MARKETING MANAGEMENT - FALL 2022Linda McNeelyAug.docx

MARKETING MANAGEMENT -
FALL 2022
Linda McNeely
August 17, 2022 - December 31, 2022
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NOTICE REGARDING COPYRIGHT
This custom course package contains intellectual property that
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Resale or further copying of anything in this package is strictly
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Unless otherwise stated, Copyright ©2022, Ivey Business
School Foundation. Ivey Business School
is the leader in providing business case studies with a global
perspective.
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Table Of Contents
SpaceX: Starlink’s Uncertain Demand Trajectory 4
Driverless Trucks at Ford: Cruising into a Compromised Brand
Identity? 16
Martha Stewart Cannabis: Overcoming Obstacles 40
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9B21A004

SPACEX: STARLINK’S UNCERTAIN DEMAND
TRAJECTORY1
Arpita Agnihotri and Saurabh Bhattacharya wrote this case
solely to provide material for class discussion. The authors do
not intend
to illustrate either effective or ineffective handling of a
managerial situation. The authors may have disguised certain
names and other
identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized,
or otherwise reproduced in any form or by any means without
the
permission of the copyright holder. Reproduction of this
material is not covered under authorization by any reproduction
rights
organization. To order copies or request permission to
reproduce materials, contact Ivey Publishing, Ivey Business
School, Western
University, London, Ontario, Canada, N6G 0N1; (t)
519.661.3208; (e) [email protected]; www.iveycases.com. Our
goal is to publish
materials of the highest quality; submit any errata to
[email protected] i1v2e5y5pubs
Copyright © 2021, Ivey Business School Foundation Version:
2021-10-08
Elon R. Musk, founder and chief executive officer (CEO) of
California-based Space Exploration

Technologies Corp. (SpaceX), was developing Starlink, a high-
speed, low-latency, affordable, low Earth
orbit (LEO) satellite-based Internet system for consumers (see
Exhibit 1).2 The system’s satellites were
especially meant to service rural and remote areas where
terrestrial broadband service could not be
established.3 If the revenue projections were accurate, the
project could be lucrative, which for Musk meant
that he could use the business of satellite Internet to fund
SpaceX’s ultimate and expensive mission of
sending humans to Mars.4
Competition in the satellite Internet field was increasing, with
players such as Telesat Corp., OneWeb, and
Kuiper Systems LLC (Amazon.com Inc.’s Project Kuiper) also
intending to offer LEO satellite Internet.5
However, the demand for LEO satellite Internet was uncertain,6
especially after the fifth-generation mobile
network (5G) had been introduced, and players such as T-
Mobile promised to offer that service in both
rural and urban areas of the United States.7
SpaceX’s biggest challenge would be differentiating itself from
other broadband constellations operating
in LEO.8 In the 1990s, LEO satellites launched by companies
such as Iridium Communications Inc.
(Iridium) did not succeed.9 Acknowledging past failures of the
satellite Internet system, Musk said, “No
one has ever succeeded in making a viable low Earth orbit
communication constellation right off the bat.”
He added, “I do believe we’ll be successful, but it is far from a
sure thing.”10 Yet by July 2020, SpaceX
had launched more than 500 Starlink satellites and was
beginning the beta testing of these satellites.11
Still, 500 satellites barely represented a start. Complete

coverage of Earth with “moderate” Internet service
would require 12,000 LEO Starlink satellites, which created
another challenge: overcoming the worsening
problem of space debris and obstacles for astronomers. On July
26, 2020, Starlink satellites had already
ruined images of the NEOWISE comet,12 which astronomers
were keenly observing.13
Musk had some analysis and planning to do. How should he
organize and prioritize known information
about the various issues Starlink was facing? Who, exactly,
were Starlink’s competitors, and how should
SpaceX compete against them? Should Musk proceed with the
project when demand was uncertain, or
should he first fix the challenges of space debris and obstacles
for astronomers?
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9B21A004
BACKGROUND
In 2019, SpaceX raised US$1.33 billion14 over three rounds of
funding. It was working on three ambitious
programs: Crew Dragon, Starship, and Starlink. Crew Dragon
and Starship represented SpaceX’s efforts to
fly people into space. Starlink was intended to create a global
network of small satellites to provide high-
speed Internet. The network was known as a
“megaconstellation,” with each megaconstellation having an
interconnected system of approximately 12,000 satellites.15
According to SpaceX, developing the Starlink network could
cost about $10 billion in total, but the
company was managing the funds through internal sources
only.16 Jonathan Hofeller, SpaceX’s vice-
president of Starlink and commercial sales, said, “We’ve been
able to fund the development of Starlink
primarily from our internal businesses.”17
Starlink’s satellites were 227-kilogram “flat panel” satellites,
expected to orbit the earth at an altitude of
approximately 550 kilometres.18 Although Starlink’s first-
generation satellites did not have the facility of
inter-satellite communication, its second-generation satellites
had this facility.19
On May 26, 2020, SpaceX filed an application with the US
Federal Communications Commission (FCC)
to launch a total of 30,000 Starlink second-generation satellites
in addition to the first-generation satellites

already approved.20 By 2027, SpaceX intended to have 12,000
Starlink satellites in Earth’s orbit,21
providing high-speed Internet to millions of customers globally,
with advantage of economies of scale for
satellite manufacturing.22
In 2020, SpaceX’s revenue was $1.2 billion, which was an
increase of 20 per cent over 2019. The company
employed 8,000 people.23 SpaceX’s valuation increased from
$12 billion in 2014 to $36 billion in June
2020.24 Trefis, an interactive financial community, expected
Starlink to achieve a valuation of $30 billion
by 2025 if it could generate $10.4 billion in revenue by then.25
GEOSTATIONARY SATELLITE INTERNET PROVIDERS
In the United States, satellite Internet was primarily targeted to
rural households that could not be
connected by fibre-optic or coaxial cable due to problems with
infrastructure or the cost to overcome those
infrastructure challenges.26 In those areas, Internet service was
offered through geosynchronous satellites;
however, the system had problems with latency, or lag. The
need for the signal to fly thousands of
kilometres through space back and forth resulted in a delay of
half a second—a significant problem for
anything but basic data transmission over the Internet.27
Geostationary satellite Internet providers earned most of their
revenues from governments and businesses
and not from household customers.28 The market in the United
States was dominated by two companies:
Hughes Network Systems LLC (HughesNet) and Viasat Inc.
(Viasat). In 2019, HughesNet and Viasat had
a combined total of 2.5 million satellite Internet customers.29

In the United States, where the average American family used
more than 300 gigabytes (GB) of data per
month,30 19 million people (from an estimated 7.6 million
households) still lacked access to fixed
broadband Internet.31 For those people, the options were dial-
up service (digital subscriber line, or DSL;
originally digital subscriber loop), which was a very slow
Internet connection, or satellite Internet. The
average cost of a geostationary satellite Internet plan in the
United States was approximately $100 per
month, while a coaxial cable or fibre-optic cable plan averaged
$50 per month.32
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In addition to the monthly service fee, Viasat charged $10 per
month for equipment rentals (a satellite antenna
and modem), with the option of paying a lifetime prepaid
equipment lease for $300.33 Viasat charged a one-
time installation fee of $100, but new customers were often
successful in requesting a rebate.34 HughesNet
charged $15 per month plus a one-time $100 activation fee with
an option to purchase the equipment for $450
(with the activation fee waived). Both companies held clients to
a two-year contract.35 HughesNet based its
satellite Internet prices on a data cap. All of its packages
offered the same speed—25 megabits per second
(Mbps)—with the packages offering a range of 10–50 GB data
per month before paying overage costs.36 In
contrast, Viasat offered packages based on both speed and data,
with data caps for Internet satellite ranging
from 25-150 GB per month and speed ranging from 12–100
Mbps (see Exhibit 2).37
LOW EARTH ORBIT (LEO) SATELLITE INTERNET
SERVICE
Until 2020, people in rural and remote areas of the United
States primarily relied on geostationary satellite
Internet, which was expensive compared with terrestrial
Internet.38 The pricing of LEO satellite Internet
was not known (see Exhibit 2).
Starlink and its competitors, such as OneWeb, Telesat, and
Project Kuiper, planned to place thousands of
broadband satellites into LEO instead of a geostationary orbit.
Using LEO could help the companies solve the

half-second latency problems of geostationary satellites, as LEO
satellites had a delay of approximately 20
milliseconds—barely noticeable to the average user.39 In
February 2019, OneWeb launched its first batch of
six satellites and by March 2020, it had launched a further 68
satellites.40 In 2019, Amazon announced Project
Kuiper and its intention to place more than 3,200 broadband
satellites into LEO.41 Telesat intended to place
78 satellites into LEO by 2022 and another 220 satellites by the
end of 2023 (see Exhibit 3).42
By March 2020, SpaceX had received FCC approval for one
million ground antennas43 (approximately
the size of a pizza box44) used by customers to connect with the
satellites passing overhead.45 However,
during Starlink’s first broadcasting test in early 2019, which
began with the launch of 60 satellites, three
satellites failed in their orbit.46 Starlink was hoping to begin its
commercial services by the end of 2020.47
Demand for LEO Satellite Internet
Starlink intended to serve customers in the US rural areas,
where “5G is really not well-suited” (see Exhibit
4).48 More than a quarter of the 29 million rural Americans did
not have access to high-speed Internet,
which became even more challenging during the COVID-19
pandemic.49
Although the price of LEO satellites was unknown, ground
antennas were expected to be expensive for
customers, raising affordability issues, especially for rural
households.50 Musk indicated that SpaceX
would try to sign deals with global telecommunication service
providers and governments that wanted

to reach interior parts of their countries.51 LEO satellite
Internet providers also found aviation and
maritime markets to be lucrative.52 Starlink and OneWeb also
promised to make connectivity better in the
Arctic—a region of about four million people and an area where
the US military usually struggled with its
current communication satellite technology.53
Carissa Christensen, CEO of the analytics firm Bryce Space and
Technology, raised concerns about the
affordability of satellite Internet. She cited the example of O3b
Networks Ltd., a satellite-based Internet
company founded in 2007 by Greg Wyler, the CEO of OneWeb.
Its goal was to bring online the estimated
three billion people globally without Internet access. However,
the market for satellite mega-constellations
did not exist; therefore, to survive, O3b switched to providing
data services for maritime operations, which,
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9B21A004
according to Christensen, implied “transformational visions are
not necessarily going to translate into a
realistic business model.”54 Matt Desch, CEO of Iridium, also
had concerns about whether there was sufficient
demand for LEO satellite Internet, observing, “The investment
markets are clearly concerned, which is why
these new markets are being slow to be funded, at least by the
public equity and debt markets.”55
Starlink versus 5G
SpaceX’s Starlink project also faced competition from the 5G
system. Experts believed 5G posed a threat
to the satellite Internet business, especially with regard to
latency.56 Starlink’s latency was estimated to be
less than 20 milliseconds,57 which was an improvement over
4G’s latency of 50 milliseconds, but still
slower than 5G’s latency of 5 milliseconds.58 Starlink’s speed
was faster than 5G, which offered a speed of
330 Mbps in urban areas, while Starlink’s Internet service was
forecast to offer speeds that were three times
faster—up to 1 gigabits per second (Gbps).59
Because 5G was expected to be deployed more in urban areas of
the United States,60 the FCC announced in
2019 the launch of a $9 billion fund to accelerate the
deployment of advanced 5G wireless networks in rural
areas across the United States.61 In June 2020, T-Mobile, the
third-largest wireless carrier in the United

States by the number of subscribers,62 also began offering 5G
services in rural areas.63 Its Magenta 5G plan
was available for $70 per month.64 T-Mobile also claimed that
by 2026, it would cover 90 per cent of rural
United States with 5G, offering a minimum speed of 50
Mbps.65 T-Mobile’s operating profit margin had
been around 13 per cent.66
Musk maintained that LEO satellite Internet was still superior,
especially with its potential, commenting,
“That same system, we could leverage to put into a constellation
on Mars.”67 He further added, “Mars is
going to need a global communication system too, and there’s
no fiber optics or wires or anything.”68
Moreover, once built, maintaining satellites was less expensive
than maintaining fibre-optic and co-axial
cables. Comcast Corp., for example, which provided fibre
optic–based broadband in the United States,
spent $10 billion–$11 billion every year on capital maintenance
and investment.69
According to media reports, 5G and Starlink were not
comparable and each had its own function. Comparing
them was equivalent to comparing Uber Eats with Uber Freight
services.70 Uber Eats was a food ordering
and delivery platform, while Uber Freight allowed independent
truckers to connect via a mobile application
(app) with shippers and freight forwarders.71 5G was fast and
efficient, but depended on transmitters mounted
on towers about half a kilometre apart, which was ideal in
densely populated areas where the infrastructure
was easy to establish and the density of users was high.
Starlink, on the other hand, while slower and less
convenient than 5G, could efficiently service sparsely populated
rural areas. The only ground equipment
needed was one receiver per household. Although the

technologies were unrelated, they could be
complementary.72 LEO satellites could extend cellular 5G
networks from their dense web of transmitters to
air, sea, and other remote areas that could not be covered by
small cell networks, thus offering a seamless
experience for end-users.73 Moreover, during catastrophic
events, when cellular and Internet networks had
higher chances of failure, LEO satellite Internet providers could
take over to provide services in critical
industries, such as health care.74
Another limitation to 5G networks was its unknown effects on
people and the environment. Scientists and
physicians in the European Union appealed to governments to
halt the expansion of 5G until the effect of
radiation caused by radio-frequency electromagnetic fields (RF-
EMF) could be investigated. Most wireless
networks and wireless devices depended on RF-EMF, and while
the second, third, and fourth generations
of cellular technology (2G, 3G, 4G) and Wi-Fi all created
electromagnetic fields, 5G escalated the potential
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Page 5 9B21A004
risk because of the sheer number of base stations required to
generate the network and the nature of the
waves generated by the network.75 Installation of 5G in the
United States would require more than 800,000
cell antenna sites in populated areas, replete with homes, parks,
shopping, and offices.76 And, unlike other
cellular technologies, which relied primarily on microwaves, 5G
employed millimetre waves. The shorter
wave length was the reason antennas were needed every few
hundred metres (thus the high number of
transmitters), but the shorter wave length also raised concerns
about millimetre-wave radiation. According
to scientists, millimetre waves were mostly absorbed in the top
few millimetres of human skin and in the
surface layers of the cornea. Short-term exposures to millimetre
waves were expected to adversely affect
the peripheral nervous system, immune system, and
cardiovascular system.77
Economic Feasibility of LEO Satellites
LEO satellites had not been successful in the past. When
Iridium launched a constellation of 95 LEO
satellites into Earth’s orbit in the 1990s, 30 per cent of the
satellites failed.78 The company’s satellite-based
phones were priced at $3,000 each and calls were charged at

$4–$7 per minute in 1997 (a function of the
cost of building the satellites and launching them into orbit).79
According to Blaine Curcio, founder of Orbital Gateway
Consulting, that cost had been much reduced by
2020. He claimed, “The cost to launch 1 Gbps of capacity is
literally 100 times less than it was 15 to 20
years ago.”80 However, according to McKinsey, the cost of
satellite launches was just one part of the
equation; reducing the cost of manufacturing spacecraft, ground
equipment, and user equipment was
equally important to unlock the potential of LEO satellite
Internet.81 The price of consumer equipment had
fallen; for example, antennas that had cost $100,000 in the
1990s had fallen to $300–$500 by 2020.82
Bulent Altan, head of space at Mynaric, a laser communication
technology manufacturer, suggested that
for satellite Internet to be economically viable, user equipment
must be sold at three to four times the
operator’s monthly service charge so that investments could be
made in equipment maintenance.83 In 2019,
OneWeb indicated that it was planning to price a user terminal
at $200–$300, but SpaceX had not revealed
its price plans.84
For Starlink to be economically viable, Musk maintained that
the company needed to deploy 1,000
satellites. He added, “If we are putting a lot more satellites than
that in orbit, that’s a very good
thing—it means there is a lot of demand for the system.”85
Starlink’s goal was “targeting service in the
Northern US and Canada in 2020, rapidly expanding to near-
global coverage of the populated world by
2021.”86 Musk’s financial goal for Starlink was an operating
profit margin of 40 per cent in 2021, 50 per

cent in 2022, and 60 per cent in 2025.87 With expected
operating profits of $10 billion per year and a cost
of $10 billion to build Starlink, a year’s profit was expected to
offset SpaceX’s cost in launching Starlink.88
OTHER ISSUES
Scientists were concerned that the numerous satellites launched
by SpaceX and other companies were
increasing the amount of debris in space. In 2018, there were
more than 14,000 particles of space junk that
were uncontrolled.89 Space debris could cause collisions,
damaging satellites, telescopes, and other
objects orbiting the earth. Because of the speed of travel and the
lack of countervailing gravitational
forces, any debris larger than 10 centimetres could shatter a
satellite or spacecraft into pieces,
consequently creating more space debris.90
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Page 6 9B21A004
In its FCC filing in October 2019, SpaceX claimed that if any
Starlink satellite failed immediately after
being launched into its initial orbit—an altitude of about 350
kilometres—the risk of the failed satellite
colliding with any objects larger than 10 centimetres was just
0.000000303 per cent. SpaceX did not provide
a risk analysis for satellites that failed at their operational
height of 550 kilometres.91
Astronomers also raised concerns about how Starlink’s mega-
constellation affected observations of the
universe.92 The initial batch of SpaceX’s Starlink satellites
shone brightly in astronomical observations of
the night sky. Cees Bassa, an astronomer from the Netherlands
Institute for Radio Astronomy, said,
“Astronomy will [still] be possible, we will just have to learn to
deal with many satellites passing through
our observations, and they may ruin some observations.”93
THE ROAD AHEAD
Musk’s ultimate mission for SpaceX was to send humans to
Mars—a project that could cost up to $220
billion.94 SpaceX’s revenue from rocket launch contracts was
about $3 billion annually, with the potential
of reaching $5 billion by 2025. Revenue from Starlink’s
Internet services was projected to be around $30

billion,95 which Musk intended to use for SpaceX’s Mars
project. However, Roger Rusch, president of
TelAstra, an investment consulting firm in the satellite industry,
was not optimistic, commenting, “My
view is that these LEO constellations are totally
uneconomic.”96
Musk was also known to overpromise and underdeliver, as had
been the case with Tesla.97 But he was
known, as well, for taking on big challenges, and in the past,
Musk had proven wrong those market analysts
who believed that industries such as conventional automobiles,
aerospace, or banking could not be
disrupted.98 Could Musk do it again with Starlink? He wanted
Starlink as a trial run of satellite Internet
services for Mars.99 Given the competition and low prices of
other Internet service providers, how could
Musk ensure that Starlink remained an economically feasible
project?
Page 9 of 48
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EXHIBIT 1: KEY TERMS
Key Term Definition
LEO satellites Low Earth orbit (LEO) satellites operated
between 500 and 2,000 kilometres
above Earth’s surface.
Need for multiple
LEO satellites
LEO satellites revolved around Earth at approximately 8
kilometres per second,
completing a full orbit in 90–120 minutes. The rapid orbit made
satellites visible to
receivers on the ground for a short period of time. Multiple
satellites, however,
could establish a permanent Internet connection because as one
satellite
approached the horizon, it passed the signal to the next.
Geostationary
satellites
Satellites that operated at an altitude of 36,000 kilometres
above Earth’s surface.
At that altitude, the satellite’s orbital period was the same as
Earth’s rotation

period; thus, the satellite was in a fixed (stationary) position
relative to the Earth.
Latency The time delay between cause and effect of physical
change. In communications,
latency referred to the time needed to send and receive a packet
of data on a
network, usually measured in milliseconds.
Ground station A radio station on or near Earth that
communicated with a space station (satellite)
above Earth’s surface. Satellite ground stations were typically
used to provide
voice, data, broadcast, and two-way broadband communications.
5G Fifth generation of cellular technology, designed to increase
speed, reduce
latency, and improve flexibility of wireless services.
Satellite versus
terrestrial
“Satellite is the only broadband wide-area network technology
that is available
everywhere—in urban and rural areas around the world. All that
is required for a
location to receive connectivity from the satellite is a clear view
of the sky
unobstructed by trees, tall buildings or other objects. In
contrast, terrestrial
technologies are limited in their coverage area.”
Broadband
Internet
“An Internet connection with a high data transfer rate.”

Terrestrial
Networks
“Terrestrial networks are suitable for high speed wired
communications, using
cheap devices and fixed points of access, and for medium-to-
high speed wireless
connectivity, resulting in a more flexible infrastructure.”
Space debris Space debris refers to artificial dysfunctional
materials in the space orbiting Earth.
They could be as small as a microscopic chip or as large as a
discarded rocket
stage.
Satellite gateway “A ground station that transmits data to/from
the satellite to the local area network.”
Source: Greg Ritchie and Thomas Seal, “Why Low-Earth Orbit
Satellites Are the New Space Race,” Bloomberg Businessweek,
July 10, 2020, accessed August 17, 2020,
www.bloomberg.com/news/articles/2019-08-09/why-low-earth-
orbit-satellites-are-
the-new-space-race-quicktake; Elizabeth Howell, “Space
Companies Are Investing Big in 5G Technology,” Space,
October
20, 2019, accessed August 17, 2020, www.space.com/5g-in-
space-Internet-satellites.html; “Satellite Earth Stations,” Ofcom,
December 18, 2019, accessed August 17, 2020,
www.ofcom.org.uk/manage-your-licence/radiocommunication-
licences/satellite-earth; “What Is 5G?,” Cisco, accessed August
17, 2020, www.cisco.com/c/en/us/solutions/what-is-5g.html.
Erik Gregersen, “Space Debris,” Britannica, June 15, 2020,
accessed January 11, 2021,
www.britannica.com/technology/space-debris; “Broadband

Internet Connection,” NFON, accessed January 11, 2020,
www.nfon.com/gb/service/knowledge-base/knowledge-base-
detail/broadband-internet-connection; Francesco Zampognaro,
“Satellite and Terrestrial Network Integration,” 3, University of
Rome Tor Vergata, 2008/2009, accessed January 11, 2021,
https://core.ac.uk/download/pdf/53822257.pdf; “What Is a
Satellite Gateway?,” X2nSat, accessed January 11, 2020,
https://x2n.com/faq/what-is-a-satellite-gateway/; Michel
Verbist, “Satellite vs. Terrestrial: Which Network Is Right for
You?,”
Orange Business Services, October 1, 2020, accessed January
11, 2021, www.orange-
business.com/sites/default/files/media/library/0215_satellite_vs
_terrestrial_wpr-sat-0094.pdf.
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EXHIBIT 2: INTERNET SERVICE PROVIDERS IN THE
UNITED STATES
Type Company
Monthly Price
(in US$)
Download Speed Data Cap
Terrestrial
(broadband)
Xfinity (Comcast Cable
Communications LLC)
$20–$299.95 25–2,000 Mbps 1 TB–unlimited
Terrestrial
(broadband)
Lumen Technologies
Inc. (previously
CenturyLink)
$49–$65 15–940 Mbps 1 TB
Terrestrial
(Broadband and
5G)
AT&T Inc. $49.99 940 Mbps Unlimited
Terrestrial
(Broadband and

5G)
Verizon
Communications Inc.
$39.99–$79.99 200–940 Mbps Not Available
Terrestrial (5G) T-Mobile US Inc. $40–$70
330 Mbps (urban)
50 Mbps (rural)
10 GB–unlimited
Hotspot: 5–15 GB
Geostationary Viasat Inc. $30–$150 12–100 Mbps 25–150 GB
Geostationary
Hughes Network
Systems LLC
(HughesNet)
$59.99–$149.99 Up to 25 Mbps 10–50 GB
Note: LLC = limited liability company; Mbps = megabits per
second; TB = terabytes; 5G = fifth-generation mobile network;
Gbps = gigabits per second; GB – gigabytes.
Source: Catherine McNally, “Best Internet Service Providers
2020,” Reviews, June 30, 2020, accessed August 17, 2020,
www.reviews.org/Internet-service/best-Internet-service-
providers; Dave Schafer, “How Much Does Satellite Internet
Cost?,”
Satellite Internet, December 2, 2019, accessed August 17, 2020,
www.satelliteInternet.com/resources/how-much-does-
satellite-Internet-cost; “Metro: Phone Plans,” Metro by T-

Mobile, accessed August 17, 2020, www.metrobyt-
mobile.com/shop/plans; Philip Michaels, “T-Mobile 5G Rollout:
Locations, Phones, Price and More,” Tom’s Guide, May 6,
2020, accessed August 17, 2020, www.tomsguide.com/uk/us/t-
mobile-5g-network,news-29965.html.
EXHIBIT 3: EFFICIENCY OF LEO SATELLITE
CONSTELLATION SYSTEMS, BY COMPANY
Telesat OneWeb SpaceX
Required number of gateways per ground station 5–6 11 30
Average data rate per satellite (Gbps) 22.74 2.17 5.36
Maximum data rate per satellite (Gbps) 38.68 9.97 21.36
Satellite efficiency (%) (average Gbps/satellite) 58.8 21.7 25.1
Note: Gbps = gigabits per second.
Source: Inigo del Portillo, Bruce G. Cameron, and Edward F.
Crawley, “A Technical Comparison of Three Low Earth Orbit
Satellite Constellation Systems to Provide Global Broadband,”
(presentation to 69th International Astronautical Congress
2018, Bremen, Germany, October 1, 2018), accessed August 17,
2020, www.mit.edu/~portillo/files/Comparison-LEO-IAC-
2018-slides.pdf.
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Page 9 9B21A004
EXHIBIT 4: UNITED STATES—KEY DEMOGRPAHICS,
2017–2019
2017 2018 2019
Rural population (millions) 58.34 58.05 57.8
Urban population (millions) 266.81 269.11 271.73
Average family size 3.14 3.14 3.14
Disposable personal income (US$) 14,000 14,560 14,975
Median Household Income (2011–2015) (US$)
Rural 52,386

Urban 54,296
Source: Erin Duffin, “Size of Urban and Rural Population of the
U.S. 1960-2019,” Statista, November 28, 2019, accessed
August 17, 2020, www.statista.com/statistics/985183/size-
urban-rural-population-us; Erin Duffin, “Disposable Personal
Income in the U.S. 2000–2019,” Statista, March 31, 2020,
accessed August 17, 2020,
www.statista.com/statistics/710209/us-
disposable-income; “Families in the U.S.,” Statista, 2019,
www.statista.com/study/9824/families-
in-the-us-statista-dossier; Alemayehu Bishaw and Kirby G.
Posey, “A Comparison of Rural and Urban America: Household
Income and Poverty,” United States Census Bureau, December
8, 2016, accessed August 17, 2020,
www.census.gov/newsroom/blogs/random-
samplings/2016/12/a_comparison_of_rura.html.
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9B21A004
ENDNOTES
1 This case has been written on the basis of published sources
only. Consequently, the interpretation and perspectives
presented in this case are not necessarily those of Space
Exploration Technologies Corp. or any of its employees.
2 Dave Mosher, “Elon Musk Just Revealed New Details about
Starlink, a Plan to Surround Earth with 12,000 High-Speed
Internet Satellites. Here’s How it Might Work,” Business
Insider, May 16, 2019, accessed August 17, 2020,
www.businessinsider.com/spacex-starlink-satellite-internet-
how-it-works-2019-5.
3 Daniel Oberhaus, “SpaceX Is Banking on Satellite Internet.
Maybe It Shouldn’t,” Wired, May 15, 2019, accessed August 17,
2020, www.wired.com/story/spacex-starlink-satellite-internet.
Broadband Internet referred to a high-speed signal that was
always on and delivered by radio, phone, optical fibre, or cable
lines.
4 Ibid.
5 Michael Sheetz, “Here’s Why Amazon Is Trying to Reach
Every Inch of the World with Satellites Providing Internet,”
CNBC, April 7,
2019, accessed August 17, 2020,
www.cnbc.com/2019/04/05/jeff-bezos-amazon-Internet-
satellites-4-billion-new-customers.html.
6 Oberhaus, op. cit.
7 T-Mobile, “T-Mobile Wins 5G Availability Award: Customers
Get 5G 56x More Often Than Verizon,” press release, June 30,
2020, accessed August 17, 2020, www.t-

mobile.com/news/network/opensignal-5g-availability-win-june-
2020.
9 Michael White, “New Satellite Phone Venture Is Struggling,”
Los Angeles Times, August 21, 2000, accessed August 17,
2020, www.latimes.com/archives/la-xpm-2000-aug-21-fi-7787-
story.html.
11 Akhil Katam, “SpaceX’s Starlink Satellites Ruined Photos of
the NEOWISE Comet,” News Landed, July 26, 2020, accessed
August 17, 2020, https://newslanded.com/2020/07/26/spacexs-
starlink-satellites-ruined-photos-of-the-neowise-comet.
12 Officially known as C/2020 F3, the comet was more
commonly known for the mission that discovered it: NASA’s
Near-Earth Object
Wide-field Infrared Survey Explorer (NEOWISE), “Hubble
Snaps Close-Up of Celebrity Comet NEOWISE,” NASA, August
21, 2020,
accessed November 30, 2020,
www.nasa.gov/feature/goddard/2020/hubble-snaps-close-up-of-
celebrity-comet-neowise.
13 Katam, op. cit.
14 All dollar amounts are in US dollars (USD) unless otherwise
specified.
15 Michael Sheetz, “SpaceX Is Looking to Raise about $250
Million, Valuing Elon Musk’s Space Company at $36 Billion,”
CNBC, February 21, 2020, accessed August 17, 2020,
www.cnbc.com/2020/02/21/spacex-raising-250-million-elon-
musks-
company-valuation-36-billion.html.
16 Rich Smith, “Elon Musk Wants Taxpayers to Pay for His
Starlink Satellites,” Motley Fool, April 10, 2020, accessed
August
17, 2020, www.fool.com/investing/2020/04/10/elon-musk-
wants-taxpayers-to-pay-for-his-starlink.aspx.
17 Michael Sheetz, “SpaceX Raising over $500 Million, Double

What Elon Musk’s Company Planned to Bring In,” CNBC,
March 9, 2020,
accessed August 17, 2020, www.cnbc.com/2020/03/09/spacex-
raising-500-million-in-new-funding-for-elon-musks-
company.html.
19 Larry Press, “Can SpaceX Launch 30,000 Second-Generation
Starlink Satellites? Maybe,” CircleID, June 8, 2020, accessed
August 17, 2020, www.circleid.com/posts/20200608-can-
spacex-launch-30000-second-generation-starlink-satellites.
20 Ibid.
21 Sheetz, “SpaceX Is Looking to Raise about $250 million,”
op. cit.
23 Michael Sheetz, “Elon Musk Tells SpaceX Employees That
Its Starship Rocket Is the Top Priority Now,” CNBC, June 7,
2020,
accessed August 17, 2020, www.cnbc.com/2020/06/07/elon-
musk-email-to-spacex-employees-starship-is-the-top-
priority.html.
24 Trefis Team, “Revisiting SpaceX’s $36-Billion Valuation
after Its First Manned Mission,” Forbes, June 2, 2020, accessed
August 17, 2020,
www.forbes.com/sites/greatspeculations/2020/06/02/revisiting-
spacexs-36-billion-valuation-after-its-first-
manned-mission/#8bbad5144fb7.
25 Trefis Team, “How Much Value Can SpaceX Unlock from
Starlink’s Proposed IPO?,” Forbes, February 13, 2020, accessed
August 17, 2020,
www.forbes.com/sites/greatspeculations/2020/02/13/how-much-
value-can-spacex-unlock-from-starlinks-
proposed-ipo/#781efe0c6a7c.
27 Ibid.
28 Nathan Rust, “Why Satellite Internet Is the New Space
Race,” PC Magazine, July 30, 2018, accessed August 17, 2020,

www.pcmag.com/news/why-satellite-Internet-is-the-new-space-
race.
30 US Federal Communications Commission, as reported by
Rob Toledo, “Report: The Average Household’s Internet Data
Usage Has Jumped 38× in 10 Years,” Decision Data, April 17,
2020, accessed November 30, 2020,
https://decisiondata.org/news/report-the-average-households-
internet-data-usage-has-jumped-38x-in-10-years.
31 Luis Sanchez, “The Space Race among Internet Service
Providers,” Motley Fool, November 21, 2019, accessed August
17, 2020, www.fool.com/investing/2019/11/21/the-space-race-
among-Internet-service-providers.aspx.
32 Dave Schafer, “How Much Does Satellite Internet Cost?,”
Satellite Internet, December 2, 2019, accessed August 17, 2020,
www.satelliteInternet.com/resources/how-much-does-satellite-
Internet-cost.
33 Viasat, “Order Viasat Home Satellite Internet,” accessed
November 30, 2020, https://order.viasat.com/ooe/display-
package.jsp.
34 Catherine McNally,” Viasat (Formerly Exede) Satellite
Internet Review 2020,” Reviews, November 30, 2020, accessed
November 30, 2020, www.reviews.org/internet-service/viasat-
reviews.
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Page 11 9B21A004
35 Catherine McNally, “HughesNet Satellite Internet Review
2020,” Reviews, August 26, 2020, accessed November 30, 2020,
https://www.reviews.org/internet-service/hughesnet-reviews.
36 Ibid.
37 McNally, “Viasat (Formerly Exede),” op. cit.
39 Ibid.
40 Caleb Henry, “Soyuz Launches 34 OneWeb Satellites,”
Space News, March 21, 2020, accessed August 17, 2020,
https://spacenews.com/soyuz-launches-34-oneweb-satellites.
42 Caleb Henry, “Telesat Preparing for Mid-2020 Constellation
Manufacturer Selection,” Space News, May 1, 2020, accessed
August 17, 2020, https://spacenews.com/telesat-preparing-for-
mid-2020-constellation-manufacturer-selection.
43 Michael Sheetz, “FCC Approves SpaceX to Deploy up to 1
Million Small Antennas for Starlink Internet Network,” CNBC,
March
20, 2020, August 17, 2020, www.cnbc.com/2020/03/20/fcc-
approves-spacex-to-deploy-1-million-antennas-for-starlink-
Internet.html.
44 Devin Coldewey, “SpaceX Reveals More Starlink Info after

Launch of First 60 Satellites,” Tech Crunch, May 24, 2019,
accessed
January 11, 2021, https://techcrunch.com/2019/05/24/spacex-
reveals-more-starlink-info-after-launch-of-first-60-satellites/.
46 Jonathan O’Callaghan, “‘Not Good Enough’—SpaceX
Reveals That 5% of Its Starlink Satellites Have Failed in Orbit
So
Far,” Forbes, June 30, 2019, accessed August 17, 2020,
www.forbes.com/sites/jonathanocallaghan/2019/06/30/not-good-
enough-spacex-reveals-that-5-of-its-starlink-satellites-have-
failed-in-orbit/#4c58e03a7e6b.
47 Tariq Malik, “SpaceX’s Starlink Broadband Service Will
Begin in 2020: Report,” Space, October 24, 2019, accessed
August
17, 2020, www.space.com/spacex-starlink-satellite-Internet-
service-2020.html.
48 Sheetz, “FCC Approves SpaceX to Deploy up to 1 Million
Small Antennas,” op. cit.
49 Harmeet Kaur, “Why Rural Americans Are Having a Hard
Time Working from Home,” CNN, April 29, 2020, accessed
January
11, 2021, www.cnn.com/2020/04/29/us/rural-broadband-access-
coronavirus-trnd/index.html.
51 Caleb Henry, “Musk Says Starlink ‘Economically Viable’
with around 1,000 Satellites,” Space News, May 15, 2019,
accessed
August 17, 2020, https://spacenews.com/musk-says-starlink-
economically-viable-with-around-1000-satellites.
52 Larry Press, “Low-Earth Orbit (LEO) Satellite Internet
Service Developments for 2019,” Circle ID, January 14, 2020,
www.circleid.com/posts/20200114_low_earth_orbit_leo_satellit
e_Internet_developments_for_2019.
53 Nathan Strout, “SpaceX Could Fill the US Military’s Arctic

Communications Gap by the End of This Year,” C4ISRNET,
May
12, 2020, August 17, 2020, www.c4isrnet.com/smr/frozen-
pathways/2020/05/11/spacex-could-fill-the-us-militarys-arctic-
communications-gap-by-the-end-of-this-year.
55 Ibid.
56 Ibid.
57 Sheetz, “FCC Approves SpaceX,” op. cit.
58 Elizabeth Howell, “Space Companies Are Investing Big in
5G Technology,” Space, October 20, 2019, accessed August 16,
2020, www.space.com/5g-in-space-Internet-satellites.html.
59 Steven J. Vaughan-Nichols, “SpaceX Starlink Internet
Prepares for Beta Users,” ZD Net, June 15, 2020, accessed
August
17, 2020, www.zdnet.com/article/spacex-starlink-Internet-
prepares-for-beta-users.
60 Derick David, “Are Elon Musk’s Starlink Satellites Being
Used For 5G?,” Medium, July 2, 2020, accessed August 17,
2020,
https://medium.com/@drckangelo/are-starlink-satellites-being-
used-for-5g-38df3b79ebf2.
61 Catherine Sbeglia, “FCC Unveils $9 Billion 5G Fund for
Rural America,” RCR Wireless News, December 5, 2019,
accessed
August 17, 2020, www.rcrwireless.com/20191205/policy/fcc-
reveals-9-billion-5g-fund-for-rural-america.
62 S. O’Dea, “Number of Subscribers to Wireless Carriers in
the U.S. From 1st Quarter 2013 to 3rd Quarter 2018, by
Carrier,” Statista,
June 5, 2020, accessed August 17, 2020,
www.statista.com/statistics/283507/subscribers-to-top-wireless-
carriers-in-the-us.
63 T-Mobile, “T-Mobile Wins 5G Availability Award:
Customers Get 5G 56x More Often than Verizon,” press release,
Business

Wire, June 30, 2020, accessed December 3, 2020,
www.businesswire.com/news/home/20200630005657/en/T-
Mobile-Wins-
5G-Availability-Award-Customers-Get-5G-56x-More-Often-
than-Verizon.
64 Philip Michaels, “T-Mobile 5G Rollout: Locations, Phones,
Price and More,” Tom’s Guide, May 6, 2020, accessed August
17, 2020, www.tomsguide.com/uk/us/t-mobile-5g-
network,news-29965.html.
65 Bevin Fletcher, “FCC Floats Options for Proposed $9B 5G
Rural Fund,” Fierce Wireless, April 1, 2020, accessed August
17, 2020, www.fiercewireless.com/regulatory/fcc-floats-
options-for-proposed-9b-5g-rural-fund.
66 “T-Mobile US Profit Margin 2006-2020 | TMUS,”
Macrotrends, June 30, 2020, accessed August 17, 2020,
www.macrotrends.net/stocks/charts/TMUS/t-mobile-us/profit-
margins.
67 Rust, op. cit.
68 Ibid.
69 Smith, op. cit.
70 “Starlink vs 5G Internet Detailed Comparison,” Bitactro,
December 25, 2020, accessed January 11, 2021,
https://bitactro.com/starlink-vs-5g/.
71 J. Jordan, “Uber Freight: What Is It and Is It a Threat to the
Industry?,” Telenet Logistics, January 19, 2020, accessed
August
17, 2020, http://telenetlogistics.com/uber-freight.
72 David, op. cit.
73 Ibid.
Page 14 of 48
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74 Andy Baryer, “5G From Space: The Role of Satellites in
5G,” Futur-Ithmic, March 10, 2020, accessed August 17, 2020,
www.futurithmic.com/2020/03/10/5g-from-space-role-of-
satellites.
75 “Scientists Warn of Potential Serious Health Effects of 5G,”
5G Appeal, accessed August 17, 2020, www.5gappeal.eu/the-
5g-appeal.
76 Joel M. Moskowitz, “We Have No Reason to Believe 5G Is
Safe,” Scientific American, October 17, 2019, accessed August
17, 2020, https://blogs.scientificamerican.com/observations/we-
have-no-reason-to-believe-5g-is-safe.
77 Ibid.
78 Jonathan O’Callaghan, “The Risky Rush for Mega
Constellations,” Scientific American, October 31, 2019,
accessed August
17, 2020, www.scientificamerican.com/article/the-risky-rush-
for-mega-constellations.
79 White, op. cit.

80 Xinmei Shen, “Satellite Internet Failed 20 Years Ago. But
This Time Is Different,” Abacus, June 18, 2020, accessed
August
17, 2020, www.scmp.com/abacus/tech/article/3089481/satellite-
internet-failed-20-years-ago-time-different.
81 Chris Daehnick, Isabelle Klinghoffer, Ben Maritz, and Bill
Wiseman, “Large LEO Satellite Constellations: Will It Be
Different
this Time?,” McKinsey & Company, May 4, 2020, accessed
August 17, 2020, www.mckinsey.com/industries/aerospace-and-
defense/our-insights/large-leo-satellite-constellations-will-it-be-
different-this-time#.
82 Samantha Masunaga, “Cost Could Be SpaceX’s Biggest
Barrier to Satellite Internet,” Government Technology, July 1,
2019,
accessed August 17, 2020, www.govtech.com/network/Cost-
Could-Be-SpaceXs-Biggest-Barrier-to-Satellite-Internet.html.
83 Ibid.
84 Ibid.
85 Henry, “Musk Says Starlink ‘Economically Viable,’” op. cit.
86 Alan Burkitt-Gray, “SpaceX Wins Licence for One Million
Starlink Terminals Across the US,” Capacity Media, May 23,
2020,
www.capacitymedia.com/articles/3825149/spacex-wins-licence-
for-one-million-starlink-terminals-
across-the-us.
87 Rich Smith, “Europe Races SpaceX in 2020: Who Will
Launch the Most?,” Motley Fool, January 26, 2020, accessed
August
17, 2020, www.fool.com/investing/2020/01/26/europe-races-
spacex-in-2020-who-will-launch-most.aspx.
88 Smith, “Elon Musk Wants Taxpayers,” op. cit.
89 Dave Mosher and Samantha Lee, “More than 14,000 Hunks
of Dangerous Space Junk Are Hurtling around Earth — Here's
Who Put It All Up There,” Business Insider, March 29, 2018,

accessed January 11, 2021, www.businessinsider.com/space-
junk-debris-amount-statistics-countries-2018-3.
90 Lizzie Plaugic, “This Is What Happens When a Tiny Piece of
Flying Space Debris Hits the ISS,” Verge, May 12, 2016,
www.theverge.com/2016/5/12/11664668/iss-window-chip-
space-debris-tim-peake.
91 O’Callaghan, “The Risky Rush,” op. cit.
92 Ibid.
93 Ibid.
95 Ibid.
96 Ibid.
97 Matthew DeBord, “The Whole Point of Tesla Is That It
Always Overpromises and Underdelivers,” Business Insider,
August
16, 2016, accessed August 17, 2020,
www.businessinsider.com/why-tesla-always-overpromises-and-
underdelivers-2016-8.
99 Rust, op. cit.
Page 15 of 48
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UVA-M-0967
Rev. Jul. 10, 2020
This public-sourced and field-based case was prepared by Jenny
Craddock, Senior Case Writer, and Rajkumar Venkatesan,
Ronald Trzcinski Professor
of Business Administration. It was written as a basis for class
discussion rather than to illustrate effective or ineffective
handling of an administrative
situation. All of the Ford AV protagonists’ thoughts were
created for pedagogical purposes. Copyright © 2019 by the
University of Virginia Darden
School Foundation, Charlottesville, VA. All rights reserved. To
order copies, send an email to [email protected] No part of this
publication
may be reproduced, stored in a retrieval system, used in a
spreadsheet, or transmitted in any form or by any means—
electronic, mechanical, photocopying, recording, or otherwise—
without the permission of the Darden School Foundation. Our
goal is to publish materials of the highest quality, so please
submit any errata to
[email protected]
Driverless Trucks at Ford:
Cruising into a Compromised Brand Identity?

In the summer of 2018, iconic American automaker Ford Motor
Company (Ford) created a new limited
liability company, Ford Autonomous Vehicles LLC (Ford AV).1
Ford charged the organization “with
accelerating [Ford’s] AV business to capitalize on market
opportunities.”2 As members of the newly appointed
management team at Ford AV considered the best way to guide
Ford, the second-largest automaker in the
United States,3 toward its well-publicized robot-taxi and
driverless delivery services slated to debut in 2021,4
they had several important decisions to make regarding the
company’s strategy and driverless car product
offerings of the future.
Alongside its goals in the self-driving space, Ford had made a
seminal product decision several months
earlier, when the company announced it was retreating from the
American car business and dropping several
sedans, such as the Fusion, Fiesta, and Taurus (while preserving
the Mustang and Focus Active crossover
launching in 2019), in order to improve its profit margin.5 The
company’s decision to turn away from its slow-
selling car models and instead focus on its more lucrative line
of trucks and SUVs6 was in line with Ford’s long-
standing reliance on the success of its trucks division,
especially the F-Series (which included the classic F-150
pickup truck and “super duty” F-250 and -350 trucks) that the
company had first released in 1948.
As the management team members at Ford AV assumed their
new roles and looked ahead to the not-so-
distant future of autonomous vehicles at Ford, they wondered
how they might incorporate self-driving
technology into the F-Series lineup. Could an autonomous F-

150 make sense for the company?
On one hand, delaying the decision could put Ford behind the
curve, losing market share to competitors
as consumers might grow to expect and appreciate driverless
technology in their pickup trucks.
On the other hand, the executives knew from their many
conversations with Ford dealers across the United
States that the F-Series was a brand that buoyed its consumers’
sense of independence and control, perhaps
1 This is a partially field-based case. Information and
quotations that are not otherwise cited derive from author
interviews with professionals in the
automotive industry.
2 “Ford Creates ‘Ford Autonomous Vehicles LLC’: Strengthens
Global Organization to Accelerate Progress, Improve Fitness,”
Ford News, July 24,
2018,
https://s22.q4cdn.com/857684434/files/doc_news/2018/07/Ford-
Creates-‘Ford-Autonomous-Vehicles-LLC’-Strengthens-Global-
Organization-to-Accelerate-Progress-Improve-Fitness.pdf
(accessed Jan. 29, 2019).
3 Efraim Levy, “Ford Motor Company,” CFRA Stock Report,
July 30, 2018.
4 Keith Naughton, “Ford Is Far from First in Driverless
Vehicles—and Investors Want In,” Bloomberg, August 9, 2018,
https://www.bloomberg.com/news/articles/2018-08-09/ford-is-
far-from-first-in-driverless-vehicles-and-investors-want-in
(accessed Dec. 11, 2018).

5 Keith Naughton, “Ford Retreats from American Car Business
in Penny-Pinching Push,” Bloomberg, April 25, 2018,
https://www.bloomberg.com/news/articles/2018-04-25/ford-ceo-
plans-11-5-billion-more-cuts-pulls-ahead-margin-goal (accessed
Dec. 11, 2018).
6 https://www.bloomberg.com/news/articles/2018-04-25/ford-
ceo-plans-11-5-billion-more-cuts-pulls-ahead-margin-goal.
Page 16 of 48
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mailto:[email protected]
mailto:[email protected]
Creates-'Ford-Autonomous-Vehicles-LLC'-Strengthens-Global-
Creates-'Ford-Autonomous-Vehicles-LLC'-Strengthens-Global-
https://www.bloomberg.com/news/articles/2018-08-09/ford-is-
far-from-first-in-driverless-vehicles-and-investors-want-in

plans-11-5-billion-more-cuts-pulls-ahead-margin-goal
plans-11-5-billion-more-cuts-pulls-ahead-margin-goal
Page 2 UVA-M-0967
putting it at odds with the idea of an autonomous vehicle.
Aligning the F-Series to autonomous vehicle
technology too soon might have a negative impact on
consumers’ connection to the brand and loyalty to the
F-Series as a whole.
Bearing these potential risks and rewards in mind, the Ford AV
executives faced a critical dilemma: Should
Ford act fast to produce and market an autonomous F-150, or
hold off in a “wait and see” move, strictly
focusing on the self-driving taxi and delivery market via sedans
and vans, in order to see how customers might
react to the unexplored driverless future? Was this opportunity
too big to miss, or was the F-Series too
profitable to become obsolete?
Ford Motor Company: A Business History7
The Ford Motor Company was founded in a converted wagon
factory in Detroit, Michigan, in 1903, when
40-year-old engineer Henry Ford decided to commercially
pursue his love of automobiles. The company made
its name when the practical Model T was introduced in 1908,
and over 10,000 Model Ts were made and sold
in the following year. The historic American car grew in
popularity and stayed in production for the next
18 years.

As Ford grew in size and strength, it acquired the financially
challenged Lincoln Motor Company in 1922,
allowing it to enter a more upscale market, but challenges arose
over the next decade. In 1926, archrival General
Motors (GM) introduced its stylish Chevrolet, hurting Ford’s
market share, before huge losses plagued all
carmakers during the Great Depression. During World War II,
Ford supported the Allied effort by producing
bombers and aircraft engines.
After the war, Ford reentered the automotive industry with a
bang: it decided to enter foreign markets in
1947 and shortly thereafter entered the truck segment in 1948
with the introduction of its F1, the first of a
celebrated line of F-Series. The trucks were rebranded in 1953
when the F-100 and the F-250 were born.8 The
next hugely popular Ford vehicle was released in 1963, when
the Mustang sedan made its successful debut:
over half a million models sold in just 18 months.
Challenges arose in the 1970s, when Ford had no compact cars
to compete with the Japanese-made
compacts that were becoming popular among American
consumers. The Clean Air Act of 1970 burdened US
carmakers with increased development costs by imposing
federal standards on car manufacturers requiring that
they emit fewer pollutants. By 1980, Ford was in an economic
crisis, losing over $1.5 billion in that year alone,
despite strong profits from the trucks division.
The tides turned in the 1980s when Ford released the Taurus, a
modern, four-door sedan that became an
instant hit, and by 1984, the company had achieved record sales
and profit levels. In 1986, Ford’s income
surpassed GM’s for the first time since 1924, and Ford’s market

share increased to just under 20%. During the
same decade, Ford also started to diversify into financial
services.
In 1989, Ford acquired luxury British car manufacturer Jaguar,
thus starting a wave of acquisitions in the
luxury space in order to complement its Lincoln unit. In 1994,
the Jaguar purchase was followed by a majority
stake in Aston Martin, the British luxury line made famous by
James Bond movies, and Ford subsequently
bought the Swedish automaker Volvo in 1999. Finally, Ford
bought the England-based Land Rover sport-utility
7 Christina Stansell and Paul Greenland, “Ford Motor
Company,” updated by Jeffrey Covell, in International
Directory of Company Histories, vol. 141, ed.
Jay P. Pederson (Detroit: St. James Press, 2013), 229–38.
8 “Ford Celebrates 100 Years of Truck History—From 1917
Model TT to 2017 F-150 Raptor,” Ford Media Center, July 27,
2017,
https://media.ford.com/content/fordmedia/fna/us/en/news/2017/
07/27/ford-celebrates-100-years-truck-history.html (accessed
Dec. 11, 2018).
Page
16
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Page 3 UVA-M-0967
business from BMW Group in 2000. These purchases coincided
with some bleak years for Ford, fueled by the
economic recession of the early 1990s.
Growth of the truck segment
Fueled by these financial losses throughout the early 1990s,
Ford started to “increase its presence in the
truck and minivan market niche, which represented the fastest-
growing segment of the broadly defined
automotive market.”9 Ford’s eventual return to profitability was
bolstered by the sudden boost in demand for
minivans and light trucks in the early 1990s. Indeed, the US
vehicle market changed dramatically over the 1990s
and early 2000s—in 1990, 66% of all US vehicles purchased
were cars, but by 2017 that number had shrunk to
35%, with the vast majority of cars sold in America being
trucks and SUVs.10 Ford’s own numbers amplified

this trend—by 2017, 43% of all of Ford’s vehicles sold to
dealers were trucks, and 34% were SUVs. (See
Exhibit 1 for Ford’s 2017 car sales by type.)
Over time, the F-150 in particular grew to become the most
popular variant within the F-Series and Ford’s
“sacred cash cow,”11 and by 2017, the “F-Series franchise
marked its 41st year as America’s best-selling
pickup.”12 (See Exhibit 2 for best-selling light pickup trucks in
the United States in 2017, with corresponding
market share.) In 2018, equity analysts at investment bank
Morgan Stanley argued that the F-Series was a
“Fortune 40 company (by profit) that investors [didn’t] know
about,”13 predicting that the F-Series would
contribute $42 billion in revenues and over $10 billion in
EBITDA (a 25% EBITDA margin) to Ford in 2018.14
This success echoed Ford’s 16.6% share of US truck sales in
2017, compared to its 9.8% share of car sales
(including Ford and Lincoln models).15 One analyst believed
that the “shift away from car sales to more
profitable trucks and utility vehicles helped [Ford’s] market
share in 2016 and 2017.”16
Within the F-Series lineup, Ford offered customers several
variants. Jim Snead (Darden MBA ’81),
president at Jim Snead Ford in Waynesboro, Virginia, since
1986, noted the options available:
We’ve already seen the differentiation between the commercial
truck and the Super Duty series (the F-
250s and -350s), and then the 150 is more of a passenger car–
type vehicle, although it can certainly
perform all the tasks such as towing that people would normally
go to a pickup truck for.
Ford also offered “high series” models, such as the Lariat, King

Ranch, and Platinum, in both F-150 and
Super Duty lines, thus creating sub-brands within the products
and giving customers signature interior and trim
options.
Historically, Ford had exhibited trepidation about introducing
changes to the trucks that might alienate
customers, but in 2014, the company made a “bold” switch to
aluminum.17 Even more dramatically, it planned
9 Stansell and Greenland.
10 Ward’s Automotive Yearbook, 2018 Edition (Wards
Intelligence, 2018), 182.
11 Alex Davies, “This Week in the Future of Cars: The Kids
Are on Fire,” Wired, September 29, 2017,
https://www.wired.com/story/anthony-
levandowsk-austin-russel-car-news/ (accessed Dec. 11, 2018).
12 Ford Motor Company annual report, 2017,
http://s22.q4cdn.com/857684434/files/doc_financials/2017/annu
al/03/Final-Annual-Report-
2017.pdf (accessed Dec. 11, 2018), 7.
13 Adam Jonas, Armintas Sinkevicius, Carmen Hundley, and
Alex Straton, “Ford F-Series: A Fortune 40 Company (by Profit)
that Investors Don’t
Know About,” Morgan Stanley, June 6, 2018.
14 Jonas et al.
15 Levy.
16 Levy.
17 Jack Stewart, “Ford Turns to Students for the Future of
Truck Design,” Wired, September 25, 2017,
https://www.wired.com/story/ford-turns-to-

students-for-the-future-of-truck-design/ (accessed Dec. 11,
2018).
Page 18 of 48
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https://www.wired.com/story/anthony-levandowsk-austin-
russel-car-news/
https://www.wired.com/story/anthony-levandowsk-austin-
russel-car-news/
al/03/Final-Annual-Report-2017.pdf
al/03/Final-Annual-Report-2017.pdf
https://www.wired.com/story/ford-turns-to-students-for-the-
future-of-truck-design/
https://www.wired.com/story/ford-turns-to-students-for-the-
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Page 4 UVA-M-0967

to debut an F-150 gas-electric hybrid in 2020. To counteract the
perception of electric vehicles as at odds with
the spirit of a pickup, Ford made an innovative spin on the
electric offering based on extensive customer
research: the battery in the F-150 would not just be for
powering the electric motor, but also able to power
“everything from an electric saw to a drink cooler on a camping
trip. So the selling point [wasn’t] just the added
fuel economy, but the utility for those who need[ed] it,”18 one
observer noted.
Ford of 2018
By 2018, Ford had turned away from its luxury endeavors19 and
had doubled down on affordable cars for
consumers across the globe. The company headquartered in
Dearborn, Michigan, manufactured and sold its
cars across six continents and provided financial services
(automotive financing and insurance) through Ford
Motor Credit Company. In 2017, over six million cars were sold
under the Ford and Lincoln brands, and in the
previous year, 65% of revenues came from the North American
Automotive segment.20 Gross profit margin
was down to 10.2% in 2017 (from 11.0% in 2016), and EBITDA
margin by year end 2017 was at 5.5% (down
from 7.5% in 2016).21 Financial analysts believed margins
dropped in 2017 due to growing losses in the North
American small car market (estimated to total $1 billion in
2017, up from $800 million in 2016) and
underperforming in Europe and Asia Pacific,22 while the
stronger margins of 2016 resulted from robust pricing
of the F-150 pickup trucks (Ford’s average transaction price for
its vehicles in 2016 was more than double the
industry’s) and strong profits in Europe.23 (See Exhibit 3 for a

summarized income statement from 2012 to
2018.)
Customers of F-Series
By 2018, “most carmakers [were]n’t even allowed to sell or
lease directly to their consumers—every
transaction [had] to go through an independent dealer,”24
making customer demographics slightly intangible to
automakers like Ford. To provide customer transparency,
market research firm mTAB had long served Ford
and countless other automotive companies by surveying
customer demographic and preference information
following the purchase of a vehicle. (For a summary of mTAB’s
data on 2018 F-150 customers, see Exhibit 4.)
In addition to such survey research, dealers housed heaps of
information and observations through
interacting with customers on a daily basis. Snead, for example,
had several astute observations on the types of
people buying F-Series vehicles at his dealership over the years:
Today, the F-Series customers are a different animal,
dramatically different from when I became a Ford
dealer 30 years ago. Back then, customers were farmers or
people who worked in construction, and
the truck was their secondary vehicle. They had a passenger car
parked in their driveway at home, and
the pickup truck was their second vehicle. Today of course, it’s
become a primary vehicle. We sell more
four-door pickup trucks than we do two-door—we virtually
never sell a two-door regular cab pickup
truck, occasionally in a commercial environment, but not very
often. They’ve gotten to be much more
car-like, they drive more like a car, and the electronics that they
have on them appeals to the people

18 Jay Ramey, “Here’s Why a Hybrid Ford F-150 Pickup Could
Be the Perfect Camping Truck,” Autoweek, December 1, 2017,
https://autoweek.com/article/trucks/heres-how-ford-hopes-
make-buyers-want-hybrid-pickups (accessed Dec. 11, 2018).
19 Aston Martin was sold in 2007, Jaguar and Land Rover in
2008, and Volvo in 2010.
20 Colin Langan and Gene Vladimirov, “Ford Motor Co. –
Welcome to Ford Truck USA,” UBS Global Research, April 25,
2018.
21 Langan and Vladimirov, “Ford Motor Co. – Welcome to Ford
Truck USA,” 7.
22 Colin Langan and Gene Vladimirov, “Ford Motor Co,” UBS
Global Research, May 1, 2018.
23 Tom DiChristopher, Reuters, and the Associated Press,
“Truck Sales Drive Record Results at Ford; Shares Surge,”
CNBC, April 28, 2016,
https://www.cnbc.com/2016/04/28/ford-motor-sets-records-for-
profit-operating-margins.html (accessed Dec. 11, 2018).
24 Kevin Roose, “Can Ford Turn Itself into a Tech Company?,”
New York Times Magazine, November 9, 2017,
https://www.nytimes.com/interactive/2017/11/09/magazine/tech
-design-autonomous-future-cars-detroit-ford.html (accessed
Dec. 11, 2018).
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https://autoweek.com/article/trucks/heres-how-ford-hopes-
make-buyers-want-hybrid-pickups
https://www.cnbc.com/2016/04/28/ford-motor-sets-records-for-
profit-operating-margins.html
-design-autonomous-future-cars-detroit-ford.html
Page 5 UVA-M-0967
that were buying large SUVs. Anybody and everybody buys a
pickup, so it’s kind of hard to say this is
the segment of the market that buys a pickup, because they can
be just about anybody these days...You
see women driving [F-150s], more women than ever before; you
see everybody and anybody in an F-
Series. I think Ford’s recent decision to back away from the
passenger car market is because so many
of the drivers today are looking for a vehicle that can do more
recreational-type stuff, so it’s the
crossovers, the SUVs, the pickup trucks.
Snead also made several observations on the motivations of the
typical pickup consumer:

The mentality of the typical pickup owner…there’s an
emotional attachment to a pickup truck that’s
different from a sedan…Moneywise is what amazes me. On a
pickup truck, you can very quickly get
to $60,000 and in a Super Duty, you can push $100 [thousand].
We had a custom-done Super Duty
that one of our manufacturer’s reps just had them drop off in
our store until he could pick it up, and
we had people come in demanding that they be able to buy it,
and this was a $100,000 pickup truck.
And this is in a rural area where you don’t think of the income
level as something that would support
that. But we sell a ton of $50,000 and $60,000 pickup trucks to
blue-collar people. It astounds me that
they can figure out a way to buy it, but they do. They value
their pickup much more than they do their
houses.
These emotional attachments to Ford’s trucks resulted from
decades of prominent placement and
distinctive positioning of the brand. Although the F-150 was
launched in 1975, when the company was still
primarily known for its cars,25 it was 1977 when a copywriter
for a Ford truck magazine came up with the three
iconic words that would come to define the brand—Built Ford
Tough.26
In 1980, the F-150 assumed the national spotlight in the hands
of one of the world’s biggest movie stars
of the time, John Travolta.27 That year, Travolta’s film Urban
Cowboy was released, and its rich Texan scenery,
replete with Wrangler jeans, cowboy boots, and honky-tonk
music, kicked off the “first pop-culture craze of
the eighties.”28 Following the movie’s launch and popular
reception, country music gained a more mainstream
audience across the country, and clothing pieces like silver belt

buckles and prairie dresses became expensive
wares of American fashion designer Ralph Lauren.29
Importantly for Ford, Travolta’s character drove a black
F-150 extensively in the film, including during the opening
sequence and his seminal marriage scene.
This Texas cowboy association was further strengthened by the
long-running CBS soap opera, Dallas,
which ran from 1978 to 1991, and whose main character, Ray
Krebbs, drove a white F-Series truck starting in
the show’s second season.30 It was also during the 1980s that
Ford became the official vehicle of the Dallas
Cowboys professional football team and remained as such for
over two decades31 (before becoming the official
25 Chris Isidore, “How the Ford F-150 Became the Most
Important Vehicle in America,” CNNMoney, May 11, 2018,
https://money.cnn.com/2018/05/11/news/companies/ford-f150-
history/index.html (accessed Dec. 11, 2018).
26
07/27/ford-celebrates-100-years-truck-history.html.
27 John Spong, “Urban Cowboy Turns 35,” TexasMonthly, June
2015, https://www.texasmonthly.com/the-culture/urban-cowboy-
turns-35/
28 https://www.texasmonthly.com/the-culture/urban-cowboy-
turns-35/.
29 Marissa R. Moss, “Inside Country Music’s Polarizing ‘Urban
Cowboy’ Movement,” RollingStone, June 12, 2015,
https://www.rollingstone.com/music/music-country/inside-
country-musics-polarizing-urban-cowboy-movement-38886/

30 “1979 Ford F-Series,” IMCDB (Internet Movie Cars
Database), http://www.imcdb.org/vehicle_229682-Ford-F-
Series-1979.html (accessed Dec.
11, 2018).
31 “Ford Introduces Limited-Edition Dallas Cowboys F-150,”
Ford Media Center, August 31, 2016,
08/31/ford-introduces-limited-edition-dallas-cowboys-f-
150.html (accessed Dec.
11, 2018).
Page 20 of 48
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history/index.html
07/27/ford-celebrates-100-years-truck-history.html

https://www.texasmonthly.com/the-culture/urban-cowboy-turns-
35/
https://www.texasmonthly.com/the-culture/urban-cowboy-turns-
35/
https://www.rollingstone.com/music/music-country/inside-
country-musics-polarizing-urban-cowboy-movement-38886/
http://www.imcdb.org/vehicle_229682-Ford-F-Series-1979.html
08/31/ford-introduces-limited-edition-dallas-cowboys-f-
150.html
Page 6 UVA-M-0967
truck of the National Football League in 2016).32 As the F-150
became more popular, it “helped launch the
trend of Americans buying trucks instead of cars,”33 and pickup
buyers proved to be more loyal to their brands
than any other car buyers.34
This loyalty to truck brands, and to Ford in particular, became
increasingly evident throughout the 21st
century. In 2002, popular country music singer Toby Keith
released a series of national TV ads for Ford, in
which Keith was featured recreating the look and feel of his
music videos while singing lyrics such as “I’m a
Ford truck man” and “That’s all I drive, I don’t compromise.”35
In 2007, country singer Jonathan East released
his own ode to Ford, “That Ole Ford Truck,” independent of any
deal with the company, and nostalgically
claimed, “I wouldn’t trade nothing in the world for that old
Ford truck.”36
The cars’ distinctive appeal even resonated with politicians and
the voters they were trying to capture. In

2016, Roger Huffstetler, a Democratic politician running for
Congress in Virginia’s fifth district, was trying to
exude a rural farm feel in his campaign ads after moving to the
state from Washington, DC, and, before that,
California. Staffers for his campaign were keenly set on finding
both a Virginia farm and a Ford truck to set the
stage for Huffstetler’s first TV advertisement. To aid this effort,
Huffstetler’s campaign manager, Kevin
Zeithaml, posted on Facebook that year:
Charlottesville Friends, I am in need of an old Ford pickup
truck…next week. Does anyone in the
Charlottesville area have one that they would be willing to let
me snag for a few hours? No Chevy or
GMC need apply.37
The resulting campaign ad featured a blue-jean-clad Huffstetler
driving bales of hay in an old white F-150
while discussing the values of “being grateful to [his]
country.”38
Leveraging these emotional associations with the brand, Ford
put a distinctive spin on its pickup marketing
materials. While preparing to launch the 2015 F-150, Ford
chose to introduce the trucks through “straight-talk”
TV commercials that highlighted the “Built Ford Tough”
durability during the NCAA College Football
playoffs. (For links to these commercials, see Exhibit 5.) That
year’s truck was also promoted with the
company’s “brand content alliance teams, including country
music star Toby Keith, Professional Bull Riding,
NASCAR and National Future Farmers of America
Organization.”39

32 “Ford F-Series Now Official Truck of the NFL; Celebrating
Toughest Players and Introducing First-Ever Official NFL
Tailgate Trucks on Demand
with Exclusive Fan Experiences,” Ford Media Center,
September 7, 2016,
09/07/ford-f-series-now-official-truck-of-the-nfl--celebrating-
toughes.html
33 https://money.cnn.com/2018/05/11/news/companies/ford-
f150-history/index.html.
34 https://money.cnn.com/2018/05/11/news/companies/ford-
f150-history/index.html.
35 Tanya Irwin, “Toby Keith Sings Praises of Ford Trucks in
New Ads,” Adweek, October 7, 2002,
https://www.adweek.com/brand-marketing/toby-
keith-sings-praises-ford-trucks-new-ads-59046/ (accessed Dec.
11, 2018).
36 “That Ole Ford Truck,” YouTube video, 3.57, posted by
“CDBaby,” June 7, 2015,
https://www.youtube.com/watch?v=6K02LnfxN-4 (accessed
Dec. 11, 2018).
37 Brent Scher, “Democrat Running in Virginia Discovers New
Southern Accent in New Home State,” Washington Free Beacon,
February 9, 2018,
https://freebeacon.com/politics/democrat-running-virginia-
discovers-new-southern-accent-new-home-state/ (accessed Dec.
11, 2018).
38 https://freebeacon.com/politics/democrat-running-virginia-
discovers-new-southern-accent-new-home-state/.
39 “Ford Starts Most Comprehensive Truck Marketing

Campaign to Introduce Toughest, Smartest, Most Capable F-150
Ever,” Ford Media Center,
December 30, 2014,
12/30/ford-starts-most-comprehensive-truck-marketing-
campaign.html (accessed Dec. 11, 2018).
Page 21 of 48
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09/07/ford-f-series-now-official-truck-of-the-nfl--celebrating-
toughes.html
history/index.html
history/index.html
https://www.adweek.com/brand-marketing/toby-keith-sings-
praises-ford-trucks-new-ads-59046/
https://www.adweek.com/brand-marketing/toby-keith-sings-
praises-ford-trucks-new-ads-59046/

https://www.youtube.com/watch?v=6K02LnfxN-4
discovers-new-southern-accent-new-home-state/
discovers-new-southern-accent-new-home-state/
campaign.html
campaign.html
Page 7 UVA-M-0967
Autonomous Vehicles: An Industry Perspective
“The dream of cars that drive themselves has been around
almost as long as cars have—Americans saw a
concept for some at the 1939 World’s Fair…, but the push to
make it real began in 2004.”40 That year, DARPA
(Defense Advanced Research Projects Agency of the US
Department of Defense) “inaugurated its ‘Grand
Challenge,’ offering a $1 million prize to any autonomous
vehicle that could navigate a 142-mile course”41 in
the Mojave Desert. No team made it past the first 5% of the
course that year,42 but in 2005, five teams’ robots
completed the course, with Stanford University placing first and
a flurry of research in the space ensuing.
Level 1 and 2 progress
As researchers pursued the development of a fully autonomous
vehicle, assistive technologies allowing
human drivers to optimize the handling of their vehicles started

to emerge, and in 2014 the Society of
Automotive Engineers (SAE) defined five official levels of self-
driving functionality.43 (For definitions and
examples at each level, see Exhibit 6.) Carmakers made great
strides at the lower end of the spectrum (Levels
1 and 2) and brands such as Tesla, Cadillac, Volvo, Audi, and
Ford released car models that had autonomous
settings for highway driving—elevating traditional cruise
controls with the ability to steer and slow down for
traffic—and even for parallel parking.44 By 2018, the most
advanced autonomous car for sale was the Audi A8,
owned by Volkswagen. “The car’s traffic jam pilot use[d] Lidar
to see the road and let drivers go completely
hands free at speeds up to 37 miles per hour.”45
These assistive technologies were a sensible move for
carmakers hoping to ease consumers into the idea of
a fully autonomous vehicle, considering research from Pew
Research Center in 2017 indicating that “Americans
[were] wary of driverless cars—56%…would prefer not to ride
in one.”46 This wariness was likely fueled by
several high-profile deaths that resulted from advancements in
autonomous technology: in 2016, a man
“driving” a Tesla on autopilot in Florida collided with an
undetected white tractor-trailer and was killed,47 and
in March 2018, a self-driving Uber struck and killed a
pedestrian in Arizona.48 Despite these challenges,
“consumer research by Kelley Blue Book, Autotrader, and
others demonstrate[d that] exposure to driver-assist
technologies potentially increase[d] acceptance of self-driving
vehicles,”49 and there was no doubt this was
where carmakers and tech companies alike were rapidly
heading.
40 Bill Wasik, “What the Car Did—And What It Might Do.

Introducing This Year’s Tech and Design Issues, Life after
Driving,” New York Times
Magazine, November 7, 2017,
-design-future-autonomous-cars-american-interstate-
highway-roads-suburbs.html (accessed Dec. 11, 2018).
41
-design-future-autonomous-cars-american-interstate-highway-
roads-
suburbs.html.
42 Marsha Walton, “Robots Fail to Complete Grand Challenge,”
CNN, May 6, 2004,
http://www.cnn.com/2004/TECH/ptech/03/14/darpa.race/
43 Aaron Cole, “What Are the Different Levels of Self-Driving
Cars?,” Washington Post, February 21, 2017,
https://www.washingtonpost.com/cars/what-are-the-different-
levels-of-self-driving-cars/2017/02/21/444a2a80-f877-11e6-
aa1e-
5f735ee31334_story.html?utm_term=.2335e05d82f1 (accessed
Dec. 11, 2018).
44 Jon Gertner, “Tesla’s Dangerous Spring into the Future,”
New York Times Magazine, November 7 2017,
-design-future-autonomous-cars-factory-tesla-sustainability-
gigafactory.html
45 Lidar, a common tool used in self-driving research vehicles,
was a high-precision sensor that measured distance to objects

using pulses of laser light
and provided 360 degrees of visibility. David Welch and
Elisabeth Behrmann, “Who’s Winning the Self-Driving Car
Race?,” Bloomberg, May 7, 2018,
https://www.bloomberg.com/news/features/2018-05-07/who-s-
winning-the-self-driving-car-race (accessed Dec. 11, 2018).
46
-design-autonomous-future-cars-detroit-ford.html.
47 Danny Yadron and Dan Tynan, “Tesla Driver Dies in First
Fatal Crash while Using Autopilot Mode,” Guardian, June 30,
2016,
https://www.theguardian.com/technology/2016/jun/30/tesla-
autopilot-death-self-driving-car-elon-musk (accessed Dec. 11,
2018).
48 Sam Levin and Julia Carrie Wong, “Self-Driving Uber Kills
Arizona Woman in First Fatal Crash Involving Pedestrian,”
Guardian, March 19, 2018,
https://www.theguardian.com/technology/2018/mar/19/uber-
self-driving-car-kills-woman-arizona-tempe (accessed Dec. 11,
2018).
49 “A Matter of Trust: Ford’s Approach to Developing Self-
Driving Vehicles,” Ford Media Center, August 16, 2018,
https://media.ford.com/content/dam/fordmedia/pdf/Ford_AV_L
LC_FINAL_HR_2.pdf (accessed Dec. 11, 2018).
Page 22 of 48
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roads-suburbs.html
roads-suburbs.html
roads-suburbs.html
http://www.cnn.com/2004/TECH/ptech/03/14/darpa.race/
aa1e-5f735ee31334_story.html?utm_term=.2335e05d82f1
aa1e-5f735ee31334_story.html?utm_term=.2335e05d82f1
gigafactory.html
winning-the-self-driving-car-race

-design-autonomous-future-cars-detroit-ford.html
https://www.theguardian.com/technology/2016/jun/30/tesla-
autopilot-death-self-driving-car-elon-musk
https://www.theguardian.com/technology/2018/mar/19/uber-
self-driving-car-kills-woman-arizona-tempe
https://media.ford.com/content/dam/fordmedia/pdf/Ford_AV_L
LC_FINAL_HR_2.pdf
Page 8 UVA-M-0967
The road to Level 4
Although Level 5 autonomy was the pinnacle of the SAE’s
ranking system, by 2018, “no level 5 car [had]
ever been publicly deployed, and it [was] doubtful one even
exist[ed].”50 Instead, the race was on to achieve
Level 4 autonomy, and the industry hoped to first use these
vehicles in a shared service context for several
reasons. First, buying an autonomous vehicle for individual use
was expensive. In 2018, an autonomous version
of the Chevy Bolt would cost around $200,000, compared to
$35,000 for a manually driven Bolt.51 By putting
the self-driving car to use as a robo-taxi, “you amortize the cost
through the saving on the driver,”52 remarked
Daimler’s head of development, Ola Kaellenius.
Secondly, the potential rewards were massive. Onlookers
believed driverless “delivery and taxi services
[were] capable of generating huge profits.”53 In 2018, Goldman
Sachs predicted that robo-taxis [would] help
the ride-sharing business grow from [a current] $5 billion in
revenue…to $285 billion by 2030—without drivers,
operating margins could be in the 20% range, more than twice

what carmakers”54 were accustomed to
generating. Furthermore, the self-driving car industry as a
whole could be worth $7 trillion by 2050, according
to a 2017 report from Intel Corporation and Strategy
Analytics.55
Finally, shared self-driving cars could help urban traffic
patterns, parking facilities’ capacity, and the
environment as a whole. The average personal vehicle was
driven less than an hour per day, whereas self-driving
vehicles could theoretically “pick up and drop off passengers all
day, which significantly reduce[d] the number
of cars a community need[ed].”56 “Researchers at the
University of Michigan estimated that autonomous
vehicles could cause car ownership to drop by as much as 43%.
Lyft…cited research estimating that as many
as 80% of cars could eventually be eliminated.”57
With these potential rewards in mind, 43 companies were
testing autonomous vehicles all across the world
by 2017,58 and a few were clear leaders of the pack.
Winning the race
By May 2018, journalists at Bloomberg believed that Google’s
sister company and self-driving car division
was the closest to achieving successful autonomy and thus
winning the “self-driving car race.” Google began
pursuing the dream of self-driving cars back in 2009, when it
started investing hundreds of millions of dollars
into research around driverless technology59 under the “Google
self-driving car project” banner, before
changing the name to “Waymo” in 2016. By this time, Waymo
was designing its own reference vehicle,
“Firefly,” with a custom sensor, computers, steering and
braking, but no steering wheels or pedals,60 with the

majority of its research being conducted on Fiat Chrysler
minivans.61 In 2018, Waymo announced it was
acquiring 60,000 self-driving vans and planning to open a robo-
taxi business in Phoenix later that year.62
50
gigafactory.html.
51 https://www.bloomberg.com/news/features/2018-05-07/who-
s-winning-the-self-driving-car-race.
55 https://www.bloomberg.com/news/articles/2018-08-09/ford-
is-far-from-first-in-driverless-vehicles-and-investors-want-in.
56
57
58
59
60 “Our Journey,” Waymo, https://waymo.com/journey/

62 Andrew J. Hawkins, “Ford’s ‘Self-Driving’ Vans Are Now
Delivering Food in Miami,” The Verge, June 11, 2018,
https://www.theverge.com/2018/6/11/17448702/ford-self-
driving-car-food-delivery-miami-postmates (accessed Dec. 11,
2018).
Page 23 of 48
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gigafactory.html

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