Ford wants to be the Tesla of connected utility vehicles

Ford CEO Jim Farley poses with the Ford F-150 Lightning all-electric pickup truck during the unveiling at the company’s world headquarters in Dearborn, Michigan, U.S. May 19, 2021. REUTERS/Rebecca Cook/File Photo

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DETROIT, Jan 25 (Reuters) – Ford Motor Co (FN) chief executive Jim Farley has been applauded by Wall Street as he raised the automaker’s electric F-150 production target to 150,000 a year, or more than three times the original number.

Now, Farley wants commercial vehicle investors and customers to pay more attention to the software and services Ford wants to sell with these trucks, as well as the company’s Transit electric vans and its portfolio of utility vehicles. combustion engine.

At an event in Sonoma, Calif., this week, Farley and other Ford executives reveal more details about their Ford Pro utility vehicle strategy — and set ambitious goals.

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“This is a first step from Ford to really start scaling and committing serious resources to digital software and service-based revenue,” Farley told Reuters.

Ford Pro is a stand-alone unit created last May to focus exclusively on commercial and government customers.

Ford has set a goal to grow Ford Pro’s annual revenue to $45 billion by 2025, up 67% from 2019. Farley said Ford Pro is leading the way for Ford to extend digital service offerings to retail customers.

The US and European commercial vehicle markets are fragmented, Farley said. Ford can use its position as the number one commercial vehicle brand in the United States and Europe to be a leader in parts assembly as commercial fleets go electric.

“We are the Tesla of this industry,” he said.

Ford Pro, which will house the automaker’s commercial vehicle operations in Dearborn, Michigan, is developing a commercial electric vehicle charging business using software and workers who joined when Ford bought the startup from Electriphi charging in June 2021.

Ford Pro has also partnered with Salesforce.com Inc (CRM.N), Silicon Valley’s enterprise software company, to develop software to digitize invoicing and other documents for contractors and other businesses. that deploy people to jobs where the vehicle doubles as an office.

Ford Pro general manager Ted Cannis said in an interview that the unit has 125,000 active accounts and a 40 percent share of the U.S. van and pickup markets. Startups such as Rivian Automotive Inc (RIVN.O) and established rivals such as General Motors Co (GM.N) and its new van unit BrightDrop are targeting big customers such as FedEx Corp (FDX.N) or Amazon.com Inc as golden tickets for vehicle-based service companies.

With Ford’s stable of small and medium-sized business customers, “I have 125,000 golden tickets,” Cannis said.

TRIPIDATION ON VE

Ford has previously tried to develop a higher-margin services business to augment its traditional manufacturing business, which does well at hitting pretax margins of 10% in good years. In the early 2000s, Ford acquired a chain of auto repair services and salvage yards in an effort to derive revenue from more of a vehicle’s life cycle. These diversifications have been abandoned.

Ford’s new service strategy will have to overcome the efforts of rivals who are also rushing to sell electric vans and trucks to commercial vehicle fleets. Individual elements of Ford Pro’s services business, such as fleet charging, will face competition from companies such as ChargePoint (CHPT.N) that already offer such services.

Rhett Ricart, whose Ohio-based Ricart Automotive Group is a major dealership of Ford commercial vehicles, said Ford executives had “done their homework” on Ford Pro. Now, he said, the automaker needs to deliver electric vehicles that don’t leave business customers stranded.

“These vehicles have to be flawless. People will be apprehensive. They know what they’ve got with internal combustion engines. They know where to find gasoline,” Ricart said.

Farley and Ford executives said connected vehicle technology — including telematics systems that give Ford a pipeline to receive data from its vehicles — gives the company a stronger foundation for recurring revenue, services as well as increased repair activity driven by software that tells fleet owners when it’s time for vehicle maintenance.

Ford can analyze the number of miles traveled by vehicles in a fleet and where they are parked, to design hardware and software that allows charging at a central depot, or at a worker’s home, or two, said Muffi Ghadiali, former CEO of Electriphi and now head of the Ford Pro electric vehicle charging business.

“Thanks to telematics, we can give them a very precise plan based on how the fleets work,” he said.

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Reporting by Joe White in Detroit Editing by Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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