Ford's Chariot aims to fill NYC transit gaps with ride-sharing shuttle service

Key Points
  • Ford will bring low-cost, ride-sharing shuttle Chariot to NYC
  • Chariot already operates in three U.S. cities
  • Acquired by Ford Mobility in 2016
  • Part of Ford's overall effort to stay relevant in changing transportation landscape
Ford-owned Chariot shuttles are coming to New York.
Source: Ford Chariot

Ford is expanding its recently acquired crowdsourced shuttle service called Chariot into New York City.

This is the fourth city the company is now operating in, with the goal of offering cheap shared rides in areas that do not have public transit within walking distance. The company also hopes to lure riders away from buses or subways they find too crowded for their liking.

Ford acquired the San Francisco-based startup in 2016 for a reported $65 million, and it has since expanded from that city to Austin and Seattle. Ford's ownership has helped Chariot to more quickly expand. In return, Ford has access to a business that may help it participate in the rapid changes happening in transportation, such as the rise of the so-called ride sharing industry pioneered by companies such as Uber and Lyft.

"With Ford, we can scale operations really, really quickly," Chariot CEO Ali Vahabzadeh told reporters at an event in Manhattan on Thursday.

Ford has intimate knowledge of the vans it provides Chariot, so it offers the benefits of vertical integration, said Ford City Solutions group director Jessica Robinson, in an interview with CNBC. For instance, the company can support vehicle operations and maintenance.

The service will cost $4 per ride, about $1.25 more than a single one-way ride on a New York City subway or bus.

At first it will offer two routes, one that travels through a portion of Brooklyn and another that runs along the east side of Manhattan.They call both areas "transit deserts" where public transit is often not available within a convenient walking distance.

Chariot also hopes to scoop up some commuters frustrated with New York's often cramped public transit. The service debuts in New York at a time when subways regularly face delays caused by overcrowding.

The company plans to have 60 vehicles operating in the city by fall.

Users sign up through an app, where they provide information on their commute, such as time and distance. The app will give them pickup and drop-off locations, along routes Chariot has designed, and times when the next shuttle will be headed toward their stop.

But groups of people of at least 50 can collectively ask for a route to serve their area if they choose.

Unlike Uber or Lyft, it is not quite door-to-door service, and it is not on demand in the strictest sense. Once a route is set up, users check the app to see when a Chariot shuttle will next be in the area and reserve a seat.

The vans already offer WiFi, Vahabzadeh told reporters, and Chariot plans to consider offering other perks for riders. For example, he said, they may begin experimenting with seating arrangements, or offering locations for plugging in devices or stowing bags and coffee cups.

Ford's business has historically sold vehicles to individual drivers, but ride sharing, and hype over emerging technologies such as autonomous cars, have fed concerns that consumers may yet lose their interest in owning their own vehicles, preferring instead to make use of the patchwork of public and privately owned transit services.

Indeed, Lyft co-founder and president John Zimmer has said car ownership will "all but end" by 2025.

Of course, that claim has its skeptics, but some automakers are preparing anyway.

Ford recently, and abruptly, replaced CEO Mark Fields with Jim Hackett, who has run the company's "Ford Mobility" segment, a subsidiary charged with exploring autonomy, ride-sharing, and other new concepts.

That division was and still is charged with showing that Ford can keep up with rapid changes, and be a potentially formidable competition to new and potential rivals, such as Tesla, or even cash-rich tech firms such as Apple or Alphabet.

Despite overseeing several profitable quarters, Ford's stock has languished. Shares hovered around $11 Thursday afternoon. In contrast, Tesla shares were down about 4 percent Thursday afternoon, trading around $330, but have soared 50 percent since January alone. This disparity is despite the fact that Tesla is deeply in debt and delivers just a fraction of the vehicles Ford sells in a year.

Acquiring firms like Chariot is particularly critical for Ford's future success, Robinson said. Data from around the world indicate that more and more people are moving into densely populated cities, where car ownership tends to be less common.

"The way we have done things in the past is not going work for the next chapter of our company's future," she said.