Home / Auto / Ford and GM Prepare for a Silicon Valley-Driven Paradigm Shift

Ford and GM Prepare for a Silicon Valley-Driven Paradigm Shift


Triumphs and tragedies are prospering side by side in North America’s automotive world. On the one hand, we have a bunch of outperforming winners like Tesla (briefly the nation’s most valuable car maker), Apple (which is about to challenge Alphabet’s Waymo with its own software for driverless vehicles), and Big Data (which aims to starve out the OEMs).

On the other hand, Ford and General Motors are fighting an uphill battle against these new enemies from Silicon Valley. To armor up for this raging digital shootout, Ford has bought, among others, ride-share start-up Chariot, artificial intelligence specialist Argo, and sensor manufacturer Velodyne. In related moves, The General bought defunct ride-sharing service Sidecar to launch its Maven car-sharing service, acquired a stake in No. 2 ride-sharing service Lyft, and purchased Cruise Automation of self-driving aspiration.

Ford Chariot ride sharing service 02

This know-how advantage puts Dearborn and Detroit, along with Daimler, Nissan, and Renault, ahead of the competition. But this race is not just about product and technology. It’s also about new rules, players, and business models.

Mushrooming innovations like ride sharing, self-driving robotaxis, and ever improving electromobility may — in big cities at least — put an end to individual car ownership in the not too distant future. Add to this fast changing user patterns driven by remote work and virtual reality, and it becomes obvious that running a private car in dense metropolitan areas will eventually be even more totally counter-productive and mega-expensive than it already is (even today, a parking spot in Manhattan costs as much as an apartment, and walking is often faster than driving), if not against the law.

That’s the bad news. The good news is that old habits, like America’s love affair with full-size pickups (sales are up six percent so far this year) and muscle cars (see Dodge Demon), die hard. In addition, a patchy charging infrastructure makes this vast country hard to conquer for any all-electric vehicle, at least in the short run.

Another issue slowing down the paradigm shift is unclear profitability. With the average new car transaction price hovering around the $31,000 mark, making money on autonomous, mid-range, zero-emission vehicles is a fata morgana. Even the Chinese won’t go down this avenue right now in North America. Instead, they are attempting to eclipse Tesla with low volume, high-tech, six-figure halo cars.

 



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