Ford aims to do more than make and sell cars. The next 5 years plan to tap into the $5.4 trillion market for car-sharing services and ride-hailing services with Level 5 Autonomous Vehicles that are unrelated to conventional car ownership.
Ford plans to make self-driving cars for commercial ride-sharing or on-demand taxi services by 2021, a target the automaker says it will reach by expanding its Silicon Valley research lab as well as investing in or buying autonomous vehicle technology startups.
One of those investments—Velodyne LiDAR, the leading supplier of technology that lets self-driving cars see and avoid what’s around them—was announced earlier Tuesday.
Ford also recently invested in 3D mapping startup Civil Maps, acquired Israel-based computer vision and artificial intelligence company SAIPS for an undisclosed sum, and signed an exclusive licensing agreement with machine vision company Nirenberg Neuroscience.
All of these efforts, along with plans to double the size of its research lab in Palo Alto, Calif., are part of Ford’s strategy to develop a fully autonomous vehicle safe enough for commercial use in five years.
Ford aims to do more than make and sell cars. Fields has mentioned to Fortune that while the company accounts for nearly 6% of the $2.3 trillion auto market involving the sales, financing, and repairing of cars, it hasn’t touched the $5.4 trillion market for car-sharing services like Zipcar and ride-hailing services like Uber that are unrelated to conventional car ownership.
“When you take the driver out of the equation that improves the cost of the ride service by five or tenfold,” Fields said. “And when that happens, people use that service more.” The business opportunity is two-fold, Fields said. Ford could produce and supply the autonomous vehicles and potentially share some of the revenues generated by the ride-sharing and ride-hailing businesses.
For now, Ford is focused on developing a fully autonomous vehicle, or Level 4, a classification by the Society of Automotive Engineers that means the car can handle all aspects of driving in some conditions or driving modes. It would be one step short of the highest rating, Level 5, when a car can handle all driving tasks in all road and environmental conditions normally controlled by a human.
It’s important to note that these cars will be not be for personal ownership. Raj Nair, Ford’s chief technology officer, noted that self-driving cars will be too expensive, at least initially, to sell directly to consumers.
“Deploying these vehicles through ride-hailing, ride-sharing, or dynamic shuttles gets you the best availability and significantly improves the affordability of those services,” Nair said. “And as we get the volumes up, the economics of scale and the advancements of the technology will probably bring the cost down.”
Nair and Fields predict that personal ownership of self-driving cars will be more likely towards the end of the next decade.
“This decade, for the auto industry, will be defined by the automation of the vehicle,” Fields said. “From our standpoint, we see autonomous vehicles as the potential to have the same societal impact that Ford’s moving assembly line did more than 100 years ago.”