Detroit Auto isn’t dead, and Silicon Valley isn’t leaving

When you think of Automotive, your mind probably travels to the Motor City—home to GM, Ford, and Chrysler. However, as automotive components are increasingly becoming smarter and more technologically-advanced, many people see Silicon Valley as the emerging leaders. But will the traditional Detroit-born automotive models really become a relic in the quickly-emerging market of electric-powered, self-driving, connected vehicles?  

The truth is, Silicon Valley tech giants simply can’t compete against the tried-and-true traditions of Detroit’s Big Three—and Detroit certainly won’t hold up in a tech match against the likes of Google and Amazon.

So, where does that leave us? And who will come out on top as we enter a completely revolutionized market?

Detroit vs. Silicon Valley: The strengths and weakness

Before making assumptions and placing bets, we need to see exactly what each player brings to the ring.

Silicon Valley undoubtedly leads in technological innovation. As a younger industry fueled by a high tolerance for risk and a trial-and-error business model, they aren’t afraid to move forward with new ideas and are equipped with the flexibility and fearlessness to make quick, innovative breakthroughs. This makes the Valley a clear winner for developing and building the state-of-the-art technologies (sensors, big data, machine learning algorithms, etc.) needed for future automotive business models.

If traditional auto companies would want to develop technology in-house and compete against the tech giants, they would need to completely redesign their business trajectories and accrue an impossible amount of new talent, skill, and resources, which simply aren’t available in today’s working pool.

However, even with amassing technology in vehicles, there are still many vehicle production elements (design, manufacturing, and sales) that Silicone Valley would struggle with.  

Detroit automakers have more than 100 years of industry and manufacturing experience in the books. And while some business models are becoming outdated, their standardized and disciplined approach to safety measures, reliability, and risk mitigation will continue to be crucial in the development of vehicles.

This level of quality testing is foreign to most tech giants, whose “move fast and break things” culture could lead to disastrous conclusions. Without the discipline and expertise to establish safe, sustainable manufacturing processes, tech companies will never be able to master self-driving cars and will struggle to follow the laborious process of designing, manufacturing, and selling vehicles—of course, Tesla withstanding.

A meet in the middle

As new technology merges with old, it only makes sense that traditional automakers and innovative tech companies also blend their strengths and collaborate on the development of new vehicles.

Automakers can bring forth the knowledge and experience in automotive design, testing, manufacturing, assembly, sales, service, and infrastructure (including dealership networks)—all things that are unavailable to current technology companies.

In turn, tech organizations can leverage their expertise and freedom from the bureaucratic culture of traditional auto companies to develop innovative self-driving software, telematics, GPS mapping systems, data science, network security, and other smart features that will fuel the functionality of new vehicles.

How Detroit and Silicon Valley are working together

The auto-tech collaboration logic is more than a theory, too. We’re already seeing some major automotive players collaborating with tech companies to develop and commercialize new technology, share risks, and prepare the market. Examples of these mergers include:

• BMW Consortium for the development of a scalable platform for Level 3 and Level 4 autonomous vehicles with BMW, Fiat Chrysler Automotive (now Stellantis), Intel, Mobileye, Aptiv, Continental, KPIT, and TTTech
• Waymo Partnerships with Fiat Chrysler Automotive (now Stellatas)  and Jaguar Land Rover for ride-hailing services, and with Magna to build a factory for self-driving cars in southeast Michigan
• GM’s acquisition of Cruise Automation in 2016 for testing and developing autonomous car technology
• Microsoft, Softbank’s Vision Fund, and Honda’s more recent strategic investments in Cruise which is now valued at more than $30 billion
• Ford’s $1-billion investment in Argo AI, combining its autonomous vehicle development expertise with Argo AI’s robotics experience and startup speed on artificial intelligence software
• Lyft, a ride-hailing service company based in San Francisco, recent partnerships with Waymo, GM, and Ford
• Mercedes-Benz and NVIDIA will develop a centralized compute platform powered by NVIDIA DRIVE  

These collaborations are only the beginning of what we can expect to see in the near future. Once the forces from Silicon Valley and Detroit come together to join expertise, we can expect to see major developments in automotive automation, electrification, and big data.