Mich. places $8M bet on future to bring Waymo plant to Metro Detroit
Michigan officials are placing big bets to ensure the state remains a leader in automotive technology — and the latest proof is the $8 million grant the Michigan Economic Development Corp. awarded Tuesday to Google's self-driving car unit.
Waymo wants to retrofit a factory in Metro Detroit to install self-driving hardware on Chrysler Pacifica Hybrid minivans and Jaguar i-Pace electric cars. The Mountainview, California-based company has been using Pacificas as autonomous test-mules in cities around the U.S. for years.
The Michigan factory would put Waymo closer to the source of those minivans — Windsor — as well as numerous automotive suppliers. It could bring up to 400 jobs to an area of southeast Michigan that's at risk of losing two General Motors Co. factories.
The terms of the agreement approved Tuesday require Waymo to sign a three-year lease in Wayne, Oakland or Macomb county and create 400 jobs to receive the full $8 million from the state. Total planned investment in the plant would be $13.6 million, so the MEDC could end up paying for more than half of it.
Tuesday's agreement involving the high-profile Silicon Valley company is the latest in which Michigan cut a deal with a supplier, technology company or auto company to entice them to the state.
"It's mostly logistics," said Karl Brauer, analyst with Cox Automotive. "But it will have somewhat of a symbolic impact. I think you could say this is certainly an indicator that this is how the future of the auto industry might go."
Waymo says it is looking for up to 200,000 square feet of ready-to-go, light manufacturing facility space in one of the three counties. Jeremy Webb, senior business development project manager at the MEDC, said the company is in talks with a few locations, though it has not signed a lease.
According to the deal with the economic development corporation, the facility must be in operation by the end of 2021 with at least 100 new employees. Waymo could create up to 400 jobs in the region by 2025.
In a blog post, Waymo said it will hire engineers, operations experts and fleet coordinators to retrofit and deploy the self-driving vehicles. Waymo has the option to buy 62,000 Pacifica Hybrids from Fiat Chrysler and 20,000 vehicles from Jaguar.
The news comes after Waymo introduced last month a small-scale ride-hailing service in the Phoenix area to a couple of hundred riders.
Waymo has used Pacifica Hybrid vans for years to test its self-driving system. The three-row minivans are produced in Windsor and shipped to a facility in Novi where they currently are outfitted with self-driving hardware and software by Waymo and Chrysler engineers. That center, which opened in 2016, employs about 20.
Waymo also will work with Canadian auto supplier Magna International Inc. to help integrate Waymo’s self-driving system into its fleet with a team hired exclusively for its work.
Magna, Jaguar Land Rover and Fiat Chrysler all deferred questions on the partnership to Waymo.
MEDC CEO Jeff Mason said the move emphasizes the significance of Michigan in the development of self-driving vehicles.
"It shows Michigan is the place where we are able to integrate this technology into the vehicles," he said Tuesday. "It shows Michigan is the place in North America where companies are coming to bring this technology to life."
Mason said Waymo had looked at other states, but ultimately decided on Michigan.
He said, "This is another great example of a company from the West Coast really seeing the advantages Michigan has to integrate both engineering and manufacturing, find high-tech talent and where the company can grow and prosper."
Sam Abuelsamid, analyst with Navigant Research, said for now, Michigan's power resides in the fact that the automotive industry was born in the state. There are hundreds of companies located in or around Michigan that Waymo needs to be near.
"Having a facility in Michigan to do AV-equipment installs will be helpful," he said, :and there are lots of capable technicians available with layoffs (expected from GM)."
"They also need to do a lot more poor-weather development," he said. "A Detroit-area facility would be a good staging-ground for winter work in northern Michigan."
MICHauto, an economic development of the Detroit Regional Chamber, also has recognized Waymo with a higher investor level because of its move. The company has been an investor in the group since coming to Michigan in 2016.
"Southeast Michigan is the ideal place (for Waymo's operations) because we have an ingrained cultural know-how on how to design, test and manufacture highly, highly complex safety-first vehicles," said Glenn Stevens, MICHauto executive director. "That is something we do here. That is not something Waymo does."
Waymo is the latest Silicon Valley company to come to Michigan. California-based automotive battery manufacturer Samsung SDI America Inc., semiconductor equipment manufacturer KLA-Tencor Corp. and information technology firm Nexient have announced major investments in Southeast Michigan over the past year. San Jose's Cisco Systems acquired Ann Arbor-based Duo Security, a cloud-based, trusted-access provider.
Last year, Google moved 100 employees at its Birmingham office to a new space in Little Caesars Arena in Detroit.