The auto supply chain is going to be completely unbundled. Ford currently has 150+ suppliers like Bosch, Autoliv, Warn Industries, and Flex-N-Gate among others. Farley describes the challenges of wrangling this group and making their solutions interoperable:
2) Software development goes in-house
As Ford moves to electric vehicles (EVs), it’s going to shift software development in-house. But automakers have never written software like this, as Farley highlights. That is one of Tesla’s major advantages.
“So that’s why at Ford, we decided in the second generation product to completely in-source the electrical architecture. To do that, you need to write all the software yourself, but just remember, car companies haven’t written software like this ever…We’re literally writing the software to operate the vehicle for the first time.” — Jim Farley, CEO of Ford
3) Business RElationships will be Key to attracting talent
In order to do move software development in-house, Ford will have to attract software talent. To this end, expect more partnerships, investments, and M&A by automakers, i.e., outsourced R&D and access to talent.
Doing this all from scratch or organically will take too much time and is rife with risk.
We break down Ford’s connected, automated and electrified future here.
4) Auto Suppliers look for growth
What happens to all the auto suppliers in a world where car makers are increasingly moving their efforts in-house? These businesses will have to look for new growth markets or will start to compete with their customers over time.
The likes of Bosch are positioning themselves for the rise of EVs. Bosch recently acquired TSI Semiconductors and announced plans to invest $1.5B in the company, a maker of silicon carbide semiconductors (SiCs), which can handle high-power applications more efficiently than traditional silicon chips — useful for increasing the driving range of EVs.
We dug into Bosch’s growth strategy earlier this year here.
It’s rare to see such a candid and cogent reflection on the current state of a company and what it needs to do to succeed. You can listen to Farley’s full comments here.
For those who want to understand some of the trends and technological shifts happening in the auto sector, check out the following research:
- A look at Bosch’s $1.5B bet on silicon carbide semiconductors
- Cruise (GM subsidiary) and the flailing robotaxi space
- Strategy maps for Bosch, Ford, and Tesla
Why is Tesla so disruptive?
Ford Motor Company CEO Jim Farley recently shed light on the massive change coming to the world of legacy automobile manufacturers on an episode of the Fully Charged Show podcast.
We dig into his astute comments and their implications, including Tesla’s advantage, below.
1) Unbundling of the auto supply chain