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Howes: Detroit pushing for place in self-driving race

Daniel Howes
The Detroit News

The scramble is quickening between Detroit automakers, Silicon Valley stalwarts and techy newcomers for competitive advantage in next-generation mobility.

General Motors Co.’s partnership with ride-sharing startup Lyft, whose software matches people who need rides with people who have cars, is unambiguous recognition by a traditional automaker that the definition of personal transportation is morphing in real time — and that Detroit needs to be a big part of it or risk being left behind.

“We think our business will change more in the next few years than it has in the last 50,” GM President Dan Ammann told The Detroit News in an interview Monday. “There’s a good chunk of the customer base already that’s saying they want to consume mobility in a different kind of way. We as a company want to make sure that we’re positioned to be at the forefront of that change instead of having change happen to us.”

GM will invest $500 million in Lyft and get a seat on its board of directors to be occupied by Ammann. Under the transaction, the companies would create a pool of jointly developed autonomous vehicles available on demand to Lyft customers; would give GM access to Lyft’s ride-sharing software; would expand Lyft’s portfolio of services by making GM the preferred vehicle provider of short-term rentals to its customers; and theoretically would burnish GM’s image as a trendsetter in the self-driving space.

The move, confirmed just before the opening of the CES 2016 technology trade show and next week’s press days at the North American International Auto Show, partially answers Ford Motor Co.’s likely joint venture with Google Inc. to develop self-driving vehicles. It also signals that the bid for leadership in the autonomous space is intensifying.

This is new territory for Old Detroit. Bruised by its own legacy of badly underestimating foreign-owned competition — and losing market share, often permanently, in the process — a new generation of leaders here is seeking partnerships that marry the metal-and-rubber cred of automaking with the creativity and utilitarian customization of Silicon Valley.

They don’t have a choice. The success of Lyft and Uber ride-sharing, the efforts of Google and Apple Inc. to develop self-driving cars, the presence of Tesla and others in the electric-car space — all of them represent direct challenges to the predominance of Detroit, and the Germans and the Japanese, among others, in the personal transportation business pretty much owned for a century or more by automakers.

The Silicon Valley disrupters whose work destroyed audio CD sales, upended the newspaper business, imperils the livelihood of taxi drivers and continually redefines personal communication are aiming squarely for the convergence of their world and Detroit’s. Loaded with cash, entrepreneurial moxie and a story to tell, they make formidable opponents and attractive partners, as GM’s tie-up with Lyft suggests.

The symbolism is hard to overstate for GM. Seven years after collapsing into federally induced bankruptcy, the archetype of American industrial decline is awash in cash, generating billions from its core North American business and pushing the kind of technological edge that would have been laughed out of the Old GM.

The substance, however, is more meaningful. GM’s tie-up with Lyft, just like Ford’s telegraphed alliance with Google, is both a competitive imperative and a logical next step for the people whose new cars, trucks and SUVs essentially are massive computers on wheels. That’s not new, either.

The auto industry has a demonstrated record of showcasing innovations by Silicon Valley and the broader tech community. From GM’s use of OnStar, 4G-enabled communication and Apple CarPlay in select models to Ford’s Microsoft-based Sync infotainment systems and myriad crash-avoidance software systems, the industry arguably is the most prominent deployer of Silicon Valley know-how outside of the valley itself.

More, the reality of the auto industry today — from the nuances of product development to clean-space manufacturing controlled by sophisticated computer technology — belies the caricatured image of smoke-belching plants manned by gritty workers doing as they’re told. Not true, either.

The industry is evolving because it has to and because the consumer society it serves is, too. The race for competitive position in what is a software-driven, team-based and entrepreneurial eco-system is pushing this town’s automakers and their traditional rivals to move more quickly than they’re typically accustomed, to invest in technological development that may, or may not, be repaid in the marketplace by paying customers.

Either way, the exercise will quicken the metabolism of an industry conditioned to thinking in five-year product cycles and even longer for capital investment in manufacturing. That’s a good thing — anything, that is, that imprints tech’s go-go culture of discipline and speed on a comparatively staid auto sector.

“We’ve always had this vision that one day it will be as easy as opening an app and requesting a transportation experience and being able to ... have that be the most affordable, while also being productive wherever you’re going,” Lyft President and Co-Founder John Zimmer told The Detroit News. “In the future you’ll pay less for transportation, it’ll come to your doorstep, and you’ll be able to choose what experience you want.”

That’s disruption. A new study by Roland Berger LLC, a consultant focused on the auto supply base, warns that the next “industry disruption” will come from what it calls the “Silicon Valley challenge”:

“New entrants and disruptive technologies are posing an existential challenge to the business models of suppliers,” the report says. “Technology players have disrupted multiple industries over the last 10 years and now these same players are knocking on the door of the auto industry.

“They are bringing business concepts and thinking that are fundamentally different from the traditional automotive mindset, leaving no doubt that this disruption is real and it’s impacting players in the entire eco-system.”

The good news is that GM and Ford, among others, see the radical change — and they’re pushing to be part of it.

Auto Writer Melissa Burden contributed.


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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.