Ford's Plan For Moving Everything Under One Roof is to Draw Investors

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【Summary】While Ford was late to enter the autonomous-car race, the American automaker has steadfastly been working on revealing it’s a major player by moving everything into one roof. Apparently, the move worked as investors are chomping at the bits to invest.

Original Vineeth Joel Patel    Aug 19, 2018 5:00 PM PT
Ford's Plan For Moving Everything Under One Roof is to Draw Investors

Traditional automakers have been slow to adopt the same mentality as startups when it comes to putting autonomous vehicles on the road. While companies like Uber and Waymo have worked overtime to get their self-driving cars on the road and testing, General Motors, Fiat Chrysler Automobiles, Toyota, and Ford have all taken more relaxed approach. It's why Waymo has covered 8 million miles of public testing and the others aren't even close. 

While startups and technology companies have taken it upon themselves to figure out a solution to autonomous vehicles, the majority of traditional automakers have flexed their muscles and large amounts of money by simply purchasing the startup that looks the most appealing to them. 

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How Automakers Are Tackling Autonomous Cars

General Motors purchased San Francisco-based Cruise Automation, Toyota has partnered with DENSO and Aisin, and FCA is content with supplying Waymo with cars. It's been a similar situation for Ford as it looks to catch up to other automakers. Earlier this year, Ford teamed with Postmates for on-demand autonomous testing in Florida and the automaker also partnered with Qualcomm and Panasonic on connected-car tech in Colorado. 

Instead of having to make all of the equipment themselves, automakers have decided to go down the route of partnering with other companies that have already done most of the grunt work. 

In its latest venture, Ford decided to invest $4 billion into a new division under its own umbrella – Ford Autonomous Vehicles LLC. The goal of the division is to help hasten the development of autonomous technology. Essentially what Ford did is put all of the automaker's autonomous resources under one roof with a large amount of money to use. 

It may seem like an easy thing to do, but the move, according to a lengthy piece from Bloomberg seems to have worked, as investors all want in now. "I'm really excited about what I'm hearing and seeing in terms of interest with many credible entities," Sherif Marakby, the chief executive officer for Ford Autonomous Vehicles LLC, told the outlet. 

Ford Looks For Outside Investors

By moving its autonomous car program into one unit, Ford is looking to get some outside investments, like GM did when it received $2.25 billion from Japan's SoftBack Group Corp. And now that Ford's program is all under one roof, the automaker has never been more attractive believes Marakby. 

The situation has been dire for Ford, as Bloomberg states that the automaker's stock hit a six-year low after second-quarter profits dived. To show Wall Street investors that Ford is a major player that should be taken seriously, the company unveiled an $11 billion restructuring program that could take up to five years to complete. By creating an autonomous spinoff, Ford is hoping that investors will look at the brand as two separate companies and judge the new LLC on its own. 

According to him, unnamed investors are interested in the automaker because of its plan to "bring the entire ecosystem together, meaning an investor in this LLC would be looking at bringing this technology to market and developing the business, the revenue and the profits." 

The move to create a new autonomous subsidiary comes at an interesting time for Ford as it's currently in the middle of overhauling the entire brand's product line. The plan with turning the company's lineup on its head is to bring extra funds to use for self-driving vehicles. 

"There's not going to be 10 winners in this space when we look back," Ford CEO Jim Hackett said during an earnings call on July 25th. "There's going to be a few, and we plan on being one of them."  

Intel Corp. and Strategy Analytics put out a report last year that claimed autonomous vehicles will bring in a new business that will be worth $7 trillion by 2050, claims Bloomberg. Obviously, automakers want to ensure that they are well established in the segment, as they want a piece of the pie. And they're not looking for a small portion of the pie, but a large one. 

As the outlet points out, automakers are used to seeing profit margins of approximately 10 percent. When it comes to taxis and delivery trucks that don't have human drivers, automakers could see profit margins that exceed 20 percent. Those that enter the scene a little late could fall behind and not be able to catch up. So far, Ford has been grouped with the slowpokes. 

Ford Fusion Autonomous.jpg

What Else Is Ford Doing?

Ford's retort to critics has always been that it has something larger in store than anything its rivals are doing, claims Bloomberg. The automaker's plan to unleash 100,000 autonomous vehicles that are capable of driving on their own with no steering wheel or pedals. Taxis and delivery trucks will both be Level 5 and work around the clock, ferrying people everywhere and delivering packages at all times. 

To that end, Ford is spending some serious money on autonomous cars at the moment. The automaker will spend $4 billion with its new LLC and $1 billion of that is going to self-driving partner Argo AI. 

"I'm excited that externally, people see that we're spending some serious money," said Marakby. "Now that it's all under one umbrella, we can get this stuff done faster and move quicker. We believe credit will come; we just need to focus on getting the work done." 

The last part of the puzzle is getting a large amount of money from an outside source. After that happens, Ford will be considered a serious competitor by those in the industry. Apparently, that's starting to happen, but Hackett isn't ready to say who's interested in investing.

"Lots of people, of course, in other parts of our industry have received capital," he said. "We've had people approach us. We're not disclosing any of that tonight, but yeah, we've had interest." 

All of this is being done to help Ford come out with fully autonomous cars by 2021. Getting investments from outside sources will help the automaker reach its goal and help the automaker flourish. 

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