Ford Motor Company CEO Jim Farley expects revenue from in-vehicle software services to surge 1,000% in the next few years.
To capitalize on this growth, Ford announced that it has hired Peter Stern, Apple’s former vice president of services, to help run a new technology-focused division. Stern was tasked with developing BlueCruise, Ford’s hands-free driving system, and other in-car services for millions of car owners.
Stern left Apple earlier this year after six years at Apple, where he helped launch a slew of services including Apple TV Plus, Apple News Plus, Apple Arcade, Apple Fitness Plus, MLS Season Pass and Apple One.
Ford Chief Executive Jim Farley aims to create a consistent revenue stream through software services to balance the boom and bust cycles of the auto business. Farley said on the conference call that Ford already has 500,000 software users, most of them in the commercial fleet business.
Farley added: “We’re in the hundreds of millions of dollars in revenue right now, with very healthy margins. Based on the growth trajectory we’ve seen, we expect that revenue to grow 10-fold over the next few years.”
Gross margins on services such as selling software to control vehicle speeds are more than 50%, Farley said. By comparison, Ford’s EBIT margin was just 8.3% in the first half of the year.
Farley said Ford will introduce a new electric architecture to its gasoline and electric vehicles in 2025 and 2026, including the best-selling F-150 pickup, which will allow the company to offer more subscription services, especially in the field of security.
“It’s going to be Ford’s fastest-growing revenue,” Farley said. “Unlike our automotive business, this part of the business has very high margins.”
Stern is the latest former Apple executive to switch to the auto industry. At Ford, he joins Doug Field, who was hired by Farley in 2021. Field was the actual head of Apple’s “Project Titan” to develop self-driving electric cars.
Stern said he would work “closely” with Field. Field currently leads Ford’s Model E division, responsible for the development of new vehicle technologies, including electric vehicles, hands-free driving features and software services.
In May, GM hired Mike Abbott, the former vice president of engineering for Apple’s cloud services division, to lead a new software division.