Ford Plans Big Expansion of Ride-Sharing Shuttle Service

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Like many automakers these days, Ford harbors grand ambitions for transforming itself from a traditional car company into a global mobility provider. The company’s leaders laid the groundwork for that evolution last year by creating a subsidiary, Ford Smart Mobility, to house its future-minded transportation ventures. On Monday, they took further steps toward that goal, announcing they will expand Chariot, the centerpiece of those early efforts, to six new cities by the end of 2017.

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Chariot currently operates in San Francisco and Austin, Texas. The new markets for the ride-sharing shuttle service will include five in the United States and one in a foreign country. Ford wasn’t saying where the new outposts are to be located, but operations are expected to begin in the first of the new cities within weeks.

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In determining which markets are next in line for services, Ali Vahabzadeh, founder and CEO of Chariot, says one of the key factors is whether the cities have expressed interest in bringing the 14-passenger shuttles, which passengers hail via apps, to their streets.

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“There’s a big difference between standing idle and watching us do it and actually being our cheerleader,” he said, noting engaged cities can help fast-track licensing and permit requirements.

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One favorite might be London, where Ford conducted a pilot project involving on-demand shuttles of its own last year before deciding to acquire Chariot in September. The shuttles, which use Ford Transit vans, pick up passengers headed in generally the same direction along optimized routes that are determined in real time, rather than rely on the fixed routing of traditional mass-transportation buses.

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While it seems natural to consider the Chariot shuttles as competition to public transportation—and in some cases, that’s exactly what they are—they can also complement existing options. In San Francisco, where Chariot started operations in 2014, Vahabzadeh says one in five users of the service use it to connect to public-transportation hubs such as ferry terminals, rail stations, and bus depots.

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“It’s not a question about who is getting which slice,” he said, speaking at the Detroit auto show. “It’s: Let’s expand that mass-transit pie and reduce the single-occupancy vehicles on the road. It’s great if people want to drive on Saturday and Sunday, but they should be taking Chariot or other mass transit during the weekdays.”

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That approach, of course, runs counter to the strategy of Ford’s predominant business model, which relies heavily on the sale of light-duty cars and trucks. Vahabzadeh says that Chariot is profitable, with an average cost of $ 4 per ride, but that may be a small slice of added revenue that reduces revenue elsewhere.

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“Ford has a diffuse strategy on smart mobility, and Chariot and some of the other things they’re doing are really interesting,” said Mike Ramsey, research director at Gartner, a global technology consulting firm. “But it’s hard to understand how this immediately benefits the greater organization or helps them sell more vehicles or generate more revenue.”

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• Ford Looks to Future–With Or without Car

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• Bye Bye, Buses: Autonomous Shuttles Could Upend Public Transportation

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• Ford Transit: Tests, Reviews, Specs, and More

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As Chariot rolls out its service in an increasing number of locations, its executives will emphasize a second revenue stream. In San Francisco, they’ve sold their services to companies like Virgin America and GoPro, which in turn offer them to employees who use them for optimized-route commuting. Such contracts will be a part of the business model as Chariot expands. In time, those shuttles could also pick up paying passengers.

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“It’s an exciting business for us, because you’ll see over time those blurred lines between business-to-business and business-to-consumer services,” Vahabzadeh said. “A company could create a route or sponsor a route that allows for non-employee riders, and what you have then is institutional, corporate-sponsored mass transit.”

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