Silicon Valley Has the Stardust, but the Automakers Know Cars

Jim Motavalli

Jim Motavalli | Apr 28, 2016

Mary Barra is always on-message. In the latest issue of Esquire, describing what she’s learned since becoming CEO of General Motors, Barra opines:

We will see more change in the automotive industry in the next five years than we’ve seen in the last 50. My husband was visiting my son at college and he didn’t rent a car. He thought, I’ll take Lyft to here, and then when I’m over there I’m going to walk. I see the change happening even in my own family.

Why is that on-message? Well, GM said early this year that it’s investing $500 million in Lyft, so Barra wasn’t going to say her husband was taking, you know, Uber. It’s safe to say that the automakers are shopping around for a Silicon Valley strategy. Ford just opened an innovation office there, and it’s in to try and make your old-line industrial company “part of the conversation” out there.

New Slogan: Mustaches in Motion. GM's Dan Amman with his new partners from Lyft. (GM photo)It hasn’t worked yet. GM’s Chevrolet Bolt (a delight to drive, by the way) has basically the same specs as the Tesla Model 3, but only the latter has 375,000 advance reservations. Without even advertising, Tesla has created a halo of tech mystique, something it shares with Google and Apple.  

Barra’s definitely right—the next five years are going to be pretty crucial, and tech—especially the evolving self-driving car—is leading the charge. Which brings me to also mention Apple and Google, whose every move in the auto space (who’s that they just hired?) is under a microscope.

Mary Barra in Kansas City: She knows her way around the shop floor. (GM photo)But if you haven’t gathered this yet, Apple and Google don’t know how to make cars. Tesla may be tweaking automakers’ noses and going it alone, but the tech giants are going to need industrial partners. Where is Apple looking? Germany. According to Frankfurter Allgemeine Zeitung, Apple is staffing a Berlin-based car lab there with 15 to 20 people, but talks it was having with BMW and Daimler have fallen through over who would own the data the cars generate.

Beyond that, Austria-based car builder Magna Steyr, owned by Samsung since 2015, is said to have been chosen to actually build the Apple cars. That’s interesting, because Samsung is a major battery supplier for electric cars, and the Applemobile is expected to be electric. I’ve said numerous times that it makes sense for self-driving cars to plug in. Tesla is already demonstrating its Summon feature on the Model X, and who doesn’t want a car that can put itself away with a smartphone, and also connect to charging at the same time?

Much to the old-line automakers’ chagrin, Tesla continues to grab the headlines. The company’s Elon Musk claims that using his Autopilot feature on the Models S and X will reduce accident risk by 50 percent. Tesla software is almost twice as good as humans, he says. And if that’s not enough, Tesla says it will build an even more affordable car after the attention-getting Model 3. For $25,000, maybe it will drive itself—and walk the dog.

What can the tech companies learn from the Big Three? For starters, how to avoid designing a car that looks like this. (Google photo)The Apple car may not be offered directly to the public—at least initially; instead, it could be launched as part of a car-sharing operation, much as Daimler’s Smart cars are now used at Car2Go. That sounds very Apple anyway.

So what’s Google up to? The news is that it’s working with Ford and Uber on “a coalition to push for federal action to help speed self-driving cars to market.” It’s called the Self-Driving Coalition for Safer Streets, and Volvo and Lyft are members, too.

The bottom line here is that automakers are tremendously worried about Silicon Valley upstarts like Tesla, Apple and Google, but they also feel compelled to partner with them—if possible—in the hope that some of that high-tech gloss wears off. And the tech giants may consider the big automakers old fashioned, but they need the industrial know-how.

So I’m guessing that if Ford CEO Mark Fields cites a ride-sharing service, it could be Lyft or Uber. They’re partners, after all.

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