Detroit has long been the center of the American automotive industry.
News outlets actually collectively refer to automakers as Detroit, which would seem to suggest that the industry is so closely tied that it’s all the large metropolis in Michigan is known for. Business commentators now feel that new developments are shifting the focus away from Michigan toward Silicon Valley companies, which are heavily investing in new automotive technologies as well as auto recycling. Both of these factors will become increasing important as legislators seek to reduce resource consumption and emissions. Autonomous vehicles will require new computer devices that Silicon Valley firms already have access to, which should further bring car companies to sunny California in hopes of a brighter future.
Automotive Recycling Plants
California has long been associated with the ecological movement, so it makes sense that the state is ahead of the rest of the country when it comes to recycling automotive components. State lawmakers have pressed for regulations that prevent usable car parts from being disposed with regular waste. Local laws also require junkyards to carefully scrap metallic components and batteries in order to ensure that they’re turned into something else usable. This puts the state in a strong position when it comes to attracting technology companies looking to receive tax breaks for reusing existing machine parts.
Autonomous Motor Vehicles
Self-driving cars are a major source of interest in the industry right now. Ford recently announced that they plan to sell fully autonomous vehicles by 2021. While it might sound strange that Ford actually has a facility in Silicon Valley, they’re in the process of doubling the staff there. Ford plans to employ over 260 people at a technology research laboratory in California. They’re also heavily investing in four different companies that make components for self-driving motor vehicles.
This news comes on the heels of GM throwing over $1 billion into a pair of California-based firms in hopes of competing with Google’s more famous autonomous-car program. Industry analysts also released reports that suggest GM has been concerned that they might be loosing ground to Uber Technologies. San Francisco-based Uber plans to grow its ride-hailing business exponentially. This seems to have scared General Motors’ executives, who consider taxi services to be major consumers. If Uber began to manufacture more components for their fleet, then this would mean less of a market for GM to sell to.
Consultation and Marketing
CarLab is a consulting firm based in Orange, California. Their president recently released a series of comments about how the process automakers moving to California is undeniable. Intelligent cars and autonomous vehicles require the support of consulting firms already established in the technology industry. Silicon Valley companies can easily apply experience they’ve earned from other projects to the automotive industry.
Michigan isn’t giving up without a fight, however. The state’s governor is the former head of Gateway and a founder of some major investment funds. Governor Rick Snyder doesn’t have any plans to give up on talent in his home state. His office announced that Google is opening a new research center for self-driving cars in the Detroit suburbs. Harman International and Amazon have major bases in the area as well. Even if the shift to California is undeniable, it’s also difficult to deny the fact that Michigan is putting up quite a fight. The Bureau of Labor has illustrated that the unemployment rate in the Detroit and San Jose areas aren’t very different.
Moving Forward in the Industry
General Motors and Ford both have to face some difficult realities if they’re going to move forward in the industry. Companies like Uber, Google and even CarLab threaten to turn the industry around by making drivers into passengers who allow robots to do everything for them. Carmakers in Michigan might be developing talent, but Silicon Valley already has plenty of individuals who know how to write the code that powers autonomous car algorithms. If Ford and GM are to survive in the new marketplace, then they’re going to have to work with organizations in both states. The industry might be looking at a future where car companies and technology vendors work in close concert with one another. This could ultimately serve to benefit both sides of the equation.