Ford reinventing itself for future of self-driving cars
Sometimes it’s hard to connect the dots because the dots move around so quickly.
Ford Motor Company created a major stir last week when CEO Mark Fields announced that all of its small car production would move to Mexico by 2018.
The loudest protest came from GOP presidential nominee Donald Trump, who condemned the relocation of American jobs south of the border.
But that’s not what’s really happening here, automotive industry analysts say. There’s a bigger picture, and when you see it in full, moving the Ford Focus and C-Max production lines from Detroit to San Luis Potosi makes sense on every level.
The small cars are made at a much smaller profit margin than the larger luxury and performance models, and a highly competitive market prevents Ford from increasing prices on the Focus and C-Max, so the best option is to rely on lower labor costs, as well as the efficiency of the $1.6 billion new plant that will be built in Mexico.
At the same time — and assuming gasoline prices will remain low through at least the first Trump or Hillary Clinton presidential term — Ford has a rock-solid plan to turn out an all-new Ranger mid-size pickup truck at its Michigan assembly plant beginning in 2019. If there’s any net change in employment at the Detroit plant, Ford says, there would be more jobs, not fewer.
Moderately low gas prices help drive this equation, analysts say, by making the more expensive pickups more economical to drive.
Meanwhile, sales of the Focus fell 3 percent last year, a trend that also reflects Americans’ preference for bigger vehicles when fuel prices stay low. By moving production to Mexico — and again assuming sustained low fuel prices — Ford could be anticipating better sales markets for the Focus and C-Max models in Mexico as well as a lower priced labor market.
That’s even before taking into account who will win the White House, and whether Trump’s or Clinton’s immigration-border policy will prevail. Regardless of who wins, Ford envisions an emerging market and intends to be a part of it.
And then there’s the outlandish new development of self-driving cars.
John Zimmer, the co-founder of Lyft, predicts that within five years a majority of his ride-sharing company’s rides will be in self-driving cars. What’s more, Zimmer says personal car ownership will come to an end because autonomous rides will become a cheaper way to travel than owning an automobile.
For many of us, that’s a mind-blowing prediction.
But the concept is no less revolutionary than Henry Ford’s daring plan to pay his assembly line workers $5 a day. That $10 million gamble, in 1914, paid off nicely.
