Ford Commits $4 Billion to the Future, Creates New AV Subsidiary

Matt Posky
by Matt Posky

Ford Motor Company announced Tuesday that it has formed formed a subsidiary — Ford Autonomous Vehicles LLC — devoted entirely to autonomous vehicle development. That’s probably the catchiest name we’ve heard since Bank of America Corp or Waste Management Inc. However, you don’t need a clever moniker when you’re dumping $4 billion into a project, which Ford intends to do through 2023.

With all the current drama and distrust surrounding self-driving cars, we thought there was a chance automakers would cool off on pushing for it so aggressively. But while some OEMs curbed their futuristic rhetoric ever so slightly, practically everyone else kept the pedal to the metal — an analogy that will lose all meaning once computers drive us everywhere.

Let’s see what The Future™ looks like in and around Dearborn.

“Ford has made tremendous progress across the self driving value chain — from technology development to business model innovation to user experience,” said Ford CEO Jim Hackett in a statement. “Now is the right time to consolidate our autonomous driving platform into one team to best position the business for the opportunities ahead.”

Nobody could forget the industry staple that is “the self driving value chain.” Knowing that Ford has made progress with that is tantamount to a grand success already.

Alright, snide remarks on corporate jargon aside, the folks at the Blue Oval are investing a lot into self-driving vehicles. General Motors seems to be frontrunner, but Ford isn’t far behind. Both companies are investing heavily into the technology, convinced that it’s the best way to ensure long-term financial victory. Although the really big bucks seem to be tied into data sales, connectivity, and various subscriptions — all of which becomes more lucrative once cars can drive themselves.

The second you’re not preoccupied with driving your own vehicle, you’ll likely use its multimedia system to surf the web, make online purchases, or take in a movie. Automakers can charge for all of these things while selling your personal data to the companies they’ve partnered with, who will then advertise to you in-car. But that’s just part of a grander whole. Last year, a report from Intel estimated that self-driving vehicles will usher in a new “passenger economy” worth $7 trillion by 2050.

Autonomous vehicles are also supposed to save countless lives (when operating correctly) and reduce commuting times (once the vast majority of vehicles are no longer human operated). But those are just selling points. The real incentive is all the cash just waiting to be grabbed by whichever companies get there first.

It all sounds very boring, greedy, and somewhat improbable. But, with enough money, just about anything is possible. How else do you think we got to the moon?

Ford is spending roughly $4 billion to plant its self-driving money tree. The first billion has already been committed as part of the company’s investment into Argo AI, a Pittsburgh startup that has become its chief partner in autonomous development.

Ford Autonomous Vehicles LLC will be primarily based at Ford’s Corktown campus in Detroit and will hold Ford’s ownership stake in Argo AI. It will also include Ford’s self-driving systems integration, autonomous vehicle research and advanced engineering, AV transportation-as-a-service network development, user experience, business strategy and business development teams.

The company claims the subsidiary is “structured to take on third party investment.” Sherif Marakby, current Ford vice president and formerly Uber’s autonomous vehicle program director, will be appointed as CEO of Ford Autonomous Vehicles — reporting to a board of directors chaired by Marcy Klevorn, Ford’s executive vice president and president of Mobility.

Meanwhile, Ford is reorganizing its Global Operations division (led by Executive Vice President Joe Hinrichs) to include Information Technology, as well as the company’s global order-to-delivery system, technologies, and processes from across Ford’s production system.

“The evolution of computing power and IT have helped bring great products to customers — from cars to tablets,” Hackett said. “We can now harness this technology to unlock a new world of vehicle personalization, supply chain choreography and inventory leanness that rivals any industrial model in the world — and Joe’s challenge is to help us redesign this system to do just that — while better serving customers and dealers and improving our overall fitness.”

[Images: Ford]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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2 of 35 comments
  • Alan996 Alan996 on Jul 25, 2018

    If I were a shirt tail relation in the Ford family with some stock I would be on a push to; 1-sober up all the other members of the family and 2-get Bill declared incompetent..

  • MLS MLS on Jul 26, 2018

    "The second you’re not preoccupied with driving your own vehicle, you’ll likely use its multimedia system to surf the web, make online purchases, or take in a movie. Automakers can charge for all of these things..." Um, no. Passengers will have connected personal devices and practically no one will pay extra to use automakers' likely inferior multimedia systems. If that's the business model, Ford is doomed.

  • NotMyCircusNotMyMonkeys i was only here for torchinsky
  • Tane94 Workhorse probably will be added to the heap of failed EV companies.
  • Freddie Instead of taking the day off, how about an article on the connection between Black Americans and the auto industry and car culture? Having done zero research, two topics pop into my head: Chrysler designer/executive Ralph Gilles, and the famous (infamous?) "Green Book".
  • Tane94 Either Elio Motors or Aptera Motors.
  • Billccm I think we will see history repeat itself. The French acquired AMC in the 1980s, discovered they couldn't make easy money, sold AMC off to Chrysler. Jeep is all that remained. This time the French acquired FCA, and they are discovering no easy profits. Assume an Asian manufacturer will acquire what remains of Chrysler, but this time Jeep and RAM are the only survivors.