Ford to focus on electric vehicles, autonomous tech in company shakeup

The company hopes realigning the company now will make all the difference in the future.

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Ford

Ford has revealed plans to grow and increase profit margins by streamlining and transforming the company into a dominant player in next-generation automotive technology.

On Wednesday, the Dearborn, Michigan-based firm said that expansion into the mobile area is moving apace, but more opportunities await the automaker in next-generation technologies -- including electric vehicles (EVs) and self-driving technology.

Ford plans to grow the company through an enhanced focus on utility vehicles and heavy investment in "emerging opportunities," with the overall aim of becoming a leader in "electrification, autonomy and mobility," the firm said in a press release.

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By 2020, the automaker plans to spend at least $4.5 billion on EV technologies -- including hybrid models -- and introduce 13 new electric vehicles by 2020 with a focus on commercial transport, trucks, and performance vehicles.

This will make up 40 percent of Ford's overall product lineup, highlighting how strongly the company believes EVs are the ticket to future success and profit.

In addition, Ford says another aspect of the company's shakeup is focused growth in the self-driving and autonomous vehicle industry. While Ford has been working on driver assistance and autonomous driving technology over the past decade, the company wants to produce a vehicle which is able to operate independently in ride-sharing schemes by 2021.

The company says the model will be level-4 capable (.PDF) as defined by the Society of Automotive Engineers, which means that "highly autonomous" software will take over all aspects of driving even if human drivers do not respond to obstacles or changing conditions.

To push forward the development of this concept, Ford teamed up with four startups, Velodyne, SAIPS, Nirenberg Neuroscience, and Civil Maps in August.

Ford said:

"Traditionally, owning a vehicle has cost between 70 cents and $1.50 a mile. By contrast, taking a taxi is four times more, and using ride-hailing is double the cost of an owned vehicle.

Ford's autonomous vehicle with a ride-hailing or sharing could reduce the cost to about $1 per mile -- on par or even less than personal ownership with a vehicle that can improve safety, convenience and congestion."

In addition, the company plans to work with cities around the world to help reduce congestion levels through mobile applications. The company revealed plans to acquire crowdsource shuffle service Chariot and is also partnering with bike sharing platform Motivate to work on the Ford GoBike project to bring the bike sharing system to San Francisco.

Alongside the announcement, Ford revealed that the company expects pre-tax profit of roughly $10.2 billion in the 2016 fiscal year. The firm admitted that profit margins are expected to slide further in 2017 in comparison to this year's expected results -- but will then hopefully improve in 2018.

The automaker blames this outlook on "increasing investments and costs for emerging opportunities," but has promised shareholders to make "cost efficiencies" of approximately $3 billion between 2016 and 2018 to offset losses.

"We expect Ford's performance to be strong through 2018 -- with our core business improving, allowing us to invest in the emerging opportunities that will ensure our future success," said Ford CFO Bob Shanks. "Our capital allocation continues to be disciplined and to deliver strong returns, and we are fully prepared for a downturn. As a result, we plan to offer a secure regular dividend through the business cycle with an option for upside on investments to keep our core business strong and to win in emerging opportunities."

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