The Strategist

Ford to cut spending on sedans and internal combustion engines

10/04/2017 - 12:17

Automotive concern Ford Motor Co plans to cut spending by $ 14 billion in the next five years, said company CEO Jim Hackett.

According to Hackett, the automaker will switch the focus of capital investments from sedans and internal combustion engines to the development of trucks, electric cars and hybrid cars.

As part of the cost reduction, the company intends to save $ 10 billion on material costs and $ 4 billion on engineering work.

Most of the cuts will not be reflected in the company's annual report until 2019-2020, said Hackett and other top managers of the company.

Ford is ready for new partnerships to share costs and risks while simultaneously developing new technologies and services, seeking to profit from the sale of trucks and crossovers in North America, Hackett told investors during the presentation.

Ford will present its financial forecast for 2018 in January. Financial director Bob Shanks said that the company will manage to reach an 8 percent target margin level only in 2020 or later.

By 2022, Ford plans to cut the cost of internal combustion engines by a third, or $ 500 million, by investing these funds in the development of electric cars and hybrid cars. Previously it was announced that this direction will receive $ 4.5 billion of funding. Ford has promised to present 13 models of electric cars or hybrid cars in the next five years.

Jim Hackett took over as CEO of Ford Motor in May. He joined the company a year ago and at first managed the Smart Mobility division, which was not considered the key. The division is engaged in developments in the field of unmanned vehicles. Since Mr. Hackett headed Ford, he has worked with companies to develop electric vehicles in China and India and teamed up with Lyft to develop unmanned vehicles.

In the early autumn, Ford and Lyft taxi service signed a cooperation agreement, in which they plan to integrate robotic cars into the transport system of the future.

Developers of the two companies have already started creating a technological platform that will allow connecting unmanned Fords to the Lyft system. At the same time, both companies committed to create an infrastructure that allows to constantly maintain a fleet of autonomous taxis in readiness for a call. At the testing stage, both ordinary cars with drivers and robots will be used, but the latter will not begin to serve real customers until the partners have full confidence in the convenience and safety of such trips.

It is worth noting that Ford deliberately refused to introduce SAE 3 partial autopilot systems because it considers them to be unreliable due to human factors and focused immediately on SAE 4 technology, which can already be considered as a full-fledged autopilot. Nevertheless, even when the autonomous Fords get into the Lyft parks, they will be used mainly during peak hours of travel demand.

For both Ford and Lyft, this is not the first alliance created for the development of unmanned and network-connected cars (cars with a constant high-speed connection to the Web). At the same time, one of the major investors of Lyft is General Motors, one of Ford’s competitors.


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