Top

Guest Post: Ford Takes Leaf Out of Tesla Book, Moves Deeper into Services

Ford continues to demonstrate its understanding of the opportunity that it needs to address with the migration of its business model to subscription and the recruitment of Peter Stern from Apple to run its Integrated Services division.

The company is taking a leaf out of Tesla’s book and will offer its BlueCruise advanced driver assistance products on a subscription-only basis. This is not as counterintuitive as it sounds as new car buyers will be able to purchase the service for three years with an upfront payment of $2,100. Since it will be marketed as an option in the usual way, it is unlikely to change the purchase experience of new car buyers very much. Furthermore, as so many vehicles are purchased on leasing schemes, there is a good chance that the buyer of the new vehicle would have changed the vehicle before the three-year period has elapsed.

This is how Ford seeks to introduce users to the idea of subscription, but there remain some features that will never work on a subscription basis. Two of these are Mercedes’ idea of asking customers to pay $1,200 per year to improve the driving performance of their EVs and BMW’s idea of asking customers to pay $180 per year for heated seats. This is a very common strategy employed by consumer electronics companies and has also been used to good effect by Tesla.

However, the vehicle-buying public has been paying one-off fees for hardware options for decades and I suspect that there is going to be a lot of resistance to paying $15 a month to keep one’s bottom warm in winter. Hence, the right approach is to charge for the options exactly as they have been for years and to offer subscriptions for services rather than products.

Advanced driver assistance sits right in the middle as it requires extra hardware to be present but is almost entirely driven by software which will need constant updating. Furthermore, much like a chauffeur that needs to be paid on a monthly basis, it is not a very large conceptual jump to be seen as a service rather than a hardware option.

Tesla has already prepared the market for this and so Ford has a pretty good chance of winning adoption with this model. Ford has also recruited Peter Stern who spent six years at Apple (Time Warner before that) running its subscription services.

The idea here is obviously to ensure that when it comes to Digital Life in the vehicle, Ford is ready with an appealing option for each activity with which the user will engage. This will go from a media consumption offering to transport-related services such as smart parking, which saves the user from driving round and round looking for a parking spot.

The market for digital services in the vehicle could be very large indeed especially as consumer spending on vehicle transportation declines over the next 20 years. Ford is again doing the right thing in attempting to address this market, but it will need to ensure that its user experience remains relevant in the vehicle as Apple and Google will be only too happy to sell their services and those of third parties via their user experiences instead.

This is the key challenge that all OEMs face over the next 20 years and Ford remains one of the few automakers outside of Tesla that appear to understand what is happening to their industry and seem to be addressing it in the right way.

(This guest post was written by Richard Windsor, our Research Director at Large.  This first appeared on Radio Free Mobile. All views expressed are Richard’s own.) 

Related Posts

Richard is our research director at large and also founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his recent tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector. He had covered Global Telecom Equipment covering companies such as Nokia, Motorola, Lucent, Qualcomm, Ericsson, Filtronic, Alcatel-Lucent amongst others. Later, Richard began looking at Handset software and became an industry leader in the space. He shifted from direct stock coverage to covering technology on a global scale, taking on responsibility of the complete technology ecosystem. His firm Radio Free Mobile is a partner firm of Counterpoint Research and covers the digital mobile ecosystem, accessing and comparing all of the global ecosystems.

Apple Snack Pack

PREMIUM

Understanding iPhone

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited

Registration

In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.