April 25–The evidence keeps mounting: the Auto 2.0 transformation of the industry founded more than a century ago in Detroit is not leaving the Motor City behind.
Quite the opposite, actually. Ford Motor Co. confirmed as much Wednesday with a $500 million investment in the hot electric-truck maker Rivian Automotive LLC. The move follows by just one day word that Waymo LLC, the self-driving unit of Google parent Alphabet Inc., will retool an American Axle & Manufacturing site in Detroit to outfit Chrysler Pacifica minivans with its autonomous-driving technology.
General Motors Co. is using its Orion Assembly Plant north of the city to produce its electric Chevrolet Bolt, the platform for a driverless vehicle being developed by its San Francisco-based GM Cruise LLC autonomous-car unit. And Fiat Chrysler Automobiles NV, a partner with Waymo, is expanding production in Detroit of next-generation Jeep Grand Cherokee SUVs powered by gasoline, gas-electric hybrid and electric powertrains.
Welcome to the evolving reality of Detroit today. A decade removed from epic bailouts and bankruptcies, the companies America nearly gave up for dead are demonstrating the opportunism, flexibility and technical capability they’ll need to battle Silicon Valley’s heaviest heavyweights in the high-stakes battle for leadership in mobility, autonomy and electrification.
Owning a piece of the next generation of personal transportation is not a birthright for Detroit or its foreign automotive rivals. It’s a competition whose leaders recognize success comes from marrying the innovation and risk-taking of the tech space with the engineering execution and regulatory discipline of today’s auto industry.
The not-invented-here arrogance that for decades typified the business and engineering leadership of Detroit’s traditional automakers is disappearing steadily. Partnership is replacing control, curiosity is trumping certainty, innovation is outpacing process, and humility is worth far more than hubris.
The stakes are huge. Leadership in the trifecta of mobility, autonomy and electrification could deliver the winner(s) a chunk of an emerging industry expected to be measured in trillions of annual revenue. The consensus emerging, and underscored by the Ford-Rivian deal, is that getting there depends on time, partnership and the maturity to understand that no one company alone possesses all the tools to get there.
“We have a very deep respect for what the auto industry is capable of today,” said Rivian’s founder and CEO R.J. Scaringe, detailing the Dearborn automaker’s capability in manufacturing, vehicle engineering, supply-chain management and software development. “There’s a lot of expertise that’s been built up over time.”
Exactly right. The hype that assumed Silicon Valley tech powerhouses stuffed with cash would run away with the next-generation auto race is reckoning with a more realistic assessment of where the technology is, who is best equipped to leverage it and how critical partnerships are to getting there.
Plymouth-based Rivian’s deal with Ford was negotiated in a matter of weeks, not months, once the electric-truck maker’s talks with Blue Oval rival GM faltered, according to two sources familiar with the situation. Under terms of the deal, the CEO of Ford’s automotive business, Joe Hinrichs, will occupy a seat on Rivian’s board, and Rivian’s “skateboard” electric-vehicle platform will be used to develop at least one vehicle for Ford.
“The tipping point approaches, and if you wait too long, you can’t recover,” said Ford CEO Jim Hackett. “I like that R.J. recognizes that he needs the industry to make it happen. Rivian and Ford match up strategically. We can learn a lot from each other.”
Not too long ago, those eight words wouldn’t be uttered by a Detroit auto CEO, or his head of engineering, or just about any senior executive charged with designing, engineering or manufacturing a car, truck or SUV. All automotive knowledge worth knowing resided then in the citadels of the industry, in Detroit and Wolfsburg, Stuttgart and Tokyo, Munich and Paris.
In the decade since the Obama auto task force and American taxpayers financed the bankruptcies of GM and Chrysler Group LLC, that’s all changed. Elon Musk’sTesla Inc., the Silicon Valley-based maker of upscale electric vehicles, now outsells BMW and Mercedes-Benz in the rich U.S. market and sets a standard the rest of the industry is poised to match or exceed with a flood of new EVs over the next few years.
Musk’s over-the-air software updates are raising consumer expectations, even if his “production hell” manufacturing gaffes, missed targets and openly derisive attitude toward the global auto industry’s expertise in general, and Detroit’s in particular, telegraphs an arrogance Old Detroit would recognize.
But emulate? Not anymore, thank you. To hear Rivian’s Scaringe talk about his company’s capabilities — modular network architecture to move and control data in vehicles, for example — is to hear a entrepreneur who’s a) learned from a Musk mistake or two and b) understands that automakers like Ford do some things better than Rivian would anytime soon.
He’s not alone. Even as investors continue to question the pace and arc of change at Ford under Hackett, the former office furniture CEO is building a network of partnerships that could position the Blue Oval to stake a front-row starting position in the Auto 2.0 race.
In an office park not far from the Detroit Lions practice facility in Allen Park, Ford’s autonomous-driving partner, Argo AI, is developing technology to make Ford — and, potentially, Rivian’s R1T electric pickup and R1S electric SUV, among others — competitive in the self-driving vehicle space not too many years from now.
Ford’s investment in Rivian reflects “the ongoing shift in the automotive industry toward more focused partnerships and collaborations, versus traditional mergers,” Stephanie Brinley, principal automotive analyst at IHS Markit, said in a statement. “This partnership model is particularly important for EVs and mobility technology. Both parties bring specific expertise to the partnership, and have much to offer each other.”
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him at 3 p.m. and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.
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