In “It’s Silicon Valley and Detroit, not Silicon Valley vs Detroit (Pt. I),” we discussed some of the looming changes the automotive industry is facing today and what they mean for the industry going forward. In Part II, we will touch on the ways in which automotive players are addressing these changes through collaboration and the innovations that can stem from it.
To accelerate the future of the automotive industry, some players have entered into an intense era of collaboration among carmakers, technology giants, software start-ups, research institutions, telecom providers, insurance companies, and others to develop and commercialize the technology, share risk and prepare the market. Examples include:
BMW has led the development of a very ambitious consortium of companies to leverage the cost associated with the development of a scalable platform for level 3 and level 4 autonomous vehicles. The consortium includes other car manufacturers, tech companies, and automotive suppliers, including BMW, Fiat Chrysler Automotive, Intel, Mobileye (Intel purchased Mobileye in 2017 for $15.2 billion), Aptiv, Continental, KPIT and TTTech.
Waymo partners with Fiat Chrysler Automotive (FCA), Jaguar Land Rover (JLR) and Magna. Waymo is the autonomous technology company that spun out of Google, and has established a partnership with FCA and JLR for ride-hailing services that started late last year. Furthermore, Waymo is joining forces with Magna to build a factory for self-driving cars in southeast Michigan; the first cars produced will be autonomous versions of the Chrysler Pacifica Hybrid minivan and Jaguar’s I-PACE electric SUV.
GM and Cruise Automation
Cruise is a Silicon Valley start-up and driverless car company headquartered in San Francisco, California. Founded in 2013, Cruise tests and develops autonomous car technology. In March 2016, General Motors acquired Cruise for an undisclosed amount, although reports have placed the number “north of $1 billion.” Since the acquisition of Cruise, the following strategic investments have been made:
- In May 2018, Cruise announced that Softbank’s Vision Fund would invest $2.25 billion into the company, along with another $1.1 billion from GM itself.
- In October 2018, it was announced that Honda would be investing $750 million into the company, followed by another $2 billion over the next 12 years.
- Since Cruise’s acquisition, it has attracted investments of $2.25 billion from SoftBank and the $2.75 billion (over 12 years) from Honda, reportedly boosting its valuation to $14.6 billion. At the time of the GM acquisition, Cruise had 40 employees.
Ford and Argo AI
Ford has invested $1 billion in Argo AI, combining their autonomous vehicle development expertise with Argo AI’s robotics experience and startup speed on artificial intelligence software all to further advance autonomous vehicles. Founded by former Google and Uber leaders, Argo AI will include roboticists and engineers from inside and outside of Ford working to develop a new software platform for Ford’s fully autonomous vehicle coming in 2021; through their equity participation, Argo AI employees will share in the startup’s growth.
Lyft, Inc., a transportation network company (TNC) based in San Francisco, California and operating in the United States and Canada, has partnerships with Google’s self-driving car unit Waymo, as well as GM, Ford and Magna. It develops, markets and operates the Lyft mobile app. Launched in June 2012, Lyft operates in approximately 300 U.S. cities, and provides over 1 million rides per day.
- Google led investments in Lyft with a $1 billion investment.
- Lyft has partnered with Ford and GM on an open platform, where car manufacturers can plug their self-driving vehicles into its rideshare network. Magna, on the other hand, is partnering with Lyft to develop and manufacture self-driving systems.
- Lyft went public on March 29 and has a market cap of over $17 billion.
Innovation is About Working Together
Incredible collaborations and subsequent innovations have already been made between Silicon Valley and Detroit. In my view, it is rather myopic to suggest that these two industry giants be pitted against one another. The future of the automotive industry lies in automation, electrification, big data and more, but truth be told — we’re not there yet, and we won’t ever get there unless more companies from Silicon Valley and Detroit join forces and work together. Both communities need the other; both communities have much to offer. Neither will come out as true winners in the race to automotive innovation without investing heavily in cross-industry collaboration.