Fadell: Detroit's auto industry challenge comes from within

September 25, 2016 8:00 a.m. Updated

Detroit’s automotive industry is in reformation. Grappling with the realities of rapid technological advancements and rubbing against the “app culture” in Silicon Valley, the industry is working with Silicon Valley’s tech leaders and buying up startups in the new field of mobility.

The challenge for the auto industry is to replicate the environment of Detroit a century ago, when it was a hotbed of innovation.

Tony Fadell, creator of the iPod and former CEO of internet of things company Nest Labs, said Detroit is faced with the paradox of manufacturing with metal in a digital world.

“You’re in the nascent stages of (connected and autonomous) cars,” Fadell, an alumnus of Grosse Pointe South High School, said in an interview at the Detroit Homecoming event earlier this month. “You’re not building an ecosystem … yet. Will your major industry build startups like it used to?”

That happened during the dawn of the automobile.

Detroit became the Motor City for a number of reasons. Timber was ample throughout Michigan, iron ore was plentiful near the rail lines from the Mesabi Range in Minnesota to Marquette and, most of all, Henry Ford and Ransom Olds built a larger manufacturing landscape with a feeder chain of parts makers.

Oldsmobile led the push to subcontract parts production in the early 20th century, thus creating the industry’s supply base. Nowadays, they’d call it an “ecosystem.”

The industry must now find a way to build new companies for a new world, Fadell said.

So far, it’s working the other way around.

General Motors Co. acquired Cruise Automation, a maker of autonomous vehicle tech, for more than $1 billion in March. It invested $500 million into car-sharing service Lyftand later launched its own service called Maven.

Ford Motor Co. founded a subsidiary, Ford Smart Mobility LLC, which acquired San Francisco ride-sharing firm Chariot. It also partnered with Uber to test autonomous Ford Fusion taxis.

Last year, Southfield-based Lear Corp. acquired automotive connectivity firm Arada Systems Inc. and intellectual property and technology from Autonet Mobile Inc. to push into the connected-vehicle market.

The true mark of success is when the opposite happens, when Ford or GM or Lear spin off a tech company that supports the industry’s quest toward mobility and the car is no longer a car and the industry is no longer only automotive and Detroit is no longer only the Motor City, Fadell said.