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Our Editorial: Auto industry must stay nimble

From: The Detroit News

By The Detroit News Editorial Staff

January 10, 2016

General Motors’ recently announced partnership with Lyft is a big bet for an automaker that just eight years ago was bankrupt. But it shows GM — and the Detroit Big Three — have not just recovered from mistakes, but learned from them as well.

The industry’s success is pivotal to the future of Detroit and the entire state. It’s promising to see automakers take technological disruptions to their industry seriously and try to lead in their development instead of follow.

GM’s CEO and now Chairman Mary Barra announced last week the company would invest $550 million in ride-sharing company Lyft — the largest direct investment by an auto company into a ride-sharing enterprise — and partner with it to develop an on-demand network of self-driving cars. Ford Motor Co. is pursuing similar partnerships.

GM’s move will likely win some much-needed support and respect from Wall Street investors, and should help the automaker transition smoothly into whatever the future holds for the industry.

With a $550 million price tag, however, it’s a substantial risk, and assumes certain changes — such as a predicted but not yet proven decline in car sales to younger buyers, yet-to-be-seen success of electric and plug-in vehicles, and the relatively quick arrival of the nascent self-driving vehicle — that would signal different problems, as well as opportunities, for the industry. It’s the sort of high-risk bet that automakers once were wary to place, but now find essential.

Staying ahead of rapidly changing trends and technology means increasingly focusing on big data, designing vehicles to tap into the Internet, and developing autonomous vehicles sooner than expected, perhaps even within the next five years.

Automakers, not Silicon Valley companies, lead in self-driving technology patents, according to the Intellectual Property and Science Division of ThomsonReuters. Toyota leads overall, but GM isn’t far behind. Google ranks 26th on the list.

GM has also debuted a Chevrolet Bolt electric car with a range of 200 miles per charge, giving the company a car to meet California’s upcoming emissions standards. Ford has also announced plans to bring 13 electric vehicles to the market over the next four years, more than any other automaker in the world.

Though consumer demand for electric vehicles still lags — sales of the vehicle class have dropped 20 percent from already paltry 2014 levels — those investments in technology will hedge the Detroit automakers against more strident government regulations and future downturns in the SUV and truck market.

“I think lessons have been learned,” said Glenn Stevens, vice president of MICHauto, an economic development initiative of the Detroit Regional Chamber focused on the auto industry. “Companies here don’t operate the way they did in the past. They’re very well-run and strategic — the focus on the future is incredible.”

The state also stands to be a big part of the supply chain for electric and autonomous vehicles. Earlier this year, Tesla Motors bought a tool and die shop in Grand Rapids, marking its first Michigan presence.

And lest excitement over technology overshadow otherwise important news, it’s critical Detroit remains the greatest concentration of auto research and development and manufacturing in the increasingly global market.

Detroit companies automakers have regained their footing — and they seem intent on keeping it.