Ford has revealed bold plans for autonomous cars and car sharing. But is it signing its own death warrant?
Question: what’s the difference between Kodak, Blockbuster and Ford? Answer, Ford has not been disrupted out of existence by technology, yet.
Now the company has revealed plans for a mass market autonomous car to hit the streets by 2021. The focus on its new autonomous cars will be ride sharing, an Uber type model, but without a driver. Tesla has been working on a similar idea.
Mark Fields, Ford president and CEO said: “We see autonomous vehicles as having as significant an impact on society as moving assembly line did 100 years ago.”
Mr Fields is surely right, the list of advantages of autonomous cars is long.
But what not many people are considering is psychology.
People love their car. The relationship between a driver and his/her machine is almost intimate. For some male drivers it is as if the car is an extended appendage.
But suppose, instead, your car is a living room on wheels, or an office on wheels. It won’t feel the same.
The economic advantages of autonomous cars are overwhelming. The vehicles are safer, they make more efficient use of road infrastructure as they can drive closer together, they can remove the need to find a parking place, but they are about as sexy as the back end of a bus.
It turns out that the average American car spends 96% of time parked. According to research from MIT, the mobility demand of a city like Singapore could be met with 30% of its existing vehicles.
In other words, car sharing will inevitably lead to less cars on the streets. That ain’t good for Ford, or any of its rivals. It does rather feel as if Ford is cannibalising its own market place.
There is nothing Ford can do about this. As Guy Rigby, director of entrepreneurs at Smith and Williamson once told me, companies fretting over disruptive technology, “need to cannibalise their products, or be eaten.”
When it was suggested to Blockbusters that it should take a leaf out of the Netflix book, and ditch charging fines for the late return of videos, the response was not positive. ‘But this would cannibalise our products, our main revenue stream’ went the gist of the response.
Yet Blockbusters went bust anyway, and tiny Netflix went on to great things.
Kodak went bust in the same year that more photographs were taken than in any previous year in history. How could it have done things differently?
Autonomous cars, leading to car sharing, may lead to a sharp fall in total demand for cars, hitting the car industry hard.
But there is no use burying your head in the sand.
As least Ford has shown it understands this, and by attempting to become a market leader, it may find a way to be one of the few companies to flourish in the car sharing and self-driving car era that awaits.