The enterprise software business is getting Ford Tough.
The Detroit automaker’s recent quarterly report made it crystal clear why the Blue Oval chose to single out a new division called Ford Pro when it restructured: its software subscriptions grew 64 per cent year over year.
“I know many of you were surprised at the true size of the Pro business,” CEO Jim Farley said on an earnings call last week about the division, a combination of the vehicles and financing it sells to commercial clients and governments.
“We’re layering on top of that the future of our industry, an ecosystem of software and services and EV charging that we believe will be invaluable to our commercial customers. And this will unlock tremendous loyalty and profitable growth.”
It’s a sign of an increasingly competitive market where automakers are trying to make their own software, including tools that appeal directly to workers that manage big fleets of commercial vehicles, a category that can encompass rental cars to delivery vans to school buses.
“Monthly recurring revenue is a really appetizing way to monetize data,” said Sherry Calkins, vice-president of connected car and platform solutions at Oakville, Ont.-based software firm Geotab.
A wide range of businesses are beefing up their fleets. The post-COVID resumption of travel has revived the rental car business, the pandemic accelerated demand for online shopping deliveries and new incentives and mandates are prompting companies to replace internal-combustion vehicles with EVs. Quebec EV bus and truck maker Lion Electric said this week it has got $105 million worth of school bus orders through the U.S. Environmental Protection Agency’s clean school bus program. Toronto-based Element Fleet Management, which helps fleet transition to EVs, raised its 2023 earnings guidance on Tuesday.
Ford, which announced a deal with school bus maker Collins last week, is just one of the big automakers getting in on the action. General Motors reported a 27 per cent jump in fleet sales at the end of April, thanks to what CFO Paul Jacobson said was “really strong pricing.”
Despite new in-house interest from automakers, Canadian enterprise software companies like Geotab and BlackBerry say there’s still plenty of opportunity for them to help corporate customers track who is driving which vehicle, which vehicles need to be charged or repaired, and protect themselves from liability by coaching drivers or reconstructing accident data.
“A few years ago, we were knocking on all the doors, and now they’re just coming to us,” said Calkins. “We are a one-stop shop … [Fleets] have mixed vehicle makes and models, from light duty, sometimes off-road assets, all the way up to a Class 8 tractor trailer.”
Tarun Shome, product management director for BlackBerry’s Ivy software, said companies traditionally did some of this tracking with special telematics hardware. But now, many BlackBerry Ivy-powered apps can be run using computers built into the vehicle. He called BlackBerry’s software “complementary” to automakers’ efforts, noting expanding 5G services allows vehicles to access its partners’ machine learning models to predict EV battery degradation, or facial recognition that could catch drivers that aren’t alert at the wheel, he said.
“Clearly [auto manufacturers] have been able to identify that there is a market there for being able to get rich data from these commercial vehicles,” said Shome.
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Correction: This story has been updated to correct Tarun Shome’s title to product management director and clarify his comments about BlackBerry Ivy-powered apps.