Ford is the latest company to reveal plans for subscription services for future vehicles, which will allow customers to pay only for the features they want in the car.
The news comes in the wake of BMW’s controversial decision to make heated seats an additional charge even though they are already fitted to the vehicle, but the move is seen as a key element of future electric vehicles.
This is because automakers make a significant amount of their profits from servicing, but since electric cars need less maintenance, companies are looking for new revenue streams to ensure their financial survival.
Ford’s global chief financial officer, John Lawler, explained that the company would move towards this subscription-style business model as cars become more digitally connected and can be changed via ‘over-the-air’ updates.
“Absolutely. That’s part of the connected piece,” he said. “We’re implementing what we call ‘FNC,’ which is fully network compatible, we’re halfway there… That means every module in the vehicle can be controlled by software and a central computer – that’s where we’re headed. That will be available when we launch our second generation of battery electric vehicles.
“The cornerstone of what we’re doing is the cars, the hardware. It’s going from relatively dumb to smart, and when it’s fully connected, we’ll be able to do things with the car from a service and experience standpoint. [point-of-view] that you can’t even imagine today. And we think it’s very different for business customers than it is for retail customers. That is why we have created Ford Pro.”
Ford Pro is one of three major new businesses Ford has reorganized into, along with Ford Blue, which is responsible for internal combustion engine models, and Ford Model E, which deals with electric vehicles.
Ford Pro is the commercial vehicle division, and Lawler said it will be the first part of the company to embrace this fully connected future, allowing small and medium-sized businesses to tailor their vehicles to their specific needs.
“We are the number one supplier of commercial vehicles [in North America]. Many people look at commercial vehicles and think that it is these delivery vans that drop off packages from Amazon, UPS, DHL, or the like. That’s 10 percent of the market, the rest of the market, and this is true for the rest of the world, is the small and medium-sized businesses that are underserved,” he said.
“We believe we can provide software for telematics, fleet management, when it comes to electricity, freight and business software, through partnerships with others, that will improve the productivity and bottom line of those businesses.”
He confirmed that eventually this subscription program will be implemented in private vehicles and admitted that he doesn’t even know how far it will go, since the industry is rapidly evolving in the same way that telecommunications have since the creation of the smartphone.
“Then on the retail side, it’s going to be driver-assist technologies first and then I don’t know where it’s going to go from there,” Lawler said. “But how this thing [holding up his Apple iPhone]no one can imagine today what will happen with this [technology]. I know for a fact because [ex-Apple designer] Doug Field works at Ford and when the iPad was created it was so [late Apple chief] Steve [Jobs] I could read the newspaper. Look what he does now. Once you make it smart, the world has no limits.”
Asked if that meant allowing third-party companies to eventually offer services to Ford customers, Lawler said it was likely.
“The world is open to us…Everything is an option,” he said.