i3 - September/October 2019 - 25

Startups Align
Doing this enables automakers to both prepare for the future
and avoid extinction, say industry insiders.

WANTING A SAY IN THE FUTURE

T

echnology is redefining the
automobile even as new ways
of getting around are appearing
all over the world. The result is
a slew of innovative startups vying for a piece
of the action. Through closely held investment
funds and other ventures, old guard automakers are looking to work with all sorts of technology and mobility-focused startups.

C TA . t e c h / i 3

i3_0919_FEATURE_AutomakerStartups.indd 25

"The auto industry is on the verge of massive disruption and
transformation. One of the reasons automakers are investing
in startup companies is to expand their knowledge, capability
and expertise," and to capitalize on that transformation, says
Michelle Krebs, executive analyst at Cox Automotive in Detroit,
MI. She points to General Motors' acquisition of Cruise
Automation to accelerate its development of self-driving cars.
And although there's certainly talent within automakers to
work on such tech, Krebs says, investing in startups keeps
insiders focused on near-term needs.
"Nobody knows what the future is going to look like or,
more important, when auto companies can make money on
this stuff," she adds. "The auto companies must focus on
today's business, because that's what's making them money
that can be invested in the future. There's a lot of experimentation, and quite frankly investing in a startup is a way to
experiment without betting the farm."
To be sure, automakers' investments in or acquisitions of
other companies is not a new trend. But, "what's different now
is the urgency to start developing the vehicles of the future and
the mobility services of the future to have a business ongoing,"
Krebs says. "The affordability of new vehicles has gotten out of
the reach of many people which opens the door to new ways of
acquiring personal transportation," she adds.
In a 2018 report titled Evolution of Mobility: Four Predictions
for the Future, Cox forecast declining interest in personally
owned vehicles; increasing interest in car sharing and other
mobility alternatives as those become more affordable; car subscription services gaining the most traction among those alternatives; and younger people (millennials and Gen Z) being more
likely to adopt these alternatives than older generations.
Further, a separate Cox report last year found rising awareness of self-driving technology accompanied by a growing
desire for the safety benefits the tech conveys.
But most people still want the option to drive themselves. Nearly
half of all consumers would never buy a fully self-driving (Level 5)
vehicle, Cox reported. Gen Z and millennials, at 48 and 39 percent
respectively, were most open to purchasing self-driving cars.
"If you look at the 100-plus year history of the automobile
powered by an internal combustion engine, part of the key

SEPTEMBER/OCTOBER 2019

25

9/9/19 7:45 PM


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i3 - September/October 2019

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