Automakers strike back at Silicon Valley disruptors

Wed Jan 6, 2016 1:43pm EST
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By Joseph White

LAS VEGAS (Reuters) - Big automakers have spent several years watching their stock prices drift while the valuations of upstarts such as Uber and Tesla soared.

This week the automotive empire struck back at the would-be disruptors of its century-old business model.

On Monday, General Motors Co(GM.N: Quote) said it would invest $500 million in ride-hailing company Lyft, its most aggressive move yet into a future where on-demand ride services threaten to replace auto ownership and robots could unseat human drivers. GM’s move and others underscore Detroit’s determination to battle Silicon Valley for dominance of clean urban transport.

Ford Motor Co(F.N: Quote) used this week’s Consumer Electronics Show in Las Vegas to announce that Toyota Motor Corp(7203.T: Quote), the No. 1 global car maker, will use Ford software to connect smart phones to dashboards and join Ford in promoting that SmartDeviceLink system to other automakers.

Executives from German automakers Daimler AG(DAIGn.DE: Quote), BMW AG and Volkswagen AG(VOWG_p.DE: Quote) promoted their effort to design autonomous vehicles using mapping technology not from Google(GOOGL.O: Quote), but from HERE, a European mapping company the German luxury car makers bought last year.

This week’s events mark a turning point in the power struggle between auto and tech companies, analysts and industry experts say.

At stake, executives say, are potentially trillions of dollars in revenue from selling both vehicles and “mobility services”— ride sharing, car sharing, connections to mass transit, travel services, repair work, and access to valuable data on what consumers do with and in their cars. Automakers may need major stakes in such emerging industries to replace potentially massive losses, over time, in traditional auto sales to individuals.

“The tension will increase. These areas (automotive and tech) are converging, and now will hit head on,” said Jeffrey Owens, chief technology officer of  big auto supplier Delphi Automotive Plc, formerly part of GM. “The winners are those who create some of the disruption themselves.”   Continued...

The screen in Delphi's automated vehicle shows the car stopping on its own after communicating with a stop light at an intersection at the Consumer Electronics Show in Las Vegas, in this January 5, 2016 file photo. REUTERS/Rick Wilking/Files