Auto CEOs Refuse to Wave a White Flag to Silicon Valley

gettyimages-533243370-compressor-2That’s the message being conveyed, at least, by car-company executives—as well as by the actions of some of the key players involved in reshaping the industry around autonomous cars and mobility services.

As traditional automakers double down on their own self-driving efforts, including buying up digital-tech startups and beefing up staff in Silicon Valley, the pendulum in Silicon Valley seems to have swung a bit.

In recent weeks, Apple may have abandoned its efforts to build its own car, in favor of coming up with just self-driving software, while Google also has retrenched with similar ambitions. Among other things, they apparently were daunted by the prospect of having to put together their own factories and supply chains to mimic what auto companies have been doing for decades: building actual automobiles.

“The old conversation I used to have was, ‘You guys are going to end up being the handset; you’re going to be low-margin assemblers of other people’s cool technology.’ We don’t want to be the handset. We won’t be.” —William C. Ford Jr.

“There was this presumption that we were too dumb to get it,” William C. Ford Jr., Ford’s executive chairman, told Automotive News, who notes that the conversation has really shifted. “The old conversation I used to have was, ‘You guys are going to end up being the handset; you’re going to be low-margin assemblers of other people’s cool technology.’ We don’t want to be the handset. We won’t be.”

In Tokyo, another major automotive center, there’s similar new bluster. “Many say carmakers have no future, and that they will become commodity producers, because Google, Apple, Microsoft or Tesla will take the lead in the automotive business in the future,” Didier Leroy, an executive vice president of Toyota, told reporters recently. “Do you believe we will just open the door and say go ahead? No, we won’t let them come inside like that.”

Meanwhile, Toyota is currently executing its promised move of its North American headquarters to Plano, Texas, from Torrance, Calif. A big focus for the new North American headquarters, as Toyota hires more than 1,000 new people, is to “address mobility challenges” as the industry shifts more heavily toward self-driven automobiles, and ride-sharing and other services, as well as electrified vehicles, Jim Lentz, CEO of Toyota’s North American operations, told Chief Executive.

Californians made quite a bit out of the fact that Toyota was moving to Texas, of all places. Lentz noted that “Texas didn’t poach us, which is what most people believe. But there’s still this friendly, sometimes not-so-friendly, competition going on between California and Texas.”

One thing that has changed in the last two years: Oil prices have slid dramatically, and that is starting to nick the Texas economy. But Lentz said that factor hasn’t helped Toyota much in Dallas, where demand and competition for white-collar workers of all stripes continues to be torrid.

Just for good measure, Toyota also is spreading the wealth regionally when it comes to its own development of self-driving systems and other technologies for the future. Toyota Research Institute has three offices: one at Stanford University, one at MIT — and one in Ann Arbor, Michigan.

Dale Buss
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.

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