Ford wants to make commercial vehicles a larger part of its business, and it’s turning to things such as electrification and connectivity to make it happen. Ted Cannis, general manager, commercial vehicles, for the U.S. and Canada, talked about the strategy in a recent interview with HDT sister publication Automotive Fleet. Following are excerpts from that interview.
Q: What is Ford’s vision to grow its commercial vehicle business, and why is it being implemented?
A: This is occurring because of external and internal changes. Externally, a big change is happening with a massive shift to electrification, and you can see this shift in states like California and Colorado. That’s a big change, and Ford wants to lead. We want to lead by having the first electric pickup and electric van targeted to commercial customers.
This is part of the change. The other part is the move to digital connectivity, which is occurring across the industry. Many small- and medium-sized fleets are not yet moving in that direction, so we are not anywhere near full adoption yet. The other change is over-the-air updates to keep improving commercial vehicles throughout their service life for our customers. These are some of the external changes.
Then internally there are big changes occurring. If you look at the core truck and van business, Ford has about a 45% share. Ford owns work in America. We have a huge base to build upon, we have strong commercial vehicle centers, more than 90% of them are EV-certified today and counting, and a great combined engineering and commercial team that knows our customers.
While this is something we’ve already built, how do we build it bigger? Our CEO Jim Farley always talks about leaning into our strengths. We want to build beyond our strong base of vehicles and move into the entire ecosystem of services. We would like to provide businesses with end-to-end services.
Now that our vehicles are connected, we want to provide the connectivity and data services that every business needs to help them thrive. We want to provide them with end-to-end solutions, including charging solutions for the new world of electrification. We want to provide end-to-end updates so the software gets better and functions improve. Over time, we will improve that capability with better prognostics and data-enhanced solutions.
We also see more opportunities in the financing and parts businesses. We’ve been growing this side of the business, but with dedicated resources that we’re adding, and with the new approaches in the financing side, as well from end-to-end, we think there’s a lot more to expand beyond our fantastic base of trusted vehicles.
Q: On the electrification side, can you give us an idea on product rollouts?
A: At the end of 2020 we will launch our F-150 hybrid model. We wanted to make it better. How do you make the product better? We don’t want to do the kind of things a hybrid is known for in the past. We want to make a better truck.
Next, in the 2022 model-year, we will launch the full battery-electric E-Transit, and then in mid-2022 calendar-year, we’ll come out with the full battery-electric F-150. There’s a huge demand for these vehicles because it’s just good business in terms of total cost of ownership with lower fuel cost, reduced maintenance costs because there are fewer parts to fix, and more uptime. There’s a strong business case for these vehicles in terms of sustainability, plus the customers of these businesses are demanding it as well.
We just completed a survey in which millennials said they were willing to pay more for a parcel delivery if it was delivered in a sustainable manner. We’re seeing a lot of demand for these vehicles from our customers at small, medium, and large businesses.
It’s a new cost-of-ownership model, involving new residual values, determining battery life, and calculating fuel savings. Fuel rates are not the same around the country, neither is the cost of kilowatts. It’s a localized solution. Government incentives tend to vary by city, state, and local levels, which you have to match up with your fleet incentives. Then you have to have infrastructure solutions.
At the end of a workday, many employees take these vans and pickups to their homes. You need to sort out the pros and cons of home charging versus depot charging, along with on-the-road charging. It’s a lot of work to get into this space and Ford will provide the help.
Q: What percentage of Transit’s production do you anticipate will be full battery-electric?
A: We see a lot of demand, and that’s why we started planning on these products in my prior role with Ford when I was running electrification. The demand is there. We’re seeing it from the rolling toolbox segment to the final-mile delivery segment.
As the capabilities of the batteries and tool sets have improved, and without having the battery size compromising package/cargo space or engine-bay space, we can give the space that the customer wanted, in both the passenger and commercial vehicles, without subtracting from the job to get done.
We’re seeing demand across businesses and that’s why we thought about the Transit. When we thought about different variations, we decided we’re going to do a lot. We’re going to cover high, medium, and low roofs. We’re going to do the three body lengths. We’re going to do chassis cab cutaways, the whole deal, because we’re seeing demand from all those different applications.
Q: What is your vision of the future of digital connectivity in fleet? How do you see it evolving?
A: Our customers in the commercial business are running businesses, whether it’s an individual owner-operator plumber or someone running 1,000 vehicles. They run these businesses on numbers. They have a monthly operating cost.
This is also true on the battery-electric side, because why would you buy a vehicle with a 300-mile range if your route is 100 miles? It doesn’t make sense. You don’t buy a 10-times-bigger engine or a bigger payload than you need to run. That just means more fuel consumption. So, matching it up for the commercial customer is a lot better.
Where we see the opportunity is with the small and medium businesses. They’ve been slower to update and we tell them let Ford bring you the tools. That’s where we have the opportunity.
And to be honest, we have the special sauce on the vehicle codes. If you own 45% of the business, such as Ford, in multiple locations, you know the prognostic side. You can see the trends in the data. You know where to fix the solutions, and you have the inside sauce. That’s what we’ve done in the Connected Services space with our telematics solutions and our recently launched fuel card. We see a huge opportunity.
Q: What’s your long-term vision? Where do you see the fleet business in 2030?
A: If a business goes to Ford with an end-to-end approach, they’re going to have an asset that allows their business to run better. Ford will be a strategic asset for their companies. Businesses never thought about their vehicles as providing a way to learn about their overall business. But today’s vehicles are sensors on wheels that can provide insight into customers’ operations that they never had before.
In 10 years, companies will be operating much cleaner fleets. We’re investing in it. We believe the climate science, absolutely, and we’re going to make it work for our customers. We want to be the leader. This is why some of us who are currently in the internal combustion business have signed on with California, to make that happen. We’re all in.
The same is true with digital connectivity. When you look at the cameras and driver-assisted technologies, how do we improve integrations? You currently have the modems and cameras, but how do you make the unit work as one? You’re going to see a lot more of that. It will improve employee safety and the safety of everybody around the vehicle, which, of course, ultimately helps increase uptime.