DETROIT -- Why is Ford Motor Co. so interested in becoming a mobility provider?
That's easy. Its executives see a day in the not-too-distant future when Ford will earn far bigger profit margins from helping customers get around in vehicles they don't own than from selling them cars and trucks.
Ford projects returns of at least 20 percent from those new ventures vs. single digits for its 113-year-old automotive business.
"It's not about moving from an old business to a new business. It's moving to a bigger business," CEO Mark Fields said.
But getting to that point won't be cheap. Ford said its rapidly growing investments in mobility services will reduce earnings in 2017. It is intensifying cost-cutting efforts to offset most of the new spending, which covers a broad swath now but will become more focused as the company begins to separate promising paths from dead ends.
"We are going to try a lot of different things, but obviously, at the end of the day, we have to build business models around them that work," Bill Ford, the automaker's executive chairman, said last week. "The one thing we cannot be is wed to a model and put a stake in the ground and then that's it. We also can't be kids in candy stores, just grabbing everything that we see coming along."
Thus far, Ford has been more reluctant to make big investments in mobility -- the industry's catch-all term for helping consumers get around without selling them a vehicle -- than rivals such as General Motors and Toyota Motor Corp. Yet Fields has continually stressed the need to "disrupt" itself before outside threats force the issue.
Presentations Ford gave to analysts and investors last week showed mobility spending rising significantly in 2017, along with a corresponding, though unspecified, dip in profits.
Fields told investors that Ford's focus on "emerging opportunities" makes the company "a solid investment with an attractive upside." Ford shares have fallen 12 percent since July 28, when executives warned that its 2016 financial targets were at risk.
At the same time, Ford has announced plans to launch a high-volume autonomous vehicle for fleet use by 2021, its acquisition of a crowd-sourced shuttle service called Chariot and the launch of a bike-sharing program in San Francisco. Fields told investors that, while the mobility ventures Ford is getting involved in won't pay off immediately, it does expect the investments to produce returns before too long.
"It's not a week, and it's not 10 years," Fields said. "There has got to be a path to profitability in a reasonable time frame that we can see."