Ford – Ship and remember.

Ford is starting to understand digital.

• I may have issues with Ford’s view on vehicle demand (see here) but there are signs that Ford is one of the very few OEMs that is starting to understand how important digital data is and the opportunity that it presents.
• More importantly, it appears to be almost the only one that is doing anything tangible about it.
• Following on from its launch of the Mach-E (see here), which I also thought was encouraging, Ford is now teaming up with Nationwide to offer usage-based insurance.
• The difference with this is that users won’t have to buy and fit a dongle as the vehicle will upload data related to driving style directly to Ford’s servers.
• The promise is that discounts of up to 40% depending on the driving style detected by the vehicle.
• By getting the service directly from Ford, it can be more deeply integrated with the vehicle.
• For example, at its most simplistic, different seat positions will indicate that there is more than one driver and using this data will allow Ford to know which driving patterns are relevant to which driver.
• This would make the insurance premium a better reflection of the real risk being taken and therefore more competitive.
• The trade-off, of course, is privacy but when there is money involved, I don’t think that this is going to be a major barrier.
• Hence, I think that in the long-run, this type of insurance will become a major force in the insurance market.
• More importantly, it gives the OEM the opportunity to create an active relationship with the owner/driver of the vehicle.
• Moving from ship and forget to ship and remember is one of the key hurdles that the OEMs have to get over if they are going to have a seat at the table when it comes to digital services in the vehicle.
• Ensuring that the user keeps his smartphone in his pocket is another key hurdle and in that regard, the user experience in the digital experience Ford has created for the Mach-E is very interesting.
• Clearing these two hurdles will give Ford a seat at the table when it comes to delivering digital services in the vehicle because it will have put itself in the position of being that gatekeeper.
• If the vehicle is running Android Automotive which is owned and controlled by Google, then it will be Google in the driving seat rather than the vehicle manufacturer.
• This does not mean that Ford will be creating all or any of the services being offered to the user, but it will be in a position to demand a revenue share as it will be enabling and managing the relationship.
• RFM research indicates that the opportunity in-vehicle data could be very large and its higher profitability could more than offset the decline in profit and cash flow that the OEMs must suffer when vehicle demand goes into secular decline.
• Most OEMs seem to be in denial with regard to the severity of this secular decline and are making very little if any, headway in dealing with this issue.
• In my opinion this puts Ford ahead of the pack and more likely to survive in the very long term.
• This does not mean that I want to buy Ford’s shares today, but as digital services begin to emerge, there will be a good pair trade to be had with Ford on the long-side.
• Ford is becoming an interesting company to watch and potentially once again, a leader.