Ford’s shake-up proves Detroit is facing mounting pressure from Silicon Valley

Ford’s replacement for CEO Mark Fields speaks volumes about Detroit’s tense relationship with Silicon Valley.

Board member Jim Hackett, the head of Ford’s unit overseeing autonomous driving, will take Fields’ place as a sign of shareholders itch to ensure it doesn’t fall behind in the race to develop mobility services of the future.

But the move also speaks to inevitable disruption where Detroit must either align with tech companies and split the self-driving-tech pie or stick to its guns and build a solution in-house, but risk losing out.

Detroit and Silicon Valley are in a complex situation when it comes to self-driving tech.

On one hand, tech companies can’t compete with legacy automakers when it comes to the difficult task of manufacturing vehicles and meeting the strict standards set by regulators.

But on the other, Detroit has struggled to acquire the AI talent necessary to create fully driverless vehicles that can navigate difficult urban environment on the same timeline as major tech players like Waymo, the self-driving company spun out of Google’s parent company.

We’ve already seen that dichotomy play out: Apple ditched its car efforts to focus on software and GM spent $US581 million to acquire startup Cruise Automation.

When it comes to the Big 3, GM and Fiat Chrysler have arguably hedged their bets better than Ford.

In addition to its acquisition of Cruise Automation, GM invested $US500 million in Lyft so it has access to a pre-existing ride-hailing network to roll out a fleet of autonomous cars. Although GM is using Silicon Valley tech and talent to its advantage, it’s continuing to keep development in-house and compete head-on with Waymo and Tesla.

Fiat Chrysler, meanwhile, has sent over 500 Chrysler Pacifican minivans to Waymo for its self-driving test fleet and is rumoured to be collaborating on a robot taxi service. FCA CEO Sergio Marchionne is willing to bet on Waymo’s competitive advantage and bridge the gap between Detroit and West Coast tech elites.

That leaves us with Ford.

Fields’ big move as CEO was investing $US1 billion in startup Argo AI as part of a talent grab to expedite its self-driving-car efforts. But the company lacks the same big-name alliances as GM and FCA to provide Wall Street with the confidence that it will be a leader in the space.

With Hackett at the helm, Ford said it will look to further align itself with Silicon Valley, Chairman Bill Ford said during a Monday press call.

“One of the things we haven’t talked about is Jim’s deep knowledge of Silicon Valley,” he said.

“You know that Silicon Valley culture is certainly different than industrial midwest… and to see Jim navigate that so well but to be held in such high regard there made a high impression on me,” Ford continued.

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