Ford charts cautious path toward
self-driving, shared vehicles
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[September 14, 2016]
By Paul Lienert
DETROIT (Reuters) - Ford Motor Co Chief
Executive Mark Fields is looking for more deals to advance the
automaker's expansion into ride services and autonomous vehicles, but
will not rush to match big spending by auto industry rivals, he told
Investors comparing the size of Ford's investments to what other
automakers have announced are "looking at the wrong scoreboard," Fields
said in an interview at Ford headquarters on Tuesday, ahead of the
company's annual late-summer investor meeting.
"Don't confuse activity for progress," Fields said in response to
questions about why Ford's future 'mobility' investments appear to lag
those of competitors such as General Motors Co, Daimler AG and Toyota
Mobility is the term auto companies and investors use to describe the
next wave of personal transportation, which is still largely car-based
but includes a wide range of services from ride sharing to automated
driving and parking.
Fields and other top Ford executives are scheduled to meet on Wednesday
with investors and analysts to address concerns that the automaker is
heading into a cyclical downturn in the United States market, which
generates the bulk of Ford's profit.
Fields is expected to highlight the prospects for Ford to jump-start
growth over the next several years by developing new businesses using
autonomous, or self-driving, vehicles and internet-enabled services such
as shuttle vans that can be hailed using a smartphone app.
A Reuters analysis of automaker investments in future mobility startups
estimates that Ford has spent less than $500 million in the sector over
the past five years, while Toyota has spent more than $1.1 billion, GM
more than $1.2 billion and Daimler more than $1.4 billion.
So far, the Dearborn, Michigan-based automaker has announced a steady
stream of relatively small deals. GM, in contrast, has highlighted
bigger moves such as its $700 million acquisition of driving startup
Cruise Automation and a $500 million investment in ride services company
GM has outlined plans to use its alliance with Lyft to place electric
and autonomous vehicles in ride services fleets, while expanding car
sharing through its Maven brand.
FORD GOES SMALL
Ford has focused on smaller startups in such fields as laser sensors,
mapping, artificial intelligence and data analytics. Last week, Ford
said it had acquired Chariot, a San Francisco-based startup that
provides a local on-demand shuttle service with dynamic routing
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The Ford logo is pictured at the Ford Motor Co plant in Genk,Belgium
December 17, 2014. REUTERS/Francois Lenoir/File Photo
Fields said the company has a "contingency fund" to finance future
investments that fit into Ford's long-range mobility strategy, but
wants to "make sure we are investing wisely" in a field where less
than half the prospects offer real value.
Fields said Ford will “leave all options open” for partnerships and
acquisitions to expand its services business.
"It will take time to scale some of these new businesses," he said.
Until then, Fields said those ventures will be funded in part by
Ford's core business, including its high-volume, high-margin pickup
Ford also will place "a high priority on stable and sustainable
dividends," Fields said. Ford's current dividend yield is nearly 4.7
Ford shares are down 12 percent for the year to date,reflecting
investors' concerns that vehicle sales in the United States are
"Investors are so focused on when the next recession is coming and
what happens to auto stocks in the recession, they’re not paying a
huge amount of attention to whether GM’s strategy of spending big to
position itself for the next era of mobility or Ford’s strategy of
going late with less of a checkbook is the right one," Barclays
Capital analyst Brian Johnson said on Tuesday.
Ford jolted investors on July 28 when it released second-quarter
results that fell short of Wall Street expectations, and Chief
Financial Officer Robert Shanks said “the growth is over” in the
U.S. market. Ford shares fell 8 percent, and have not fully
GM shares are stuck in the doldrums too, down 9 percent for the year
despite beating Wall Street profit expectations in the second
(Reporting by Paul Lienert; Editing by Joseph White and Bill Rigby)
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