Ford Plans to Roll Out Cars with No Steering Wheel or Pedals in 5 Years
Ford Motor Co. made its latest plea for investors to view the auto maker more like a Silicon Valley company, promising lofty returns on future ventures while warning near-term profit will be pinched by deep investment.
The car maker told investors that its new business services unit eventually will deliver 20% margins, two-and-a-half-times its core auto-making operation. It updated its plans for venturing into robo-taxis, electric cars and other transportation services like bike-sharing and shuttle vans.
The new strategy will be costly and risky. Capital spending will rise to 5.6% of revenue in the next two years, from 4.9% in 2016, as Ford steps up investment and acquisitions related to the new businesses. The No. 2 U.S. car maker also said profit will shrink in 2017 due to investments, then rebound in 2018 amid an expansion of its car and truck lineup and $3 billion in annual cost cuts achieved during a three-year span beginning this year.
Mr. Fields sought to reassure wary investors Wednesday the company is in a strong position to weather a downturn and primed for growth. “We’ve given you clear evidence that Ford is a solid investment with an attractive upside,” Mr. Fields said.
The company thinks autonomous vehicles will account for up 20% of total vehicle sales by the end of the next decade, and its first deployments will be in urban areas, such as New York City and Metro Detroit.
Ford plans to roll out in 2021 its fully autonomous car with no steering wheel or pedals, selling about 100,000 a year for commercial purposes only. A personal-use driverless car will be available in dealerships around the middle of next decade, Mr. Fields said.
Ford’s recent string of announcements, which include the purchase of a van-shuttle service in San Francisco and taking a stake in laser-sensor maker Velodyne Inc., have done little to soften Wall Street concerns about a cool-down in the U.S. market.
Ford says its operating cash flow will remain positive through 2018 and the company expects financial results to improve in troubled Russia and South America as restructuring efforts take hold there. Article published on WSJ