- Ford unveiled the fourteenth-generation F-150 this week, showcasing a luxurious new interior and a new hybrid powertrain.
- This will be the first Ford vehicle to support over-the-air updates, part of a planned Ford strategy to save money on warranties and monetize customer data.
- This type of software-based tracking and data monetization has been in the works at Ford for years.
The American automotive industry runs on pickups. They account for a huge proportion of the vehicles sold in this country every year (18 percent of new cars sold, in 2019), and their large profit margins make them even more important to manufacturers’ bottom lines. In the case of Ford, whose F-150 made up almost 40 percent of its sales in 2019 and whose bungled launch of the Explorer contributed to a dismal financial report last year, that goes double.
At first glance, the F-150’s quinquennial makeover seems designed mostly to put it on level footing with the competition from General Motors and, specifically, Ram, whose fifth-generation 1500 pickup has been winning accolades and customers since it went on sale in early 2018. The new F-150’s mix of available luxury and work-friendly features seem to move it to the front of the pack of Detroit Three trucks. The hybrid powertrain announced at launch and the all-electric model we expect soon may have seemed like a better idea when gas was still four dollars a gallon, but they’ll likely please fleet customers and besides, you never know when the next energy crisis might hit.
But the F-150 redesign isn’t just a new take on a classic formula. Ford is finally setting in motion a strategy they’ve been teasing for years: the use of connectivity, data tracking, and over-the-air updates to accomplish goals ranging from minimizing warranty costs and helping dealers snag maintenance business to the sale of commercial apps and maybe even ads for your infotainment system.
Tesla pioneered over-the-air updates for cars when they began offering them for the Model S in 2012. The feature has since become a hallmark of Tesla ownership, and it allows owners to reap the benefits of improvements made to a product years after they first purchase their vehicle. Ford said in October 2019 that all of its future cars would have the capability to receive over-the-air updates, and now we know that the F-150 will be the first to deliver on that promise.
These software updates have the potential to seriously impact the way Ford interacts with its customers. A software bug like the one that forced Ford to recall several hundred thousand F-150s last year could now be fixed without a trip to the service center, saving Ford bundles of cash on labor. And since these cars will be connected to the cloud, and will be transmitting all kinds of data to said cloud, Ford expects to catch potential problems much more quickly. Chief operating officer Jim Farley told Reuters that this new connectivity could shrink the time it takes to detect a problem from months to days and cut warranty costs by $5 billion.
Ford already uses a data analytics program designed by Adobe for carmakers to aggregate and analyze data from its customers. Adobe’s product helps automakers organize data they’re already collecting that includes information on vehicle location, speed of travel, and infotainment use. Add to that the data that Ford’s lending arm has long been collecting on its customers (which includes income, marital status, and credit history), and you have a pile of information that could be worth a lot of money.
Ford hasn’t detailed the potential ways it could use the data, but Farley has previously singled out fleet customers as important targets for products based on customer data. During an April interview with the Detroit News, Farley said, “if you’re a police officer, or you’re in one of our ambulances, the data is life or death. For us, that’s an opportunity.” Farley didn’t suggest that the technology could also be used to spot off-task or off-course employees, but anyone with a boss knows that’s a possibility.
It will be months before customers get hold of the first redesigned F-150s, and it will likely be even longer before Ford sees the fruits of its data and connectivity labor. But Ford’s openness about the importance of data to its future business plans, and the mainstreaming of a previously fringe technology, signal a shift in the automotive business. For years, carmakers have been trying to find ways to make money on products that aren’t cars. Many automakers have lost significant sums of money chasing doomed mobility projects (Ford lost $1.2 billion in the mobility sector last year). The monetization of customer data seems like a much surer bet. If it’s not, Ford will have to seriously rethink its long-term business strategy.
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