Auto CEOs are on a Three-Way Collision Course

automotiveUnfortunately for the heads of outfits including GM, Ford and Toyota, they’re facing all three at once.

This Vox piece details the threats keeping leaders in the auto industry awake at night, and how they’ve recently started dealing with them. Their responses have lessons for CEOs in other industries, too, wondering how the rise of artificial intelligence and the so-called sharing economy will affect manufacturing processes and consumer demand for their products.

“We view the next decade as really being defined by the automation of vehicles.”

In the past six months alone, auto and tech companies have completed deals collectively worth billions of dollars.

Ford and Chinese tech company Baidu this week announced a $150 million investment in Velodyne, a maker of sensors used in self-driving cars. GM recently invested a combined $1.5 billion in ride-sharing service Lyft and self-driving car startup Cruise, while Toyota and Ford both created their own artificial intelligence and Silicon Valley subsidiaries.

“We view the next decade as really being defined by the automation of vehicles,” Ford CEO Mark Fields told CNBC this week. “Our view is autonomous vehicles could have just as much of a significant impact on society as Ford’s moving assembly line did 100 years ago.”

The question for investors is whether these deals will be too little too late for companies facing competition from the likes of Google and Apple and rising stars such as electric car company Tesla Motors.

Making matters worse for automotive business leaders is the fact that these innovations could work better when combined. Self-driving electric cars, for instance, could be more attractive to environmentally conscious ride-sharing enthusiasts traveling short distances to work.

To be sure, Vox’s report suggests that big auto companies shouldn’t be written off.

Especially since their CEOs still have an ace up their sleeves: they can efficiently build millions of individual units quickly.

“Manufacturing a big, complex object like a car is difficult, and conventional car companies have a 100-year head start on learning how to do it,” Vox says.

“That explains why Silicon Valley has been as eager to partner with Detroit as Detroit has been to partner with Silicon Valley.”

SHARE
Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

PARTNER CENTER