Autonomous vehicles are the rage and almost all the major car companies are investing in it. This group includes Ford Motor Company (F) and General Motors (GM). The automobile industry is undergoing significant changes which are leading car companies to make important decisions on what to keep and what to let go.
In light of these changes, Ford decided earlier this year to cut down the production of its passenger cars to just two models, the Mustang and Ford Active, in order to focus more on SUVs, crossovers and trucks. GM also faced headwinds in the passenger car market and is moving pretty much in the same direction.
In the age of technology, self-driving cars are becoming important and both Ford and GM have made investments in this area. Ford set up a separate division named Ford Autonomous Vehicles LLC while GM acquired Cruise in 2016 for $1 billion to form its self-driving vehicle subsidiary. Ford has also acquired a major stake in self-driving start-up Argo AI.
Ford plans to invest $4 billion in its autonomous vehicle division until 2023, including $1 billion in Argo. The company said it was open to investments from automakers and others for its self-driving venture.
Ford plans to invest $4 billion in its autonomous vehicle division until 2023
GM invested $1.1 billion in Cruise. The company also received investments from SoftBank Group Corp. and Honda Motor Company for its autonomous vehicle division. SoftBank invested $2.25 billion in Cruise while Honda agreed to invest $2 billion over 12 years with an additional $750 million equity investment. Honda’s investment gave Cruise an estimated valuation of $14.6 billion.
In terms of partnerships, Ford announced a collaboration with Walmart (WMT) and Postmates for a delivery service using self-driving vehicles earlier this week. The company is also said to be mulling a partnership with Volkswagen AG for self-driving cars. Both Ford and GM have a common partner in Lyft in the autonomous vehicle space.
Ford plans to launch its autonomous vehicles by 2021 while GM intends to roll out its self-driving cars by 2019, a good two years ahead of its rival. Ford is currently testing its autonomous vehicles in four cities – Detroit, Washington DC, Miami and Pittsburgh.
While there are speculations that Ford is trailing behind in autonomous vehicle technology, the company refutes this notion. Ford believes autonomous vehicles are more cost-effective than conventional ones and the company is working on becoming profitable in this area.
While GM is moving fast to stay ahead in the race, Ford is choosing to go slow with a focus on keeping losses at a minimum. Even though Ford arrives a bit late to the autonomous vehicle party, it just might emerge a winner.
As of 2:45 pm ET, Ford’s stock was down 1.6% while GM’s shares were up 0.78%.
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