Welcome to the new Ford.
Last May, Ford fired its then CEO Mark Fields, replacing him with Jim Hackett, a turnaround expert with a thing for technology and the ability to alter corporate culture. Ford has now released a detailed plan regarding its future that has Hackett’s fingerprints all over it. For starters, this new strategic plan involves massive spending cuts, along with redistributing development funds from cars to more profitable vehicles, specifically trucks and SUVs, and, of course, EVs.
Specifically, Ford will reduce some $14 billion in spending - $4 billion from product engineers and $10 billion in material savings. Currently, Ford is relying on 6 percent profit margins but it wants to increase that figure to 8 percent. Investment in vehicle electrification and autonomous technology is a must, as evidenced by the recently revealed Team Edison. But perhaps the most striking thing about Ford’s future involves a $7 billion budget cut from car development. Instead, that money will be pumped directly back into its trucks and SUVs, such as the upcoming 2019 Ford Ranger and 2020 Bronco. Another three (so far unnamed) trucks are also included in the new budget, one of which will be an EV SUV.
Regarding manufacturing efficiency, Ford plans to reduce the number of car configurations, which also translates to fewer standalone options. By 2019, Ford claims that 100 percent of its vehicles will feature built-in internet connectivity. Unlike GM, however, Ford won’t completely ditch the internal combustion engine, but it will reduce engine capital expenditures by one-third. Those savings, estimated at around $500 million, will be poured directly back into electric powertrains. Hackett’s plans also calls for Ford to continue making partnerships with startups in order to advance R&D.
As far as ride-sharing goes, Ford’s recent agreement with Lyft for self-driving cars, as well as that deal with Domino’s Pizza are also crystal clear indications of Ford’s intentions. These are all major changes for a global automaker as big as Ford, but they reflect a very near future that will see even more drastic changes in transportation and how we buy and use our cars as a whole.