Mark Fields, former CEO of Ford Motor Co., anticipates four major trends this year: the growth of electric vehicles, particularly in the U.S.; increased collaboration between automakers and their suppliers; continued online vehicle purchasing; and challenges with newer industry entrants that have recently gone public via special-purpose acquisition companies.
Fields, now senior adviser at TPG Capital, an investment firm in Fort Worth, Texas, and San Francisco, spoke with Automotive News Publisher Jason Stein during Automotive News‘ Shift Mobility Forum, which was part of CES in January.
Fields, 60, said many in the industry are navigating the technological complexities and cost-intensive requirements of each of these trends. Here are edited excerpts.
Q: What are some of the more significant trends that we need to be watching?
A: Electric vehicle volumes in the U.S. are going to rise significantly this year. The bottom line is, you have real products coming to the marketplace now beyond just Tesla. I think you’ll see the Biden administration quickly enact incentives to encourage people to buy full-electric vehicles. I think you’re going to see the continued build-out of charging stations across the country.
You’re going to continue to see joint development efforts announced not only between OEMs, but from Tier 1 supplier to other Tier 1 suppliers. You’ve clearly seen a permanent shift in the way consumers shop for vehicles. I think a number of these companies that have gone public in the last six months via [special-purpose acquisition companies] are going to run into both financial and operational issues in 2021 and 2022, which is going to be a cause for concern for investors but also potentially for customers that have either signed up for vehicles or OEMs that have agreed to use those suppliers.
Could a completely new agenda be rolled out at some major Tier 1s moving forward?
Absolutely. A number of new CEOs are looking at their businesses and trying to project and say, what does the future of the industry look like in the next five to seven years, and how can I position my company for success based upon our core competencies? You’ll see a number of CEOs move pretty quickly to establish their agendas, which in some cases may be looking at certain traditional elements of their business and saying, this doesn’t fit for our growth profile going forward, and we’ll think of some other alternatives to put that business in a different position.
Do automakers and suppliers have to form partnerships in order to realize the right amount of capital allocation?
It’s very clear that the remit for these OEMs and the costs to develop those things are quite large, and so they’re going to need partners that not only bring capital, but talent to allow them to be successful. And let’s face it, the relationships are stronger than they were 10 years ago. [But] when you look at even the first dollar of revenue of some of these technologies, whether it be autonomous or otherwise, that’s very far out. The first dollar of profit is even further out.
What does the road ahead look like as the industry continues to feel the pressure of advancing technology?
I think the good news is you have lots of new players in the auto industry, dabbling in the auto industry, whether it’s around providing an autonomous vehicle or autonomous technology, around electrification. The more ideas we get in this industry, the better. The problem is, I think you’re going to see some damage and some roadkill along the way, and that’s why both investors and automakers have to be very wary and make sure they do thorough due diligence, particularly if they’re going to team up with one of these startups for providing a component or a system or a technology in their vehicles.
What’s your view on where we are now with ride-hailing and ride-sharing business models?
I do think autonomous vehicles do have a bright future. The question is, how large? If you look at what’s changed over the last year from a COVID standpoint, a lot more consumers are reticent to get into a vehicle that’s shared. They might think of, these days, a personally owned vehicle as personal protection equipment. On the same token, what has not changed is if you look at cities, major urban areas, they’re still very congested, very densely populated, and people owning their own vehicles is prohibitively expensive. That need is still there.
Those forward-thinking ride-sharing companies are going to think of ways and algorithms to try and give rides to people that actually will allow them to get there in a quick period of time. And for those that don’t allow it, they may assign just regular drivers for that versus autonomy. But it’s coming. It’s just coming slower than expected.