Ford is the latest company to reveal plans for subscription-style services for future vehicles, which will allow customers to only pay for the functions in the car they want.
The news comes in the wake of BMW’s controversial decision to make heated seats an extra charge even though they’re already fitted to the vehicle, but the move is seen as a key element of future electric vehicles.
This is because car makers make a significant amount of their profits on servicing, but with electric cars needing less maintenance, the companies are looking for new revenue streams to ensure their financial survival.
Ford’s global chief financial officer, John Lawler, explained that the company would move towards this subscription-style business model as cars become more digitally connected and can be changed using ‘over-the-air’ updates.
“Absolutely. That’s part of the connected piece of it,” he said. “We’re rolling out what we call ‘FNC’, which is fully network capable, we’re part-way through… That means every module in the vehicle can be controlled by software and a central computer – that’s where we’re headed. That will be available when we launch our second-generation of battery electric vehicles.
“The cornerstone of what we’re doing is the cars, the hardware. It’s going from being what’s relatively dumb to smart, and when it’s fully connected, we’ll be able to do things to the car from a services and experiences [point-of-view] that you can’t even imagine today. And we believe it’s much different for commercial customers versus retail customers. That’s why we’ve created Ford Pro.”
Ford Pro is one of three new core businesses Ford has been reorganised into, along with Ford Blue, which is responsible for internal combustion engine models, and Ford Model E, which looks after electric vehicles.
Ford Pro is the commercial vehicles division and Mr Lawler said it will be the first part of the company to embrace this fully connected future, because it will allow small- and medium-sized businesses to tailor their vehicles to their specific needs.
“We are the number one commercial vehicle provider [in North America]. A lot of people look at commercial vehicles and they think it’s these delivery vans that are dropping off Amazon packages or UPS or DHL or things like that. That’s 10 per cent of the market, the rest of the market – and this is true for the rest of the world – is your small and mid-size businesses that are under-served,” he said.
“We believe we can provide software for telematics, fleet management, when it comes to electric, charging, and business software, through partnerships with others, that will improve the productivity and the bottom line of those businesses.”
He confirmed that eventually this subscription program will roll out into private vehicles and admitted he doesn’t even know how far it will go, as the industry is rapidly evolving in the same way telecommunications has since the creation of the smartphone.
“Then on the retail side, first it will be driver assist technologies and then I don’t know where it will go from there,” Mr Lawler said. “But like this thing [holding up his Apple iPhone], no-one can imagine today what’s going to happen with this [technology]. I know for a fact because [ex-Apple designer] Doug Field works at Ford and when the iPad was created it was so [late Apple chief] Steve [Jobs] could read the newspaper. Look what it does now. Once you make it smart, the world is boundless.”
Asked if that meant allowing third party companies to eventually offer services to Ford customers, Mr Lawler said it was likely.
“The world is wide open to us… Everything is an option,” he said.
Keyword: Would you 'pay-to-play' in your new car? Ford planning subscription services for next generation of electric cars