Ford: We're doing more in Auto 2.0 than you think
Miami — Ford Motor Co. delivered a message to skeptical investors wanting answers about its Auto 2.0 strategy: We're doing more than you think.
They outlined how Ford thinks it can make money on those cars once they launch, how the research they've done in Miami has changed how the vehicles operate, and how that research will be applied come 2021 when Ford plans to launch self-driving service in multiple cities.
“The world doesn't understand how much progress we've made," Ford CEO Jim Hackett said in an interview Wednesday in Miami. "The world doesn't see smart. I've got to kind of get you to live in it. It's come a long way."
Ford plans to spend $4 billion over the next few years building those vehicles and the business model it will run them through to make money. Ford has been secretive about its self-driving vehicles and future plans, much to the displeasure of the investment and analyst community.
The day-long event for journalists and analysts in Miami (investors get a look Thursday) came as Ford and Argo continue to negotiate potential self-driving partnerships — and a potential investment of more than $1 billion in Argo from Volkswagen AG.
Hackett wanted to show everyone what Ford accomplished in roughly a year in Miami, even if the product is still more than two years away from launching. When Ford and Argo launched in the city, the autonomous test mules didn't know what to do when they encountered bicyclists. Wednesday, the cars safely maneuvered around bikes and much more.
The cars can now predict where pedestrians, bicyclists and people in wheelchairs might be headed, and how cautious the vehicle needs to be during random situations.
Safety drivers only once took over the self-driving hybrid Ford Fusion that The Detroit News rode in Wednesday during a 5-mile trip along a predetermined route through the busy Overtown, Edgewater and Wynwood neighborhoods of downtown Miami. Throughout the drive, the vehicle got around double-parked cars, parallel parkers, bicyclists and pedestrians like a human driver should: cautiously, but with ease.
“We didn’t stage anything on these streets,” Sherif Marakby, CEO of Ford Autonomous Vehicles LLC, said in an interview. “That is so much more difficult than having an easy, controlled experiment. This is not an experiment. This is scale.”
Learning to drive
For Brian Salesky, Argo AI CEO, Wednesday's event was a long-awaited chance to pull back the curtain. Argo, barely two years old, has been under the Ford umbrella since 2017, when Ford announced a $1 billion investment in the Pittsburgh-based technology company.
He and his business partner, Argo President Peter Rander, haven't had many chances to show people what they've been building.
"This is a pretty thrilling process to see this is really working," Rander said.
Sam Abuelsamid, analyst with Navigant Research, and Jeremy Acevedo, analyst with Edmunds said separately that Wednesday's event gave them a much-needed look at Ford and Argo's progress. As competitor Waymo readies its vehicles for commercial use in Arizona by the end of this year, Ford needed to signal where it's at.
"There's a lot of things that they're really doing well," said Abuelsamid. Argo seems to have simultaneously developed a safe and comfortable vehicle, he added: It accelerates smoothly, but confidently. It trails vehicles at a distance which many human drivers would trail. It brakes smoothly at intersections, and creeps up slowly to peer around obstructions and see oncoming traffic.
It navigated complex situations like double-parked vehicles, unprotected left turns and human drivers failing to give the autonomous vehicle the right-of-way.
Argo and Ford are still learning, Salesky and Marakby said in interviews. Wednesday's event was by no means meant to show a finished product. Both companies still have two years of work to do before launching — and then years of updates after that.
The Argo team found quickly that Miami drivers only loosely obey the rules of the road. Right-of-ways are based solely on a driver’s willingness to assert themselves. Salesky's team over the last year tweaked the system so that it won't get taken advantage of when it yields to one car.
Engineers found at one intersection that if the vehicle stopped too far ahead to allow someone to make a left-hand turn into its lane, a steady stream of drivers would spill ceaselessly into the lane. They adjusted the system so the car pulls farther forward and only allows one vehicle to proceed.
Tweaks like that will need to be done in every city in which Ford and Argo launch. The companies plan to test in several more cities over the next two years ahead of launching the autonomous vehicle business.
Ford officials stressed Wednesday that less than a year of work in Miami brought changes to both how the autonomous vehicle operates, and how Ford is building its business model.
Marakby and Marcy Klevorn, Ford president of mobility, have found here that people living in high-rise buildings don't want to leave their residence to retrieve packages. That changes how Ford works with partners on delivery services. The company also learned that the businesses using Ford's system for delivery might be based downtown, but Ford and Argo need to map outlying neighborhoods if they want to reach a large number of customers.
The automaker knows that all of its competitors will have some sort of autonomous driving business. But Klevorn said in an interview that Ford can distinguish itself through ease-of-use. The company is building out an app that will allow a certain vehicle to be deployed, based on need.
Officials said the in-depth testing in Miami — and soon Washington, D.C. — means Ford's product will be ready for mass-use on the first day it launches.
If Ford has simply launched its vehicles in Miami in 2021 without this immersive testing, they’d have spent a year changing things and losing money, Marakby said.
Ford has ongoing partnerships with Postmates delivery service and Domino's Pizza. It announced Wednesday it would partner with Walmart on grocery delivery.
Those partnerships depend on cities and people adopting the technology, the ability to safely introduce the vehicles. Ford and Argo said Wednesday a safety engineer will be riding in the driver's seat — even when the automaker begins giving rides to the public in the test vehicles in 2019 and 2020.
By then, most everything Ford showed on Wednesday will be changed, including the vehicle the automaker uses as its autonomous platform. Ford's still hasn't said what that all-new hybrid nameplate will look like.
Acevedo, an industry analyst with Edmunds, said that lead time is still hurting Ford.
"Sometimes first matters," he said. "That's just not the case here. We have some clarity that they have those initial first steps to get the ball rolling."
Ford and Argo officials said Wednesday they are moving at the proper pace to launch at the scale they're anticipating in 2021.
"If we wanted to call a launch 100 vehicles next year, we could do that," Marakby said. "I don't think we want to do that. This is real, and what we're doing is building to set up this business to be profitable."