Mentioning "software" over 30 times on a Ford Q1 earnings call, CEO Jim Farley made clear that software subscriptions are a key priority for the automaker – with vehicle telemetry also informing design choices.
Strikingly, margins on software and the margins on parts are "actually pretty similar" he added.
But while margin on software may ultimately outstrip other after-market offerings, the benefit for customers is in preventative maintenance among other areas, the CEO said of Ford software subscriptions.
(These vary significantly, but average around £2.49 / €2.99 per month per vehicle after 12 months free for things like connected navigation or access to the "BlueOval" charge network for electric vehicles, local prices show.)
"We think of designing the whole system so that every piece of it adds value, and you can't kind of think of the physical product or the software independently of each other" Farley said on the Ford Q1 earnings call on
Referring to Ford’s software suite for running commercial vehicle fleets, Farley said on the May 2 call that “Ford Pro's paid software subscriptions rose 64% in the quarter. including higher revenue per unit software sales, like our telematics and charging software. With these and all the other initiatives, Ford Pro is developing into a resilient business" -- it is, he added, also “certainly less cyclical than the broader automotive sector.”
CFO says Ford software subscriptions can help drive design choices, trim costs
CFO John Lawler added: “We're using the digital connectivity of the vehicle to understand what features that customers find valuable. And if they're not using something that we have on the vehicle, we can design that out.”
The Ford Q1 2023 earnings call's focus on software came as Deloitte said this year that usage-based product portfolios in the automotive sector are expected to increase revenue CAGR by up to 8.8% and bring profit contributions of up to 20% by 2035.
Although trust issues with consumers remain over the use of vehicle telemetry car manufacturers currently sit highly in surveys of the "most trusted" organisations for data access to connected vehicles, as the chart at left shows.
Ford launched its hands-free driving software 'BluePrism' in 2021 within the US and Canada meanwhile.
In April 2023, the software was green lit for use by Britain's Department for Transport.
70 million miles...
According to group executives, the subscription-based software exclusively for Ford vehicles has already been used to drive 70 million hands-free miles, with hands-free miles driven 65% over the last quarter; positive for the automaker as it looks to continue growing after-sales software contracts for its BluePrism and Pro services.
The company has said it plans to have 33 million vehicles with the ability to activate over-the-internet software updates on the road by 2028 meanwhile.
It is also investing heavily to boost its software capabilities: In 2022, R&D costs for Ford came to $7.8 billion, with investment in software and AI making up nearly 20% of this expense.
CEO Farley added that Pro, the manufacturer's flagship software subscription service had touched an “attach rate” (or rate of sales proportional to primary vehicle sales) of over 30% in Q1 2023.
