Ford unveils first digital strategy for electric vehicles

The Ford CEO Jim Farley poses with the all-electric Ford F-150 Lightning pickup truck during the unveiling at the company's headquarters in Dearborn, Michigan, USA on May 19, 2021. REUTERS Rebecca Cook File Photo

DETROIT, January 25, Reuters -- Ford Motor Co F.N Chief Executive Jim Farley won a three-time increase in the production target for the automaker's electric F-150 to 150,000 a year, more than three times the original number.

Farley wants investors and commercial vehicle customers to pay more attention to the software and services Ford wants to sell with those trucks, as well as the company's electric Transit vans and its portfolio of combustion engine commercial vehicles.

At an event in Sonoma, California this week, Farley and other Ford executives are rolling out more details of their Ford Pro commercial vehicle strategy and setting ambitious goals.

Farley said that this is a first move by Ford to scale and commit serious resources to digital software and services-based revenue.

Ford Pro was created last May as a standalone unit that focused exclusively on commercial and government customers.

Ford wants to increase Ford Pro's annual revenue to $45 billion by the year 2025, up 67% from 2019. Farley said Ford Pro is paving the way for Ford to expand digital service offerings to retail customers.

Farley said that the U.S. and European commercial vehicle markets are fragmented. Ford can use its position as the leading commercial vehicle brand in the United States and Europe to be a leader in pulling the pieces together as commercial fleets go electric.

He said that we are the Tesla of the industry.

Ford Pro, which will house the Dearborn, Michigan automaker's commercial vehicle operations, is ramping up a commercial electric vehicle charging business using software and workers who came on board when Ford bought charging startup Electriphi in June 2021.

Ford Pro is working with Silicon Valley enterprise software power Salesforce.com Inc CRM.N to develop software to digitize billing and other paperwork for contractors and other businesses that deploy people to jobs where the vehicle is also used as office space.

The Ford Pro chief executive Ted Cannis said in an interview that the unit has 125,000 active accounts, and a 40% stake in the U.S. commercial van and pickup markets. Rivian Automotive Inc RIVN.O and established rivals such as General Motors Co GM.N and its new BrightDrop van unit are aiming for big customers such as FedEx Corp FDX.N or Amazon.com Inc as golden tickets to vehicle-based service businesses.

I've got 125,000 golden tickets with Ford's stable of small and medium-sized business customers, said Cannis.

Ford has tried to expand higher-margin service businesses in the past to add to its traditional manufacturing business, which do well to crack 10% pretax margins in good years. In the early 2000s, Ford acquired a repair services chain and auto salvage yards in an attempt to capture revenue from a larger part of the life cycle of a vehicle. Those diversifications were abandoned.

Ford's new service strategy will have to overcome efforts by rivals that are racing to sell electric vans and trucks to commercial vehicle fleets. Some parts of Ford Pro's service business, such as fleet charging, will be subject to competition from companies such as ChargePoint CHPT.N that already offer such services.

Rhett Ricart, whose Ohio-based Ricart Automotive Group is a major Ford commercial vehicle dealer, said Ford executives have done their homework on the Ford Pro. He said that the automaker must deliver electric vehicles that do not leave business customers stranded.

The vehicles have to be flawless. People will have trepidation. They know what they have got with internal combustion engines. Ricart said they know where to get gasoline.

Farley and Ford executives said that connected vehicle technology, including telematics systems that give Ford a pipeline to receive data from its vehicles, give the company a firmer foundation for recurring revenue, subscription services and increased repair business, as well as software that tells fleet owners when it is time for vehicle maintenance.

Ford can analyze how many miles vehicles are in a fleet drive, and where they are parked, to design hardware and software that allow for charging at a central depot or at a worker's home, or both, said Muffi Ghadiali, former CEO of Electriphi, and now head of the Ford Pro electric vehicle charging business.

He said that because of the telematics we can give them a very precise plan based on how the fleets operate.