My guess is that, in the wake of Tesla’s enormous, $3 billion pre-order frenzy last week, Ford’s PR team scrambled to get flattering coverage of their own efforts, seeking to be cast in the same Silicon Valley light reserved for tech companies. A recent article in The New York Times speaks to that effort:
Over the past year, Ford Motor has raced to develop self-driving cars, put down roots in Silicon Valley and backed ride-sharing start-ups — all in an effort to be seen as not just a car manufacturer but a “mobility company.” Its goal is to emulate the likes of Google and Tesla Motors as it aims to shape the future of getting from place to place.
Not a bad idea at all. As I’ve written before, Ford, as well as GM, have taken tech adoption seriously. And that Ford seeks to brand itself as a mobility company akin to Uber rather than a car manufacturer shows that their heart is in the right place. If nothing else, The Economist’s mantra that firms that stay committed to an idea, rather than a product, are those that succeed seems apt.
But something Mark Fields, Ford’s CEO, said last week bugs me. He is rightly forward-looking, but doesn’t really seem to take how serious a threat Tesla poses to the blue oval brand, not to mention the more upscale Lincoln marque. He said:
Tesla has done a very nice job of raising awareness of electrified vehicles. They cater to a high-end consumer, where the Tesla is usually their second, third, or fourth vehicle. It’s not their only vehicle. Our approach has been to give consumers the power choice, whether plug-in hybrids or overall electrified vehicles, and be true to our brand and accessible.
He is right. Many Tesla owners likely also have a Mercedes SUV in their garage. But Tesla is fast moving down the cost curve, and it’s headed squarely for Ford’s customer base. To that end, MG Siegler compared Ford’s complacency to that of Microsoft, right at the iPhone’s launch.
With hundreds of thousands of registered buyers, Tesla can leverage its economies of scale to produce cheaper cars that will start to eat into the market for Ford Fusions and Mustangs. Perhaps not with the Model 3 in 2017, but a system of super-chargers, service stations, owners clubs and so on will eventually create the necessary regional infratructure for consumers to make their first set of a wheels a Tesla. Ford’s effort to brand itself as a tech company should also encourage it to make equally sportscar-esque, fuel-efficient vehicles. An all-electric Mustang seems a fine choice to me.
Disclosure: I hold shares of Ford. I don’t hold shares of Tesla. But I sure wish I did.
Silicon Spatula 