Big 3 partner cautiously with Silicon Valley

Michael Martinez, and Michael Wayland

The convergence of the Motor City and Silicon Valley has never been more apparent than at the Detroit auto show.

Automakers such as Ford Motor Co., General Motors Co. and others increasingly are becoming mobility companies, placing nearly as much emphasis on ride-sharing and autonomous features as horsepower and miles per gallon. It’s an odd collision of traditional, established manufacturers and new-to-the-scene tech disruptors, and executives say they’re still determining whether Silicon Valley represents a threat to their businesses.

“They have a term out there called ‘frenemy,’ and I think that’s an apt term,” Ford Executive Chairman Bill Ford told The Detroit News on Monday at the Detroit auto show. “We don’t know who’s friend and who’s foe, but I’m of the opinion you can turn almost everybody into a friend. I think that’s what we need to do.”

Ford announced at the show it is partnering with mobility companies and Silicon Valley startups for its new FordPass app: ParkWhiz and Parkopedia help customers find parking spots and pay for them. FlightCar helps them park near an airport for free; while they’re traveling, FlightCar rents their car to others.

The automaker reportedly is in talks with Google Inc. to build driverless cars. GM last week said it’s linking up with ride-sharing service Lyft. And a number of major suppliers are talking with tech-savvy startups to help make the sensors, cameras and chips that will drive the autonomous cars of the future.

“There’s some very deep silos that people are working in: autonomy, accessing vehicles and the powertrain itself,” Ford said. “But the company that can take a step up and stitch this all together in a way that changes lives in a meaningful way will be the company that does really well.”

The Dearborn automaker last year opened an office in Silicon Valley and is making an effort to “disrupt itself” as it becomes both an auto and a mobility company, CEO Mark Fields said.

“Partnerships are going to be very important,” Fields told The News last week at the consumer electronics show in Las Vegas. “We can’t have the arrogance to say we’re going to do everything on our own.”

‘Interface is inevitable’

Fiat Chrysler Automobiles NV CEO Sergio Marchionne told reporters Monday at the North American International Auto Show that the role of automakers in this new market “needs to be redefined,” but he doesn’t believe Detroit has to become Silicon Valley or vice versa.

“At least from an FCA standpoint, we should avoid making grandstanding statements about the fact that we are going to take Silicon Valley into Detroit and turn Detroit into Silicon Valley,” Marchionne told reporters Monday. “We’re not going to do that.”

Marchionne said tech companies will play a “significant role in the way in which the auto industry develops” and “that interface is inevitable.”

He cautioned, however, that the enthusiasm around auto companies becoming mobility leaders will be costly and not take place overnight.

“I am very weary of all this incredibly enthusiastic view of the world of the fact that we’re transitioning a car business into a transportation business,” he said. “I got that part of it. The capital requirements to get from point ‘A’ to point ‘B,’ which is still a very tough road to haul, it’s going to be so huge that it will make debt consolidation mandatory.”

Fiat Chrysler, Marchionne said, is having “continuous conversations” with companies in Silicon Valley.

Cost is one reason that many already have announced joint projects and partnerships between Silicon Valley and Detroit.

CEO Ford says, “The world we live in now, we’re going to have to try new things, experiment with new things, which means we will fail in some areas.

“The traditional way auto companies have dealt with failure has been to shut down the whole effort, shoot the messenger and never do that again. If that’s our response, we won’t innovate.”

Suppliers look at tie-ups

The convergence is apparent among the companies that supply the automakers as well.

Computer chip-maker Nvidia Corp. has created its first supercomputer for the car, a lunchbox-sized “Drive PX 2” with eight teraflops of processing power — the equivalent to the power in 150 MacBook Pros — that can help in the complex sensor-detecting capabilities needed in fully driverless cars and trucks. That much power can allow the car to easily scan 360 degrees around the car to detect animals, pedestrians, cars, debris and other objects.

Delphi Automobiles has been working on autonomous car technology, and has partnered with Qualcomm and others to connect the car to mobile phones, traffic lights, other vehicles and objects on the road.

Mobileye, a startup maker of camera and 3D maps for autonomous cars, last week cut a deal with the U.S. Department of Transportation to supply a city’s fleet of transit buses with its latest camera technology, which its co-founder pegged at between a $3 million-$4 million investment.

ZF CEO Stefan Sommer said the German auto supplier, which acquired Livonia-based TRW Automotive in 2015, is continually looking for new tech companies to partner with or even acquire.

“It’s needed because, as I’ve said, the new digital world cannot really provide the mobility in its own because it’s not capable in the mechanical (or production) part,” he said. “The automotive world needs to see the opportunities and the technologies of the digital world.”

Sommer said new tech companies are having a “huge impact” on the industry, and “it makes no sense just to invest on either side and to catch up on the other side.”

Kelley Blue Book senior analyst Rebecca Lindland said it would be “naive and foolish to look at Silicon Valley as a threat.”

“You can’t say ‘I’m not playing with them because they scare us,’ ” she said. “That’s an Old Detroit mentality and that’s not what the New Detroit represents at all.”