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continued from page 45
Jeff Stewart
Assistant New Car Sales Manager
Serving the Community Since 1969
248-636-2736
CONGRATULATIONS
GLASSMAN SUBARU
A division of
Glassman Automotive Group
Serving Our Community For Over 45 Years!
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Hands-free driving from Volkswagen
with San Francisco-based Pivotal.
FCA reached a deal to build 100
Chrysler Pacifica hybrid minivans for
Google’s Self-Driving Car Project with
plans to test the cars in Michigan.
Other automobile manufacturers are
making similar strategic investments.
Toyota recently hired the entire staff
of Jaybridge Robotics and has a new
partnership with Uber.
The technology disruption is bring-
ing new competitors into the auto-
mobile industry. Among the potential
major new competitors are Apple,
Alphabet, Tesla, Uber, Lyft, QNX,
Cisco, Codha Wireless, Auto Talks,
Mobileye and Nvidia. There are also
hundreds of small technology compa-
nies working on autonomous and con-
nected vehicles.
It is uncertain what the impact of
technology disruption will be on the
demand for vehicles. Autonomous
vehicles and car-sharing may result
in fewer vehicles sold and reduce the
number of vehicles per household,
which has been increasing steadily.
Automakers are increasingly con-
cerned about how technology has the
potential to help people travel easily
and cheaply without owning a car. The
technology has the potential to open
up new sources of revenue around data
and analytics and, with autonomous
vehicles and car-sharing, the miles
driven will accumulate a lot more than
a personally owned vehicle creating
service opportunities.
Also unclear is how value will be
created and which companies will be
able to capture the value. Will value be
created by mechanical engineering and
design or through software engineer-
ing? Will existing automotive compa-
nies be able to capture the value or will
some value be transferred to the new
companies looking to potentially enter
the industry?
Where personal excellence is
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infant, toddler and preschool programs.
engage. inspire. achieve.
46 September 8 • 2016
2118830
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Metro Detroit has a concentration
of engineers and an installed base of
automotive manufacturing and tier
one suppliers. These advantages will
not be sufficient for the technology
disruption to be a major opportunity
for the local area. The conservative
business culture and large size of firms
in the automobile industry is not
consistent with developing leading-
edge technology. GM is leaving Cruise
Automation in San Francisco (where
they are hiring new engineers) rather
than moving it to Warren. Ford has its
research center in Silicon Valley rather
than in Dearborn.
Research by Agrawal et al. in the
Journal of Urban Economics (2014)
demonstrates that in regions dominat-
ed by large-firm research (automotive
industry in Southeastern Michigan),
the presence of a sizeable population
of small firms significantly increases
innovation. Policies designed to cul-
tivate new ventures and small firms
around automotive technology dis-
ruption will be an effective economic
development strategy in Southeastern
Michigan.
Economic growth happens when the
potential for commercialization exists
outside of the large firms. Innovation
in autonomous and connected vehicles
has the possibility to cross over into
other industries generating more eco-
nomic growth in the region.
Without the presence of small inno-
vative firms and an entrepreneurial
ecosystem around autonomous and
connected vehicles, Metro Detroit will
not be able to capitalize on the auto
industry technology disruption oppor-
tunity.
*
Jonathan Silberman is a professor of economics
at Oakland University. You can contact him at
silberma@oakland.edu.