Keith Naughton has a Bloomberg Businessweek cover story about driverless cars and Detroit’s efforts to keep up with Silicon Valley.
It’s a fascinating read for one key reason: it vividly highlights the huge conceptual gap that exists between the traditional auto industry and the tech-centric disruptors, chiefly Google, with its self-driving vehicle.
This is the crux of the story:
[T]he technological differences are really just the beginning of the disruption Google has planned. In Google’s world, you won’t just quit driving cars, you’ll also quit owning them. Forget about investing in an expensive and depreciating asset that sits idle 97 per cent of every day. Fleets of autonomous vehicles will circulate through your town, pick you up when you summon one via smartphone — or smartwatch or brain implant or whatever — drop you off, and move on to the next fare.
In other words, Google doesn’t want to sell you a consumer product, but a mobility service, says Sebastian Thrun, a Stanford professor of artificial intelligence who ran Google’s car project for four years until 2013. “Obviously, once you get into the pure services world, that’s the end of Detroit,” he says.
Naughton has General Motors executive Mark Reuss to provide the counterpoint. Reuss is one of the best-known “car guys” in the auto industry. He’s been at GM his entire career (his father also worked for the company) and is now essentially in charge of all new vehicle development.
But Reuss also lived through the financial crisis, with GM’s bailout and bankruptcy. He can take Thrun’s “end of Detroit” prophecy seriously because he had a front-row seat in 2008-09, when Detroit did nearly go out of business. Reuss understands “Old GM” and why it failed and doesn’t want to have any part of rolling back the clock. Alongside GM CEO Mary Barra, he’s pressing for change at the car maker, and plenty of it.
But in Naughton’s article, he has the thankless task of showcasing a Cadillac equipped with “Super Cruise” technology, which us GM’s hand-free-on-the-highway semi-autonomous driving feature. Super Cruise, unlike Tesla’s recently introduced Autopilot, is still in the late Beta-test phase. It’s also expensive, and that’s why GM will only be making it available initially on the new Cadillac CT6, a luxury car that GM unveiled with much fanfare at the New York Auto Show earlier this year.
GM is still ironing out some of the Super Cruise kinks, as Naughton’s experience makes clear. But on balance, Reuss is being savvy by committing to the tech: it’s essentially just very capable augmented cruise control, and it proves how quickly existing technologies are converging in the traditional auto industry to bring us close to a full autonomous future.
Google, by contrast, has invested heavily in a completely different driverless concept. Detroit — and, it should be noted, Tesla — are incrementally improving what we already have. So you can jump into a Model S and, under certain circumstances, take your hands off the wheel and let the car drive itself. But you still have all the familiar stuff that’s been part of the automotive experience for a century: a steering wheel, brakes, an accelerator pedal.
Google is reverse engineering its driverless cars from a future that hasn’t yet arrived and won’t for decades. A future in which the automobile is merely a node in a transportation matrix, managed by powerful technology — and, as Thrun notes, not owned.
A big debate has broken out about this prospective state of affairs. On Wall Street, there are two camps. Analysts like Morgan Stanley’s Adam Jonas anticipate an ongoing Uberization of how we get around, with connectivity forever altering the vehicular landscape. On the other side are analysts fron Citi who cover the insurance business; they make the case that personal car ownership is a convenience that’s worth it. Even if your car spends most of its time sitting idle in a driveway, you’re happy to suffer that economic inefficiency if you can have access to a vehicle whenever you want.
What important about this is that the GMs and Teslas of the world are aiming to have our cars driving us around, part-time, in just a few years. Google is working toward a completely different model of mobility, one that may not be practical for decades — if ever.
To a degree, this means that Silicon Valley’s moonshot ideas about transportation, rather than disrupting the traditional car business, are actually being disrupted by the traditional automakers (and semi-traditionalist, like Tesla).
The GMs of the world are saying, “OK, Google, what you’re doing is cool, but we can start bringing self-driving cars to market now and not wait for a radically different future.”
Naughton’s angle is that Detroit is attempting to compete with Silicon Valley. But this is where one of Reuss’s now-famous management dictums is relevant.
A lot of auto executives talk about “competing.” Reuss disdains that approach. He talks about winning.
It would be foolish for Detroit to avoid collaborating with Silicon Valley, if good opportunities to collaborate arise. For example, Apple CarPlay does a fantastic job of delivering a better infotainment experience to drivers and passengers. A lot of auto executives would welcome the chance to offload infotainment to Apple and Google (the latter has a similar technology, called Android Auto).
But it would be equally foolish for Detroit to avoid leveraging its 100 years of expertise in building motorised conveyances. In the case of the Google Car, and also as far as whatever Apple is doing with its mysterious “Project Titan,” we’re witnessing a bold experiment in mobility. But still an experiment.
And beyond that, it isn’t in anyone’s interest to put Detroit out of business. The global auto industry makes a massive contribution to the global economy, at numerous levels.
In fact, Detroit may already be crossing a tipping point, when it comes to driverless cars. Naughton’s title asks if Motown can beat Google to the driverless car. But in a rubber-meets-the-road sense, it already has.
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