Uber Technologies Inc. and Ford Motor Company (NYSE: F) are working together on self-driving car technology. This means that buying Ford stock could be a cheap way to invest in Uber’s success.
The highly valued startup is testing a fleet of self-driving Ford Fusion Hybrids in Pittsburgh, The Tribune-Review reported. The Fusions are fitted with technology developed by the robotics researchers that the ridesharing app company hired away from Carnegie Mellon University last year.
Uber has set up a self-driving car project headed by John Bares; the former head of Carnegie Mellon’s National Robotics Engineering Center. He also ran his own company called Carnegie Robotics; until Travis Kalanick hired him to work at Uber.
Uber’s car can accelerate, brake and steer on its own. It also has impressive abilities including the capability to detect potholes which is vital in most American cities. The pictures of it look like similar vehicles from Alphabet, Audi, Arrow Electronics and Ford.
Is There a Ford Uber Alliance to Develop Self Driving Vehicles?
Ford is testing its own self-driving Fusion Hybrid at the Mcity a testing facility operated by the University of Michigan in Ann Arbor, Michigan, USA Today reported. Ford has actually been working on self-driving cars for about 10 years.
One has to wonder if Ford has been sharing its autonomous driving technology with Uber. That would explain how Uber was able to get its self-driving car up and running so fast. It might also explain where Uber CEO Kalanick was able to get the money to raid Carnegie Mellon and hire 40 of its robotics experts away.
Ford and Uber are also working together on self-driving car tests in Arizona. The Car Insurance Samurai reported that the two companies were testing advanced mapping company with help from the University of Arizona’s College of Optical Science. Those tests also involved Ford Fusions.
Ford certainly has enough money to bankroll the project. It had $67.71 billion in cash and short-term invests on March 31, 2016. Actually that would be enough money to buy Uber out if Ford wanted to. News reports indicate that Uber is valued at around $62 billion.
Ford’s cash stash has actually been growing lately, it had $62.37 billion in the bank in December. That float grew by $5.44 billion during the first quarter of 2016.
A Ford and Uber Partnership Makes a Lot of Sense
Ford is already working with Uber, it is a partner in Uber’s marketing plan for drivers, along with Chrysler, Volkswagen, Toyota, Chevy, Hyundai and Nissan. The program provides financing for drivers, payments are taken out of the Uber driver’s earnings.
Long term, self-driving cars would be popular for Ford’s fleet and commercial vehicles business. Ford already manufactures police vehicles and many of the cars found in government and corporate motor pools in the United States. Autonomous vehicle technology could be of tremendous use here.
Potential markets for Ford include self-driving police cars; such as a paddy wagon that drives around town and takes arrested suspects to jail for booking, or self-driving rental cars. Autonomous delivery vans could be a huge market for Ford, particularly if it can adapt them to its popular Transit and Transit Connect models.
The Post Office could be a customer, just imagine an autonomous van that could follow the letter carrier on her rounds. The van would drive from house to house while the carrier on foot takes the mail from the van to the front door.
Uber could provide lots of customers for these vans particularly with its courier service: UberRUSH. Ford is also marketing a passenger version of its popular Transit Connect van which looks designed for Uber.
All this means that a Ford and Uber partnership makes a lot of sense. Uber has the experience in networked transportation and working with drivers. Ford has the experience in vehicle manufacturing and marketing. It also has the factories and dealerships needed to build and distribute the vehicles in place.
Ford: A Value Investment in Autonomous Vehicles
What this also means is that Ford could be a great value investment in the autonomous-driving sphere.
Data provided by ycharts indicates that Ford has some tremendous value attributes including:
- $153.38 billion in revenues at the end of first quarter 2016. Ford also added $3.82 billion in revenue during the first quarter of 2016.
- $8.901 billion in net income.
- A diluted earnings per share (EPS) number of 2.223
- A profit margin of 6.5%.
- A dividend yield of 4.55%.
- A free cash flow of $2.581 billion.
- $17.85 billion in cash from operations as of March 31, 2016.
- Ford’s cash from operations increased by $1.68 billion during first quarter 2016, rights from $16.17 billion in December to $17.85 billion March 2016.
- $14.07 billion in cash from financing at the end of first quarter 2016.
- A return on equity of 32.49%
- A very low share price: $13.18 on May 20, 2016.
- Ford is highly undervalued – it had a market cap of $52.38 billion and an enterprise value of $124.72 billion on May 20, 2016.
As you can see Ford is a bargain and a good value investment. If you’re looking for a means of cashing in on self-driving cars, Ford would certainly be the company to buy. It is cheap, it is flushed with cash and its revenue is growing. More importantly you can buy Ford’s stock right now and you do not have to wait for the Uber IPO. Ford Fusion Hybrids