The Fuse

Ford’s Bold CEO Move Reflects Its Commitment to Autonomous Vehicles

by Matt Piotrowski | May 23, 2017

The Ford Motor Company made a bold move this week that may accelerate the company’s plans for autonomous vehicles (AVs), help it evolve into a mobility business, and provide assurance to investors that it will remain competitive in today’s changing transportation landscape. The automaker announced on Monday a new CEO, Jim Hackett, who runs Ford’s autonomous vehicle division and formerly worked at furniture maker Steelcase. Quietly alongside this shake-up, news also surfaced that Pittsburgh is discussing a public-private partnership with Ford—a major potential opportunity for the company, as Pittsburgh has boldly opened itself to real-world testing for AVs.

Ford’s big CEO shake-up further deepens the company’s commitment to becoming a modern mobility company, and not just a traditional automaker.

Hackett’s appointment to the CEO position was a surprise. But it makes good strategic sense, given the automaker’s commitment to AVs and the necessity of taking more steps in this area to keep up with rapid technological changes. In essence, the move further deepens Ford’s commitment to becoming a modern mobility company, and not just a traditional automaker.

“Hackett is a change agent and is open to a culture of collaboration,” Rebecca Lindland at Kelly Blue Book told The Fuse. “He’s open to new ideas and new concepts surrounding autonomous vehicles. The mobility landscape will be completely different in 2025 and key decisions need to be made now.”

Hackett has gained a reputation as an executive unafraid to institute major change, often with successful results. At Steelcase, he was credited with focusing on innovation and redesigning U.S. office spaces. He is also recognized for rebuilding the University of Michigan football program when he worked there as an interim athletic director from 2014-16. Both roles reflect Hackett’s expertise in fostering productive organizational change rather than as an auto industry expert.

Some perceive that Ford, although it inked record profits last year, has fallen behind others in autonomy, particularly Tesla, which has become the world’s largest automaker based on market capitalization. Ford is working to shake this perception. The new hire sends a direct message to investors that the company will shake things up and look toward long-term growth and innovation. Ford continues to make one splash after another in the autonomous space, reinforcing what’s at stake. In 2016, Ford set as a goal making AVs commercially available by 2021. Earlier this year, Ford invested $1 billion in Argo AI, an artificial intelligence start-up focused on AV technology. The company is also expanding its ride sharing service, Chariot, to more cities.

“We’re looking at an industry where most players are over 100 years old,” said Lindland. “There are some young companies like Tesla, but you don’t always see fresh players. Much of the change will occur because of the OEMs, so that’s why it was important for Ford to bring someone who can think outside the box.”

Ford to expand ties in Pittsburgh?

While Ford undergoes a major change at the top, it may also be forging a strategic partnership with one of the most forward-looking cities in autonomy. Pittsburgh mayor Bill Peduto told the New York Times that the city is frustrated with its relationship with Uber and is talking to Ford about signing commitments on data sharing and workforce expansion.

Pittsburgh is clearly excited about being one of the country’s leading cities in testing autonomous vehicles. It has been a real-world lab for autonomous deployment by allowing Uber to operate its driverless cars in the city. The pilot program has provided consumers a chance to become familiar with the technology and for Pittsburgh and other cities to determine what is necessary for wide-scale deployment. But the city does not believe Uber has followed through on its promises. The ride-hailing service started charging consumers for rides that were originally advertised as free. Even more crucially, it withdrew support for the city’s application for a grant to help it beef up its transportation infrastructure. Uber also did not deliver on its jobs promise—a major source of friction as the city seeks to grow healthily beyond its steel-producing roots. Upgrading infrastructure for AV deployment and building consumer acceptance of the new technology will require long-term investments from both public and private actors. As automakers deploy more autonomous features and fully self-driving cars, one big challenge will be having adequate, uniform, and well-maintained infrastructure. Automakers will need help from federal, state and local governments to provide a smooth transition.

As automakers deploy more autonomous features and fully self-driving cars, one big challenge will be having adequate, uniform, and well-maintained infrastructure.

This vacuum could allow Ford to step in. Even though the roads and construction in Pittsburgh are older and more worn than in other testing areas such as Arizona or Silicon Valley, the city’s hunger for more jobs and its desire to lead on autonomy explain why partnering with Pittsburgh may be a good opportunity for the company. Ford did not comment to the Times, but with Argo AI based in Pittsburgh, Ford already has a footprint in the city. Based on the mayor’s comments, Pittsburgh is anxiously searching for a solid partner. “When it came to what Uber and what Travis Kalanick [the Uber CEO] wanted, Pittsburgh delivered,” Peduto said. “But when it came to our vision of how this industry could enhance people, planet and place, that message fell on deaf ears.”

It’s not just Pittsburgh where Ford and other companies can benefit, of course. With urban areas expected to be the main beneficiaries of the first wave of AV deployment, more cities will want to encourage investment from car and mobility companies, providing a large upside in this space.