Ford's Subscription Strategy: How A Former Apple And Tesla Employee Is Changing The Game

As electric vehicle leader Tesla Inc TSLA has been lauded for its advanced technology, the company may also introduce more affordable EVs in the future by offering software and technology services through subscription models. 

This approach, which allows lower upfront costs for consumers, could be emulated by other automakers, enabling them to generate longer-term revenue per customer.

What Happened: Ford Motor Company F made a strategic move in 2021 by hiring Doug Field, who brings his extensive experience from two prominent technology giants. Field's expertise will play a pivotal role in Ford's vehicle monetization strategy.

According to reports from Electrek, Ford is expanding its offerings to include subscription services for upcoming electric vehicles. As the Chief Advanced Product Development and Technology Officer at Ford, Field leads the electric vehicle and digital systems division for the company's Model e business line, overseeing design and hardware.

Field's prior involvement with Apple Inc AAPL has influenced Ford's direction, as its future EVs are expected to incorporate subscription services, similar to how Apple offers services for its iPhones. 

Field has said this transition is already underway, beginning with Ford's F-150 Lightning and extending to future electric models.

“The transition has happened where we designed the hardware and the software for the immediate user interface, the center screen,” he told the Associated Press recently.

Related Link: Ford Motor Company Q1 Earnings Highlights: Revenue And EPS Beat, EV Sales Decline, Guidance And More 

Ford's Trump Card? Field began his career at Ford, working for the company as a development engineer from 1987 to 1993. Since leaving Ford, Field has also held stints at Apple, Segway and Tesla.

Field was hired back in 2021 and given the title of Chief Tech Officer. Field worked at Apple as VP of Special Projects, helping work on the Mac and also the company’s highly anticipated automotive program. In five years at Tesla, Field held several titles including Senior Vice President of Engineering. The Ford executive helped lead the development of the Tesla Model 3. The importance of software and subscription-based items could come from Field’s past experience at Tesla and Apple, seeing the impact it had on those companies.

Ford CEO Jim Farley also highlighted the importance of a software-focused revenue model during the company's first-quarter earnings call. Although Ford reported a loss in its electric vehicle segment during this period, further monetization through subscription services could help improve financial performance.

Tesla CEO Elon Musk has hinted at the potential for lower vehicle costs by relying on future revenue streams. Musk expressed confidence that Tesla's vehicles will eventually generate substantial profits through autonomy, emphasizing the company's strategy of prioritizing higher sales volumes with lower margins in the short term to maximize future profitability.

Ultimately, the success of this subscription-based approach will hinge on consumer preferences. They will decide whether they are willing to pay additional monthly fees for subscription offerings in exchange for lower upfront vehicle costs, or if they prefer traditional vehicle purchases without ongoing fees for features.

This emerging trend of subscriptions in the automotive industry has been observed before, with BMW offering subscription services for features like heated seats at an additional cost of $18 per month for vehicle owners.

Read Next: Ford Is Shifting Gears, Ambitious Plans For EV Production 

Photo by Steve Lagreca on Shutterstock