Ford Motor Co. is pursuing a deal with Alphabet Inc.'s Google to
build self-driving cars that would use the software giant's
technologies, said a person familiar with the talks.
The talks are intended to help Ford, which under Chief Executive
Mark Fields has sharpened its focus on advancing car technologies,
accelerate its efforts to bring autonomous cars to market.
Any agreement wouldn't be exclusive to Ford, this person said,
and Google continues to talk with other auto makers. A partnership
could be announced early next year, the person said.
As part of the deal being considered, Ford would develop
software for components including steering, braking and
acceleration while Google would provide the overarching
self-driving software that governs those functions, this person
said.
Autonomous-driving technologies and sensors would need to be
integrated into future Ford vehicles so they don't protrude.
Google's latest prototype cars have integrated sensors in their
design.
In a statement, Ford said it is talking to a variety of
companies about advancing its mobility plan but the talks are
private and it declined further comment. A Google spokesman
declined to comment.
Discussions between the two companies on an autonomous-driving
car using Google technology was reported earlier by website Yahoo
Autos.
News of the talks lifted Ford stock 3.4% to $14.20 in 4 p.m.
trading on Tuesday. Its shares are off nearly 18% between Mr.
Fields taking the wheel in July 2014 and Tuesday's close, despite
the company earning record profit in North America this year.
Earlier actions such as raising the dividend and showcasing
future innovation have fallen flat with investors. This month, Mr.
Fields disclosed plans to spend $4.5 billion to develop electrified
vehicles through 2020, and Ford's stock price barely reacted.
Meantime, recent and potential automotive rivals such as Apple
Inc., Tesla Motors Inc. and Uber Technologies Inc. have captured
much of the stock momentum Ford was attracting a few years ago when
it avoided bankruptcy during the financial crisis. Tesla is valued
by investors at about $30.1 billion, or more than half of Ford's
current market capitalization.
"What we're seeing is fatigue from the stock," said Brian
Johnson, a Barclays auto analyst, referring to Ford shares'
lackluster performance this year. "With Ford at record levels of
profitability, it is just too easy for investors to say 'this can't
last,' " Mr. Johnson added.
Mr. Fields disagrees. "We can find ways to generate revenue on a
more consistent basis," he said in a recent interview, noting such
businesses can act as "buffer" against industry ups and downs. He
has said Ford can't end up like Nokia Corp., a once-dominant phone
maker that fell behind in the smartphone industry.
Earlier this decade, Mr. Fields argued the global market for
cars and trucks is a growth industry. But analysts' projections for
global sales increases and Ford's own sales momentum have fallen
short due to turbulence in emerging markets and other factors,
leading to lower margins than initially forecast.
Central to Mr. Fields's new strategy is a focus on services.
Ford recently expanded its Silicon Valley research and development
lab and has recruited several outsiders, including former
investment banker John Casesa and former aerospace executive Ken
Washington, to focus on tech development and mobility services such
as ride sharing and short-term car rentals.
Mr. Casesa is leading a strategy team looking for tech-sector
partnerships and steering investments to new areas. In November,
Ford hired another former banker, Joseph Heyer, to lead business
development and figure out ways to monetize the service businesses
it is testing.
Ford Chairman Bill Ford also is looking toward a future where
technology will change the way people get around. His venture fund,
Fontinalis Partners LLC, has provided venture funding for Lyft
Inc., an Uber competitor, and says if Ford is to compete in Silicon
Valley's world, "we're going to need partnerships with big
companies and startups…we have to make great cars and trucks today
but we also have to imagine a future of transportation as
service."
The 54-year-old Mr. Fields must proceed cautiously, though.
Fifteen years ago, at the height of the dot-com bubble, Ford plowed
billions of dollars on ventures that strayed from the core task of
building cars and trucks. Then-CEO Jacques Nasser snapped up luxury
brands, like Aston Martin, as well as e-commerce projects, junk
yards and auto repair shops.
"This is a family-run business that understands the boom times
are quickly followed by survival times," Morgan Stanley auto
analyst Adam Jonas said, noting that Apple could disrupt the
traditional model of owning a car.
Ford also needs to keep pace with traditional rivals.
General Motors Co. will introduce a new 200-mile range electric
car, the Chevrolet Bolt, by 2017 and is developing a so-called
"Super Cruise" feature for Cadillac that will allow drivers to ride
in a car with hands off the steering wheel on the freeway.
Toyota Motor Corp. recently announced it would establish a $1
billion research lab in Silicon Valley to accelerate the
development of smartcars and in December acquired a small stake in
machine-learning venture Preferred Networks Inc.
Mike Ramsey contributed to this article.
Write to Christina Rogers at christina.rogers@wsj.com and
Alistair Barr at alistair.barr@wsj.com
(END) Dow Jones Newswires
December 22, 2015 20:25 ET (01:25 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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