Ford CEO predicts exponential growth in car software services

author: FutureCar Staff    

Ford is expecting a significant increase in revenue from in-car software services, such as its hands-free driving feature. The company predicts a surge of 1,000 percent over the next few years. To capitalize on this growth, Ford has hired Peter Stern, the former vice president of services for Apple, to lead a newly created technology-focused unit. Stern's responsibilities include expanding Ford's BlueCruise hands-free driving system and developing other in-car services for millions of owners.

CEO Jim Farley aims to establish a consistent revenue stream from software services, which will help mitigate the cyclical nature of the car business. Ford already has around half a million software subscribers, primarily in its commercial fleet business. Farley anticipates significant growth in revenue, stating that they expect to increase their current revenue by 10 times in the coming years.

According to Farley, selling services like software that controls vehicle speed generates gross margins above 50 percent. This is significantly higher than the 8.3 percent margin before interest and taxes that Ford had in the first half of this year. Ford plans to introduce new electrical architecture in its gasoline-fueled and electric models by 2025 and 2026, including the popular F-150 pickup truck. This will enable the automaker to offer more subscription services, particularly in the areas of safety and security.

Farley believes that software services will be the fastest-growing revenue segment at Ford, with substantial profit margins. Peter Stern is the latest former Apple executive to join the auto industry, following Doug Field, who was hired by Farley in 2021 as the chief advanced technology and embedded systems officer. Additionally, in May, General Motors hired Mike Abbott, the former vice president of engineering for Apple's Cloud Services division, to establish a new software unit.

FutureCar Staff