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Ford’s Vision Is To Become The Tesla Of Connected Commercial Vehicles

Ford’s Vision Is To Become The Tesla Of Connected Commercial Vehicles
Ford Motor Co Chief Executive Jim Farley drew praise from Wall Street when he increased the company's electrified F-150 manufacturing objective to 150,000 units per year, which is more than three folds compared to the target that was initially set by the company.
Farley now wants investors and commercial vehicle customers to focus on the software and services that Ford plans to sell alongside those trucks, as well as the company's electric Transit vans and combustion engine commercial vehicle lineup.
Farley and other Ford executives are unveiling further specifics of their Ford Pro commercial vehicle strategy - and setting high targets - at an event this week in Sonoma, California.
"This is a first move by Ford to really start to scale and commit serious resources to digital software and services-based revenue," Farley said in an interview with Reuters.
Ford Pro is a separate division that was established in May to focus solely on business and government customers.
Ford has set a target of $45 billion in annual revenue for Ford Pro by 2025, up 67 percent from 2019. Ford Pro, according to Farley, is opening the way for Ford to offer more digital services to retail consumers.
According to Farley, the commercial vehicle markets in the United States and Europe are fragmented. Ford can utilize its position as the most popular commercial vehicle brand in the United States and Europe to help commercial fleets put the pieces together as they transition to electric vehicles.
"We are the Tesla of this industry," he said.
Ford Pro, which will be the place where the automaker's commercial vehicle activities would be based in Dearborn, Michigan, is now scaling up a commercial electric vehicle charging business with software and employees hired when Ford acquired charging startup Electriphi in June 2021.
Ford Pro has also partnered with Inc, a Silicon Valley enterprise software powerhouse, to build software to automate billing and other paperwork for contractors and other firms that send employees to jobs where the vehicle also functions as an office.
In an interview, Ford Pro Chief Executive Ted Cannis said the firm has 125,000 active accounts and a 40% share of the commercial van and pickup sectors in the United States.
Rivian Automotive Inc and established competitors like General Motors Co and its new BrightDrop van unit are targeting large customers like FedEx Corp and Inc as golden tickets to vehicle-based service industries.
With Ford's stable of small and medium-sized business customers, "I've got 125,000 golden tickets," Cannis said.
Ford has previously attempted to diversify into higher-margin service industries to supplement its traditional manufacturing operations, which can achieve pretax margins of 10% in excellent years. Ford purchased a repair services network and auto scrap yards in the early 2000s in order to capture revenue from a broader portion of the vehicle's life cycle. Those diversifications were never implemented.
Ford's latest new strategy for offering services will have to outperform competitors in the race to sell electrified vans and trucks to commercial fleets. Individual parts of Ford Pro's service business, such as fleet charging, will be challenged by competitors like ChargePoint, which currently provide such services.
Ford executives have "done their homework" on Ford Pro, according to Rhett Ricart, whose Ricart Automotive Group in Ohio is a major Ford commercial vehicle dealer. He believes that now is the time for the carmaker to provide electric vehicles that do not leave corporate customers stranded.
"Those vehicles have got to be flawless. People will have trepidation. They know what they've got with internal combustion engines. They know where to get gasoline," Ricart said.

Christopher J. Mitchell

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