Detroit automakers are assembling the most impressive run of profitability in probably 50 years, but that’s not stopping big churn at the top.
Ford Motor Co. ousted its CEO after less than three years in the job, replacing him with a Big Thinker. Jim Hackett’s intellectual touchstones skew more to Apple Inc. founder Steve Jobs and Microsoft Corp.’s Bill Gates than Henry Ford or Alan Mulally, the Boeing Co. executive who engineered the Blue Oval turnaround.
General Motors Co., amassing record profits in North America, is bolting key foreign markets. After 90 years, it’s selling its pieces in Europe to France’s Groupe PSA SA, abandoning Russia and pulling out of India, on track to be the world’s No. 3 market.
And Sergio Marchionne’s Fiat Chrysler Automobiles NV is seeking its own exit from the business, either through spin-offs or a sale to outside bidders.
The driver behind all this churn is the Holy Grail of the next automotive century, the race to field safe self-driving vehicles on a mass scale.
It’s changing everything. The new competition — for capital and competitive advantage, for growth and market position — is unlike anything Detroit or its traditional competitors in Germany and France, Japan and South Korea have ever encountered.
The global auto industry’s rivals are cash-rich giants epitomized by Silicon Valley. Unlike Detroit, they’re darlings of Wall Street and venture capital hotshots betting the next new thing in personal transportation is more likely to be developed and produced by California’s Bay Area than the historical heart of American auto industry.
They may not be pushing hard to actually build the self-driving vehicles. Who would, considering the meager manufacturing margins compared to Silicon Valley’s stratospheric numbers. But the biggest tech players are deep in the game of developing the software and the intellectual horsepower to make it all possible.
Detroit’s automotive leaders understand the predicament, judging by their actions. But other auto folks predisposed to dismissing the threat, much like their parents dismissed the arrival of Japanese automakers in the American heartland, do so at their own peril.
I’m talking to you, retirees; you, skeptics, who insist people will “never” buy self-driving cars; you, union leaders and local politicians, who seem to think the technology already transforming the factory floor won’t also transform the products made there.
This stuff is getting real, folks, very real. And the quickening march of technology, spurred by the huge financial windfall sure to accrue to whoever is indisputably first, means the Jetsons caricatures of popular cynicism soon will be replaced by suites of sensors that really can deliver as advertised.
Whether it arrives in 2021 or 2027 is less important than the fact that it’s coming. If the home of the American auto industry isn’t truly part of the solution, it stands to lose — a lot.
In jobs and economic clout. In political influence and seats at the automotive table that will be occupied by those who best straddle the fusion of transportation and technology and understanding the politics connecting both.
Couldn’t help but think of that tension when The Wall Street Journal posted a story Thursday afternoon describing the intense pressure Tesla Inc. Chairman Elon Musk is exerting on his engineers to deliver hardware that will enable Tesla models to drive themselves.
The push has caused the team to lose 10 engineers and four managers in recent months, the Journal reported, signaling just how wide the gulf can be between engineering limitations and realizing the outsized vision of an entrepreneur like Musk. The boss usually wins those confrontations, even if he’s wrong.
The people who brought the world the iPhone, who crafted an internet search engine whose name became a verb, are the same people trying to claim leadership in the next-generation auto industry.
Apple Inc. CEO Tim Cook says self-driving car technology is “the mother of all” artificial intelligence challenges. Google parent Alphabet Inc.’s Waymo LLC self-driving car unit is using Chrysler Pacifica vans in its efforts to develop a system that could compete with offerings from GM and Ford.
On a decommissioned Air Force base in California’s Central Valley, code-named “Castle,” Waymo engineers conduct “structured testing,” The Atlantic reports. Armed with data gleaned from vehicles, engineers are able to reshape the terrain to replicate real-world scenarios — and then collect yet more data.
All of it, and so much more, are the biggest challenge to the global auto industry in 50 years — in large part because it’s being waged disproportionately in the recesses of software development, innovation and risk-taking. No wonder there’s churn in Detroit.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.