Slashdot Mirror
Will Tech Leave Detroit In the Dust? (wsj.com)
As automotive companies shift their focus to software and services in the pursuit of self-driving cars, the impact to large manufacturing cities like Detroit could be drastic. The Wall Street Journal explores this "transformation without precedent" and poses the question: will tech leave Detroit in the dust? From the report: Auto makers point out that they have one advantage that newcomers to the industry don't: vehicles. "Ultimately, you can have the best services platform there is, but if you don't have the vehicles to operate on it, that won't do you much good," said Sam Abuelsamid, a senior analyst with Navigant research. "That's where the manufacturers have an ace in the hole." Many analysts believe businesses like Uber and Alphabet's self-driving tech subsidiary Waymo won't have the appetite to get into the low-margin, capital-intensive business of car manufacturing. Some auto executives say they can hold on to their roles as hardware providers while also tapping into the growth of more-profitable services. Mr. Stackmann said VW can earn millions more customers than it currently has by offering transportation as a service through a network of connected cars. "They talk about scalability, but where is the added value from Uber?" he said. "We have a technical foundation and will build connectivity into our vehicles to connect them and our customers to our ecosystem. In the long term, the question will be: Why do you need Uber?"
Auto industry executives have long seen tech-industry threats coming. The valuation of Elon Musk's Tesla has soared in recent years, pulling even with GM's, as it has shown it can create a fiercely loyal customer base for electric cars. Google began working on autonomous-vehicle technology in 2009 and its self-driving car unit Waymo is today considered a leader in the technology. While demand for new cars and trucks remains robust and selling them will remain a core part of the industry's business in the years to come, many executives believe the long-term profit growth is limited as new forms of transportation proliferate and more car owners ditch their vehicles for shared ones, hurting sales. Car companies are trying to diversify into new business models that, much like Uber, sell transportation as a service. Revenue is generated by usage as opposed to a one-time vehicle sale, and because the service isn't as capital-intensive as building and selling cars, executives believe it can ultimately command higher margins..." The report goes on to mention the investments automobile companies are making to restructure their businesses. GM, Ford, and Toyota, for example, "are investing in new tech startups, purchasing artificial-intelligence and robotics firms, and hiring thousands of workers in tech hubs in California and Tel Aviv, Israel," reports the WSJ. "Several car companies have acquired or invested in makers of lidar, laser-based sensors that help driverless cars navigate. The auto makers are tapping the tech world for software-engineering talent, a skill traditionally in short supply in the car business."
"Over the last year, GM has taken journalists and investors through a factory in suburban Detroit, where workers plan to build self-driving Chevrolet Bolt electric cars that have no steering wheels or brake pedals," reports the WSJ. "The message: It has the manufacturing might to crank out thousands of robot cars, while tech rivals like Alphabet's Waymo unit must equip their autonomous systems onto vehicles they purchase from traditional car companies."
Auto industry executives have long seen tech-industry threats coming. The valuation of Elon Musk's Tesla has soared in recent years, pulling even with GM's, as it has shown it can create a fiercely loyal customer base for electric cars. Google began working on autonomous-vehicle technology in 2009 and its self-driving car unit Waymo is today considered a leader in the technology. While demand for new cars and trucks remains robust and selling them will remain a core part of the industry's business in the years to come, many executives believe the long-term profit growth is limited as new forms of transportation proliferate and more car owners ditch their vehicles for shared ones, hurting sales. Car companies are trying to diversify into new business models that, much like Uber, sell transportation as a service. Revenue is generated by usage as opposed to a one-time vehicle sale, and because the service isn't as capital-intensive as building and selling cars, executives believe it can ultimately command higher margins..." The report goes on to mention the investments automobile companies are making to restructure their businesses. GM, Ford, and Toyota, for example, "are investing in new tech startups, purchasing artificial-intelligence and robotics firms, and hiring thousands of workers in tech hubs in California and Tel Aviv, Israel," reports the WSJ. "Several car companies have acquired or invested in makers of lidar, laser-based sensors that help driverless cars navigate. The auto makers are tapping the tech world for software-engineering talent, a skill traditionally in short supply in the car business."
"Over the last year, GM has taken journalists and investors through a factory in suburban Detroit, where workers plan to build self-driving Chevrolet Bolt electric cars that have no steering wheels or brake pedals," reports the WSJ. "The message: It has the manufacturing might to crank out thousands of robot cars, while tech rivals like Alphabet's Waymo unit must equip their autonomous systems onto vehicles they purchase from traditional car companies."
Work in the industry long enough and what you see is that the automotive business does not innovate and downright sucks when it comes to developing and implementing their own tech.
Examples: Dealerships are locked into hopelessly obsolete systems through UCS (now Reynolds), CDK, ADP automotive, etc. They still actively push solutions that use 10 year old cisco routers, dot matrix printers, and etc. I even saw SCO Unix still being used around 2012. When one vendor dipped their toe in the water and made a (shitty) web based system, everyone panicked.
In car entertainment systems: They suck too. At first the companies tried to develop their own (Ford Link, Lincoln in car entertainment, I forget what GM called their abortion entry). After they figured out they couldn't do systems worth a damn, they tried to partner with others. And somehow managed to screw that up (Microsoft's Sync implementations come to mind ).
On the other hand you have the tech companies. They may make a better software product, but they don't have 80 years of car building and engineering experience. Tesla makes a hell of a car, but they can't scale and right now they are crafting parts in fucking *tents* attached to their factories. They are going to have quality control issues out the wazoo.
Add all of this up and the advantage still goes to the auto makers because:
1) They have the manufacturing capacity and partner relationships. The big 3 can integrate self driving software. Self driving people have to buy / design the car and retrofit it.; and
2) People are already use to driving their own cars. It is the tech companies that are trying to change the paradigm. They will have the pressure to make a perfect product. If they have a flaw we'll all be taking about how they fucked up the self driving aspect. On the other hand all the auto makers have to do is make car that drives with a drive assist feature that is passable. If they have a problem, we'll roll our eyes and say the car is ok but the self driving needs improvement.
In order for self driving cars to really become successful and enter the mainstream, the tech guys are going to have to go automotive.