Think Ford Motor Company (NYSE:F) is a car company? Think again. Sure, Ford is superficially categorized as an automobile maker, and Ford stock trades on its various metrics as an automaker … but that’s an antiquated description.
So what is an investment in F stock, then, if the company is not an automaker? Not to wax too philosophical, but a holding in Ford stock is a holding in an idea and an ideal.
The company has spent the past few years rethinking what mobility will look like in the future. And, as it turns out, it’s going to look at lot different than it did in the recent past.
More important to owners of Ford stock, the iconic company is on the leading edge of the paradigm shift.
Rethinking Everything
Early this month, Ford Motor’s futurist, Sheryl Connelly, posted the company’s 2017 Trends report, which lays out what Connelly/Ford expect to really motivate consumers in the coming year.
What’s a futurist? It may be easier to describe it by first explaining what it isn’t.
A futurist is not an economist, nor a market researcher or consultant, and certainly not a design engineer. Rather, a futurist is someone who dives deeper into the psyche of consumers to figure out what they really care about (even when they, themselves, may not know what makes them tick on a subconscious level). And, even though Ford sponsored the study, the report isn’t necessarily about automobiles.
That, of course, raises the follow-up question: What does this report have to do with Ford stock?
Answer: Directly, nothing. Indirectly, a lot.
While it may be tough for Ford executives to connect the dots created by the 2017 Trends report with its role as an automaker, it’s telling that the company is thinking in this overarching way. Indeed, it’s telling that Ford even has its own futurist on staff (note that General Motors Company (NYSE:GM) employs them as well).
As for what this means to Ford in 2017 and beyond, the report is broad. A handful of hot buttons stand out, though. One is the notion that trust is everything. Another is the premise that access and experience are more important than outright ownership and status. Still another is the idea that too much (gratuitous) technology isn’t a good thing.
These themes, among others, are the underpinnings of Ford’s 10-year roadmap.
Initiatives
As evidence that Ford is increasingly more of a functional-mobility/lifestyle company and less of a mere automobile manufacturer, one only has to look at some of the initiatives it’s taken on.
FordPass: Back in January, when Ford introduced an app that can hail a ride, be used as a wallet, and even book (and pay for) a parking space, consumer curiosity was piqued, even if the market was a bit confused. Interestingly, FordPass works even for users who don’t own a Ford car.
In retrospect, FordPass is a platform that can position the automobile manufacturer as a provider of seamless transportation solutions.
Self-Driving Cars: They’re still controversial; the city of San Francisco just banned Uber from using them. The broad headwind isn’t going to prevent Ford from continuing to develop self-driving automobile technology, however.
Earlier this month, management announced it would be raising $2 billion by issuing debt, with a big chunk of that money to be allocated to the further development of autonomous driving technologies. Such a tool would allow Ford to become a solutions provider, offering access to rides without requiring a rider to actually own a car.
Sustainability: Though it’s actually been working toward the goal for a while, in November, Ford’s effort to (eventually) develop assembly lines that don’t use potable water was put into the spotlight. It’s already well on its way to reducing water consumption from 2000’s level of 72% by the year 2020.
At first blush, these and all the other initiatives taken on by Ford may do little to excite Ford stock holders. Such efforts are not only distracting, but can be expensive. That’s a short-term mindset, though.
In the long run, these initiatives not only save money, but can be business-building tools. Remember, the 2017 Trends report has already made it clear that consumers are re-prioritizing everything. Ford is simply getting a head start on that societal shift.
Bottom Line for Ford Stock
None of this is to suggest rivals such as GM aren’t taking on comparable projects of their own. In fact, GM is arguably further along the electric vehicle path than Ford, and EVs are the future of transportation.
Ford Motor Company, though, is far further down the philosophical futurism path than GM. An investment in Ford stock right now is already an investment in a lifestyle/solutions provider company, even if it’s not readily apparent.
Give it 10 years or so and it will become apparent, and shareholders will be glad the company was willing to gaze into the crystal ball.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
