FutureStructure

Ford CEO: Self-Driving Taxis Won't Replace the Private Car

Ford has also said it will invest $1 billion over the next five years in Argo AI, a self-driving startup.

by David R. Baker, San Francisco Chronicle / August 18, 2017
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(TSN) -- The auto industry is on the cusp of a huge transformation, with self-driving cars and ride-hailing services fundamentally changing the way society moves.

Jim Hackett’s job is to find a place in this future for Ford Motor Co. And help shape it.

In May, Ford tapped Hackett as the storied company’s new CEO. The former top executive of the Steelcase office furniture business, Hackett joined Ford’s board of directors in 2013 and last year became chairman of Ford Smart Mobility, a subsidiary focused on business models that don’t revolve solely around building and selling cars. Ford Smart Mobility purchased San Francisco shuttle service Chariot in September, pointing to at least one of the ideas Ford was willing to pursue. Ford also will invest $1 billion over the next five years in Argo AI, a self-driving startup.

On Thursday, Ford sponsored the City of Tomorrow symposium at San Francisco’s Fort Mason, focused on how new modes of transportation could mold the growth of cities, and vice versa. The Chronicle spoke with Hackett, 62, about how a century-old automaker can thrive in a world of robot taxis. The interview has been edited for space and clarity.

Q: You are a relative newcomer to Ford, a 114-year-old company. And for 114 years, the company has basically focused on one mission: building cars that people will buy and drive themselves. Is it difficult to get people within such an established company to start planning for such radical changes in the business?

A: It is a challenge to get people to see themselves in a movie and not in a Polaroid. The notion of the Polaroid is a picture of our business as we know it today: the models, the products. Everything that we produce successfully is really in a movie, moving in this direction.

What’s an example? The Chariot acquisition. It had 12 people when we bought it; it’s over 100 today. And we’re evolving the inside of the Ford Transit van because of what we’ve learned about the way people actually ride. Because we’re now using it for ride-sharing, we’ve actually learned more about what people really care about. Isn’t that great? Both sides really advantaged themselves: the core business and the emerging business. Those little success stories open the eyes of all the people for the potential of other plays like this.

Q: Ford has invested in self-driving cars, with Argo AI. You’ve invested in ride services, with Chariot. Why can’t we just keep driving our own cars?

A: They’re actually together, for me. Vehicles are getting smarter, in the traditional business. And with the promise of the future business — autonomy — the vehicles are going to get much smarter. That guarantees, in a way, that Ford’s vehicle history is an advantage. Because the smarter the vehicles are in the future — and we can build them — the more they’ll have a role. I think dumb things are going to have a hard time in that out-there future. Things that have no intelligence, it’s going to be harder to understand why you need them.

Q: So do you think we’ll shift entirely to autonomous vehicles, or will there still be a place for the car that you buy and drive yourself?

A: It’s the latter. We don’t know that autonomous vehicle intelligence in the future will all be delegated to a service that no one owns but everyone uses. It could play a role in vehicles that people own, vehicles that aren’t supposed to crash. You’re buying the capability because of the protection it gives you. It’s also possible it could be applied in these big, disruptive ways that of course we’re not blind to, but my bet is we don’t know. So again, that’s a good position for Ford to be in, because the company can actually advantage itself both ways. Compared to — I don’t want to name anyone, but a tech company that’s not in the vehicle business — they hope it will only go one way, right? Today, 60-70 days into my job, I just want to make sure the possibility isn’t closed.

Q: If we do shift to a future of shared fleets of self-driving cars, wouldn’t that mean fewer car sales for Ford and the auto industry?

A: I’m open to the possibility that the line could bend that way. Then the company’s defense is not only its investment in new possible models, but also its fitness. How fit is it in delivering the old model?

But again, I’m really optimistic that the threat is not going to be that there’s not enough vehicle revenue. If I’m right about the smartness, there’s all this other revenue that we could get, because we may have just south of 100 million people in our products at any time, and we’re not really earning substantial revenue from them today.

Imagine a vehicle’s going by some sort of a retail thing that takes standing in line for. The vehicle is mediating “Do I want to stay in line for whatever thing is in that retailer — coffee, a drive-through?” and arbitrating whether I go there or I go to the next destination on my path. There are fees for Ford helping that. There’s an advantage to the retailer because now there’s higher utilization. And the car occupant gets an advantage of not waiting in line. So everyone wins in that model. That’s an example of the fees that come from the 100 million users that we haven’t mined at all.

Q: Your predecessor committed the company to getting self-driving taxis out there by 2021. Is the company still committed to that vision, and is it doable?

A: The answer is, we are going to be in the market with products in that time frame. But the nature of the romanticism by everybody in the media about how this robot works is overextended right now. It will be a progressive thing, just like computing. If you think about a vehicle that can drive anywhere, anytime, in any circumstance, cold, rain — that’s longer than 2021. And every manufacturer will tell you that.

Ten years ago, it was about thinking of the vehicle having this independence. I think it’ll be a co-dependent model in the future. Co-dependence will actually create a safe envelope for the vehicles.

Q: You mean the infrastructure talking to the vehicles? Roads communicating with cars?

A: There’s never been a transportation system ever that didn’t have some kind of co-dependence. Like maps in cars, or air traffic control with airplanes. Even the most advanced military drones are still using low-Earth-orbit satellites.

Q: You have a reputation of working quite well with Silicon Valley companies, and Silicon Valley companies often have a high opinion of themselves. Are there lessons Detroit could bring to Silicon Valley, things the valley could learn from Ford?

A: I have a tremendous respect for the way entrepreneurs here answer what has become a design framing question, “How might we?” They start with the affirmation that it’s possible. Detroit can learn from that.

On the other hand, mechanical engineering in these systems called vehicles is as difficult as anything that was ever done in electrical engineering or software. It’s actually a parallel science that they can learn from us. To build something at the scale the auto industry builds is mind-boggling, so that scale and capability could help Silicon Valley.

I had three new employees today in meetings. I always ask “Where’d you come from?” and it was the usual suspects here: Facebook, Google, Apple. They’re coming to work for Ford. My friend David Kelly, who founded (design firm) Ideo, says it’s because this is the hottest problem in the tech world, the future of the vehicle.

©2017 the San Francisco Chronicle Distributed by Tribune Content Agency, LLC.