Why Your Car Will Become Even More Like an iPhone

Car companies are trying to change a century-old business model: Make a car, sell it, and hope the customer comes back years later to buy another one.

Instead, they’re increasingly developing vehicles as digital devices, with the ability to remotely beam new services and features to the car that could make it easier and more fun to use—while notching extra revenue.

For traditional auto makers, the ability to update cars like an iPhone is in its infancy, though Tesla Inc. pioneered the practice. When Ford Motor Co. was looking for help with the digital transition, it plucked Doug Field, a former Tesla and Apple Inc. executive, to lead the charge in coming up with new digital features to foster an “always-on” connection to customers.

Mr. Field spent five years at Tesla, including as engineering chief, where he helped develop the Model 3. He did two stints at Apple, most recently starting in 2018 as vice president of special projects, before joining Ford in September.

He talked to The Future of Everything about what to expect from the car-ownership experience in the years ahead. Electrification and at least partial automation will be the norm, he predicts. For auto makers, the real differentiator will be offering an immersive experience, transforming the vehicle into a home-entertainment studio, gaming platform or conference room.

“The disruption in the auto industry, driven by software, autonomy and electrification, is going to be as big as anything that’s happened in the last century,” Mr. Field says.

What’s a feature or service that, five years from now, people won’t think twice about spending $20 or $30 a month to get?

Autonomy is the best example. You might choose different packages, a subscription-based service for how the vehicle operates autonomously. That’s already the way it works at Tesla. Once you have autonomy, you’ve unlocked the ability to do other things in the vehicle. Today, there are features that are fully hands off, but you’ve got to keep your eyes on the road. I’m talking hands off, eyes off [in the future]. And if you need to drive again, you have plenty of notice. It’s a very gentle experience to take over, and if you don’t, there’s a very gentle response to pull over into a safe situation. It’ll be a much smoother transition between humans and autonomy than this idea of a big switch that gets flipped from one to the other.

Will car owners be able to remotely choose features a la carte?

Content absolutely will be a la carte. You’ll see certain types of connectivity and features that might involve a situation where, for example, a car is shared by five people. You could have a circle of friends who decide they’re going to buy a car together. There’s a little scheduling app that basically keeps track of who’s going to use the vehicle when, making sure that it’s charged in between. So it’s not just the software inside the vehicle, but it’s also the services that free people from the burden of car ownership while maintaining their connection with the product.

In that scenario, you could customize things for each owner?

Through software, yes. Successful tech companies build hardware carefully, with not a huge amount of variation, and then put the variation in those products through software. A lot of the [auto] industry has grown up with massive variation. With technology differences, you have a fundamentally differentiated product. You don’t have to chop your lineup into all these tiny little slices. You’re going to have fewer models.

So people will choose their vehicles for different reasons in the future?

You don’t show off your phone anymore. And your identity doesn’t feel threatened when somebody else has an iPhone 13. My differentiation is in things like my Twitter page or my Instagram. It’s a very different way that people create their identity, whereas in the past, a car was a big part of that. I think that will largely fade away. There will always be niche products that are really unique and fun to drive and heavily styled, like Ferraris and Lamborghinis. Horses didn’t go away when cars came along, but they became recreational. Sports cars will be recreational.

Can the car companies compete with Big Tech on digital services and user interface?

Where the auto manufacturers can do things that are really special are vehicle-specific. The companies that do this really well will have products that people will walk out of their homes and sit in for the experience, even if they’re not going anywhere. A company that does this right could theoretically take the wheels off and plop it in your backyard and it’s a product, like an Airstream. It becomes fundamentally the best place you could have a conference call or listen to music or watch a movie.

We talk a lot about Detroit versus Silicon Valley. Where is that battle headed?

This story is being written right now, and the outcome is not yet clear. Technology transitions allow a whole bunch of new people to come in. These people come in with a blank slate, they get to shed all the baggage. The path for a [traditional auto maker] is to figure out how to leverage history and shed baggage, and that is very, very hard. There’s a race on. Are [auto makers] going to learn tech and customer experience faster than the startups are going to learn high-volume, high-quality, low-cost production and a bunch of other things people take for granted in cars? It’s a race.

Interview has been condensed and edited.

Auto dealers across many parts of the country say electric vehicles are becoming too hard a sell for buyers worried about the range, reliability and price of these models.

When Paul LaRochelle heard Ford Motor was coming out with an electric pickup truck, the dealer was excited about the prospects for his business.

“We thought we could build a million of them and sell them,” said LaRochelle, a vice president at Sheehy Auto Stores, which sells vehicles from a dozen brands in Virginia, Maryland and Washington, D.C.

The reality has been less positive. On Sheehy’s car lots, LaRochelle says there is a six- to 12-month supply of EVs, compared with a month of gasoline-powered vehicles.

With automakers set to release a barrage of new electric models in the coming years, concerns are mounting among auto retailers about whether the technology will have broader appeal given that many customers are still reluctant to make the switch.

Battery-powered models have been piling up on car lots, dealers say, as EV sales growth has slowed in the U.S. this year. Car companies have been offering a combination of discounts and lower interest-rate deals in an effort to juice demand. But it hasn’t been enough, because buyer reticence extends beyond the price tag, dealers say.

“I’m not hearing the consumer confidence in the technology,” said Mary Rice, dealer principal at Toyota of Greensboro in North Carolina. “People aren’t beating down the door to buy these things, and they all have a different excuse why they aren’t buying one.”

Customers cite concerns about vehicles burning through a battery charge faster in cold weather or not being able to travel as far as they expected on a single charge, dealers say. Potential buyers also worry that chargers aren’t as readily accessible as gas stations or might be broken.

Franchise dealerships fear that the push to roll out new models will inundate them with hard-to-sell vehicles. Research firm S&P Global Mobility said there are 56 EV models for sale in the U.S. this year, and the number is expected to nearly double to 100 next year.

“I start to think, you know maybe we should just all pump the brakes a little bit,” Rice said.

A group of dealers expressed their concerns about the government’s role in pushing electric vehicles in a letter last month to President Biden.

A Toyota Motor spokesman said the majority of dealers have become “increasingly more confident in their ability to sell Toyota EV products.”

At Ford, the company’s electric-vehicle sales are rising, including for its F-150 Lightning pickup, but demand isn’t evenly spread across the country, according to a spokesman.

Dealers say that after selling an EV, they sometimes hear complaints about charging and the vehicles not always meeting their advertised range. In some cases, customers seek to return them to the dealer shortly after buying them.

“We have a steady number of clients that have attempted to or flat out returned their car,” said Sheehy’s LaRochelle.

While EVs remain a small but rapidly expanding part of the new-car market, the pace of growth has slowed this year. Electric-vehicle sales increased 48% in the first 11 months, compared with a 69% jump during the same period in 2022, according to Motor Intelligence. Sales remain concentrated in a few states, with California accounting for the largest chunk, S&P Global Mobility data found.

The cooling growth has raised broader questions in the industry about whether car companies face a temporary hurdle or a longer-term demand challenge. Automakers have invested billions of dollars to bring more EV models to the market, and many analysts and car executives say they remain optimistic that sales will continue to expand.

“Although the rate of growth has slowed recently, EV demand is clearly moving in the right direction,” said General Motors Chief Executive Mary Barra on a recent conference call with analysts. A combination of more affordable model options and better charging infrastructure would help encourage more people to buy electric vehicles, she said.

There are also varying views within the dealer community about how quickly buyers will adopt the technology.In hot spots for electric-vehicle demand, such as Los Angeles, dealers say their battery-powered models are some of their top sellers. Those popular EV markets also tend to have more mature public charging networks.

Selling an electric car or truck outside of those demand centres is proving more difficult.

Longtime EV owner Carmella Roehrig thought she was ready to go full-electric and sold her backup gasoline vehicle. But after the 62-year-old North Carolina resident found herself stranded last year in a rural area of South Carolina, she changed her mind. Roehrig’s Tesla Model S got a flat tire, but none of the stores in the area carried tires for a Tesla. She ended up paying a worker at a nearby shop to drive her home.

Roehrig still has her Tesla but bought a pickup truck for long road trips.

Tesla didn’t respond to a request for comment.

“I have these conversations with people who say we’ll all be in EVs in 15 years. I say: ‘I’m not so sure. I’ve tried to do it,’” Roehrig said. “I think you need a gas backup.”

Customers who want to ditch their gas vehicle for environmental reasons are sometimes hesitant, said Mickey Anderson, president of Baxter Auto Group, which owns dealerships in Kansas, Nebraska and Colorado.

“We’re in the Colorado Springs market. If this is your sole mode of transportation, and you’re in a market in extremes of elevation and temperature, the actual range is very limited,” Anderson said. “It makes it extremely impractical.”

Dealers representing around 4,000 stores across the U.S. signed the letter in November addressed to Biden, saying the administration’s proposed auto-emissions regulations designed to promote electric-vehicle sales are unrealistic. The signatories ranged from stores owned by family businesses to publicly held giants such as AutoNation and Lithia Motors.

“Some customers are in the market for electric vehicles, and we are thrilled to sell them. But the majority of customers are simply not ready to make the change,” the letter said.

Some carmakers are pushing back EV-rollout plans. GM said in mid-October that it would delay the opening of an electric pickup plant by a year to late 2025. In response to weaker-than-expected consumer demand, Ford said in late October that it would defer $12 billion of planned spending on electric-vehicle investment.

Since September, dealers on average took more than two months to sell an EV, compared with 40 days for all vehicles, according to car-shopping website Edmunds.

While discounts have helped boost sales of some electric vehicles, they also have led to repercussions for some current owners because it reduces the value of their vehicles, dealers say.

“Most people don’t have the confidence to buy an EV and know what it will be worth in 10-15 years,” said Rice from the Toyota dealership.

It may take some time for the industry to adjust because it is still in an early stage of switching to electric vehicles, Sheehy’s LaRochelle said.

“We’re asking for this market to grow organically,” he said.