Auto Industry Shifting Out of Cars

While they are known for producing cars, automakers are realizing that continuing to focus on vehicles in the traditional sense is not a strategy for success in the future. As a result, automotive companies are adjusting their approach to business. According to NBC News, Ford plans to put more emphasis on what can be called “mobility solutions.” It will still sell you an F-150 pickup, but it’s also getting into businesses like car- and ride-sharing along with putting more emphasis on high-tech services like SYNC.

Ford CEO Mark Fields explained, “Our plan is to quickly become part of the growing transportation services market, which already accounts for $5.4 trillion in annual revenue.” This is nearly twice as much as the global auto industry brings in each year. Consequently, Fields announced the creation of the new Ford Smart Mobility LLC to enable the company to become a player in the transportation services market.

Since the beginning of the year, Ford has announced a variety of new ventures outside its traditional lines of business. It’s even launched a partnership with Amazon that will give motorists in-car access to the high-tech company’s voice assistant, Alexa. This will let a motorist remotely control their home’s thermostat and lights or open the garage door.

Ford’s Detroit neighbor, General Motors (GM), is also thinking along the same lines. Over the last few months, GM has launched the Maven car-sharing service and acquired the bankrupt Sidecar ride-sharing service. It’s also invested $500 million into Lyft, second only to Uber in the fast-growing world of ride-sharing.

The auto industry, GM CEO Mary Barra said during the Consumer Electronics Show in January, “will change more in the next five to 10 years than it has in the last 50.” This led GM to announce another major acquisition, the purchase of Cruise Automation, a California-based start-up focusing on the development of autonomous vehicles.

European carmakers are doing the same thing as their American counterparts. BMW announced it will focus on electric vehicles and automated driving and develop its software and technology services as part of a new strategy according to Reuters.

The emergence of rivals including Uber and technology group Alphabet which has developed its own self-driving car, has prompted BMW to rethink its traditional strategy of selling large powerful luxury cars. BMW said it would focus on developing the businesses of high-definition digital maps, sensor technology, cloud technology, and artificial intelligence. BMW will also push services including providing wall mounted electric car charging boxes and software programs to help drivers find a parking space with its ParkNow and ChargeNow services.

By the beginning of the coming decade, the first fully autonomous vehicles are expected to hit the road. The National Highway Traffic Safety Administration recently said it would relax rules to permit faster development of a technology that it believes will yield a sharp reduction in highway fatalities, while also squeezing more vehicles efficiently onto existing roads.

Several studies released over the past month conflict over the long-term impact of autonomous vehicles and other alternative mobility services. A study by AAA found the majority of Americans remain skeptical about autonomous vehicles. A different study by the Boston Consulting Group (BCG) suggested that such concerns will fade as time passes. The BCG study predicted that ride-sharing, for example, will see a five-fold growth in the number of people using such services over just the next five years.

It’s far from clear how autonomous vehicles and ride-sharing will affect traditional automakers — and that’s why they’re rushing to enter non-traditional businesses. Ford Chairman Bill Ford summed up the auto industry shift well when he said, “Ensuring the freedom of mobility requires us to continually look beyond the needs of today and interpret what mobility will mean to future generations.”