It’s been nearly two years since Ford president and CEO Mark Fields announced in a CES 2015 keynote that the automaker was investing in 25 mobility experiments around the globe, many of them in large cities. Since then “mobility” has become the buzzword of an auto industry in transition from selling sheet metal to marketing all means of personal transportation.
Ford’s early move into mobility now seems farsighted. But the persistent question from media and shareholders is how Ford intends to profit from mobility, and the answer may be found in urban trends.
In another keynote, this time at AutoMobility LA last week, Fields announced that Ford is partnering with Bloomberg Philanthropies and the Aspen Institute’s Initiative on Cities and Autonomous Vehicles to help reshape urban transportation. And in a media lunch later in the week, Rajendra “Raj” Rao, the newly-appointed CEO of Ford Smart Mobility LLC, discussed the next stage of the automaker’s push into mobility, with a focus on cities.
According to Ford, 60 percent of the world’s population will live in cities by 2030. As urban populations increase, the challenges tied to moving people and goods around cities will become tougher – and costlier – for all involved. Ford City Solutions plans to work with emerging megacities around the world and other key stakeholders to help ease the flow of traffic and freight.
To gain a better understanding of how the brave new world of urban mobility complements the business of making and selling cars, Rao explained over the lunch with media that Ford Smart Mobility’s mission is to design, build, grow and invest in emerging mobility services. Operating like a start-up, the new business unit’s goal is to look at the results of each mobility experiment, learn from setbacks and identify successes to incubate them into money-making ventures for Ford.
One recent acquisition that acts as a model for this M.O. is Chariot, a van-pooling service that applies today’s technology to tap a demand for private buses that grew out of the need to move people with limited transportation options and budgets in urban areas. Rao pointed to Chariot as an example of an experiment in which Ford is providing a much-needed mobility service and has the potential to make a profit as it expands.
A dynamic app-based, crowd-sourced shuttle service that adapts to customer demand, Chariot started in San Francisco to address some of the first/last-mile challenges often facing low-income commuters and has since launched in Austin, with plans to expand to at least four more cities in the next 15 months. Inspiration for the service, according to Chariot cofounder and CEO Ali Vahabzadeh, was the effective albeit illegal “dollar van” services popular in his hometown of Brooklyn.
Beyond providing transportation for many service workers, Chariot’s prime customers in the Bay Area, Vahabzadeh pointed out that the company could also work with businesses to transport employees (think Google buses) and with organizers of sports and other events to move masses of people. “Enterprise is a huge opportunity,” he added, noting the investment pouring into delivery and other business-related logistics currently being disrupted by technology.
Rao emphasized that Ford remains committed to its core business of making and selling vehicles while also preparing for a future that puts personal vehicle ownership within – but perhaps not at the center – of a diverse transportation ecosystem serving global megacities. And he acknowledged that the way forward for Ford could be faced with some failures – and admitted that this is okay.
“We are looking for collaborators to help make transportation better in cities,” added Rao. And to profit on mobility’s potential.
Originally published by Forbes.com