Ford & Google, Part 2

Here’s something to consider about the relationship announced yesterday between Ford and Google. The companies indicated their collaboration “This may include projects ranging from developing new retail experiences when buying a vehicle, creating new ownership offers based on data, and more.”

The word that doesn’t appear in the announcement is monetization.

As in “data monetization.” As in getting a return from the data that is associated with the owner, driver, passenger of a vehicle.

You know: the sort of thing that drives the valuation of companies like, well, Google.

A question is “who owns the data”? While you might think that you do, again, look at the valuation of Alphabet (or Facebook): where do you think the value comes from?

Let’s say for example that the value for the data from a given vehicle is $5.

Let’s further say that the two companies split it. (That’s what “partners” do.)

In 2020, a not particularly good year so far as vehicle sales goes, Ford sold 2,044,744 units in the U.S.

So if the value per vehicle is $5, and each gets half, then $2.50 x 2,044,744 = $5,111,860 each. If it is $10 per vehicle (remember, they’re also talking about using this during the “retail” portion of the transaction, so sliding in a few bucks is not necessarily going to be all that noticeable), then that would be $10,223,720 each.

Pretty soon it is evident it is real money.

Google & Ford: When Is a Customer a Partner?

Until December 13, 2016, what is now known as “Waymo,” the company that is developing “fully autonomous” vehicle technology, was known as the “Google Self-Driving Car Project.” In the four years since, Waymo has gone far beyond something that would be described as a “project.” What’s more, it has raised a few billion dollars in outside investment so it is no longer a Google—or more appropriately, an Alphabet—solo undertaking.

Alphabet is a huge company. A company with a market cap on the order of $1.29-trillion. It doesn’t break out the Waymo numbers, but it is now estimated that the company is worth some $30-billion.

Ford has a market cap of $42.6 billion.

Which puts it ahead of Waymo but way behind Alphabet.

And what’s interesting to note is that while Ford has had the number-one selling pickup truck for 44 years running—and sold 787,422 last year alone—Waymo has sold 0 anything.

However, Ford and Google announced that they’ve entered into “a unique strategic partnership.” I wonder how much this is like when an OEM comes out with a new vehicle and calls it the “First-ever [fill-in-the-name].” Of course it is the first-ever. There hasn’t been one.

(Image: Ford)

So Ford doing something extensive with Google is “unique” because they haven’t done it before.

Ford is buying space on the Google Cloud. This brings with it all sorts of opportunities in terms of data analytics and AI and, well, all that those giant clouds bring. Here’s one: it will help Ford “Fast track the implementation of data-driven business models.” Of course.

There will be a “new collaborative group” named “Team Upshift” that “will push the boundaries of Ford’s transformation, unlock personalized consumer experiences, and drive disruptive, data-driven opportunities.”

Ford will start using the Android operating system as the OS for its vehicles starting in 2023.

Ford president and CEO Jim Farley: “As Ford continues the most profound transformation in our history with electrification, connectivity and self-driving, Google and Ford coming together establishes an innovation powerhouse truly able to deliver a superior experience for our customers and modernize our business.”

Sundar Pichai, CEO of Google and Alphabet: “From the first moving assembly line to the latest driver-assist technology, Ford has set the pace of innovation for the automotive industry for nearly 120 years. We’re proud to partner to apply the best of Google’s AI, data analytics, compute and cloud platforms to help transform Ford’s business and build automotive technologies that keep people safe and connected on the road.”

To be sure, this is a big deal for Ford, especially as General Motors announced a similar(ish) deal with Microsoft a couple weeks ago. Perhaps the third shoe will fall and someone will announce a partnership with Amazon.

As for Google, well, they like customers partners. After all, how else to get to a valuation of over $1-trillion?–gsv