Ford newly appointed president and CEO Jim Hackett listens to questions from the media after being named at a press conference at Ford Motor Company World Headquarters in Dearborn, Mich., on May 22, 2017. Hackett is succeeding Mark Fields, who is retiring. (Rena Laverty / EPA)
Tesla, the electric vehicle startup, did something remarkable last month: It surpassed Ford and GM to become the country’s most valuable car company based on market capitalization. Want to acquire Tesla? It would cost a cool $50 billion. GM’s worth a tad less. Ford’s value is about $45 billion.
On Monday, not coincidentally, Ford ousted its CEO, frustrated with the company’s mediocre progress at reinvention in the high-tech era.
Times change. Henry Ford revolutionized car ownership in 1908 with the mass-market Model T. But what has the company done this century? Not enough to convince investors that Ford understands what kinds of vehicles people want today or how they’ll get around in a decade or two.
Will the showroom of the future mainly offer electric cars? Driverless cars? Will there even be showrooms, or will the concept of vehicle ownership change? Technology zooms forward. Companies are in a race to divine what’s next while competing to win Wall Street’s favor. At the moment Tesla has momentum. The company, run by billionaire entrepreneur Elon Musk, occupies a small niche, but investors believe in his vision. So Tesla stock trades above $300 a share, while Ford’s languishes at around $11.
That’s a stunning rebuke of Detroit’s legacy — and rightly so. Tradition is wonderful, but in the marketplace it’s barely worth a bucket of old spark plugs.
Ford Chairman William Ford Jr., great-grandson of Henry, pushed out CEO Mark Fields for not moving quickly enough or taking enough bold action to reinvent the company. Fields’ biggest failure may have been the inability to convince Wall Street of his vision. Admittedly, communication skills sound less important for a Detroit CEO than building great transmissions, but modern commerce demands both. Wall Street provides much of the capital Ford requires to reinvent itself. To show urgency, Ford replaced Fields, naming company executive Jim Hackett to the job.
The economy today faces upheaval as perhaps never before. Think, for example, about how Amazon and other e-commerce companies are challenging bricks-and-mortar retail. Think about how some people watch Netflix on a phone instead of watching a TV network on a big living room screen. Or think, as we do, about how readers can get news from Facebook instead of a paperboy.
Now contemplate Ford’s challenge: Perhaps within a generation or two, Driverless cars will replace most forms of traditional vehicles. Maybe individual ownership will be replaced by subscription services because there would be no need to possess a car that sits idle 95 percent of the time: Just hail a passing robot vehicle. As for who will build those vehicles, it could be Ford and GM or Tesla and Google, among others.
This puts an entire industry and way of life in jeopardy. Ford has a big assembly line in Chicago. What happens to it? To its workers? What about all the bus and truck drivers? Like we said, we don’t know.
But we do have an abiding confidence in American ingenuity. We saw an example in Sunday’s Tribune: a rave review of the 2017 Chevy Bolt EV, an electric vehicle. If you are skeptical that GM can compete with Elon Musk, the Bolt is a revelation. It costs less than the Tesla Model 3 and has a range of 238 miles. "The Bolt is fun to drive," Robert Duffer wrote. "It is also the most significant car on the market right now."
If GM can compete against Tesla, so can Ford. There’s an open road ahead. Let the best companies win.