Why Ford decided to create a ‘Smart Mobility’ subsidiary

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For more than 100 years, Ford has built cars for the masses. On Friday, the company took its most concrete steps to date to splinter that business model among emerging alternatives to traditional car ownership.

Ford announced it has created a new subsidiary, Ford Smart Mobility, that will serve as an incubator for potential opportunities that range from ride sharing to fractional car ownership. While the company’s rivals have made splashes with big acquisitions and launches of new brands, Ken Washington, Ford’s vice president of research and advanced engineering, tells Autoblog the company made different strategic choices that resulted in the formation of the new subsidiary.

“This was a direct outcome of our very intentional approach to take our time and get it right,” he said Saturday during the South By Southwest festivities in Austin, Texas. “We’ve been fairly deliberate about exploring the space and the options. There’s a lot of ways people can move around.”

Ford has conducted more than 30 experiments and pilot projects across the globe that fall under the mobility umbrella in recent years. As those progressed, Washington said it became clear within the company that it’d be difficult to build business models around those ideas and scale them within the confines of the main company. Forming a separate company became an attractive solution, much in the same way Google formed Alphabet late last year, a holding company for more ambitious projects that might not turn an immediate profit. Ford’s stock has slid roughly 20 percent this year, despite record sales throughout the auto industry. It closed at $13.29 on Friday.

“We thought doing it within the boundaries of our current company and being part of this innovation ecosystem, that’s going to be hard,” Washington said. “So we thought it was the right move – a separate but connected company. We wanted to get the most bang for our buck being separate, and still be connected so we can flow insights from customers back into our core business as well.”

One of the first projects the Ford Smart Mobility subsidiary will examine is an extension of its Dynamic Shuttle pilot program that took place in London last year. The program is something of a mix between personal vehicles and public transportation that provides comfortable rides in a ride-hailing format. After receiving positive feedback during the initial phase of the pilot, Ford has expanded testing onto its Dearborn, Michigan, campus.

[Source: Autoblog]

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