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Why Detroit is moving to Silicon Valley

Lucas Mearian | Jan. 4, 2016
Software, not hardware, will define cars.

silicon valley automotive self-driving cars software
Ford, GM, BMW, Honda, Hyundai, Mercedes-Benz, Nissan-Renault, and Toyota have all opened R&D centers in Silicon Valley over the past several years. Credit: IDG, Wall Street Journal, Carmaker data

Ford Motor Co., the company that started the automobile assembly line and was arguably most responsible for Detroit's car industry, chose Palo Alto, Calif., this year for its latest automotive research and development facility.

General Motors opened its Advanced Technology Silicon Valley Office in Palo Alto to develop an HTML browser for its Cadillac CUE in-vehicle infotainment (IVI) system.

Since 2011, BMW, Honda, Hyundai, Mercedes-Benz, Nissan-Renault and Toyota have all opened R&D centers in Silicon Valley.

Nissan is focused on developing autonomous vehicles at its Silicon Valley facility, while Honda's operations there are working on human-machine interface technology, big data, connected vehicles and cybersecurity.

"I think just about everybody is there. You need to be there to learn about what's going on. You can't learn those things remotely," said Egil Juliussen, research director at IHS Automotive.

mark fields autonomous driving  
Ford CEO Mark Fields poses with the autonomous Fusion at the company's research lab in Palo Alto, Calif. Credit: Ford

Not only are the companies opening up R&D facilities, they're also recruiting rock star security and system engineers from the mecca of computer development, said Jon Allen, a principal at Booz Allen Hamilton, a management and technology consulting service.

Meanwhile, a former mid-level Apple engineer heads Ford's new Palo Alto R&D center, just down the street from electric-car maker Tesla Motors.

"This isn't your grandfather's automotive company any more. The [car makers] are moving away from simply being hardware manufacturers to becoming software developers," Allen said. "Fundamentally, the auto industry cannot be seen as just auto makers any more. They're mobile developers."

"And, look at who Apple is hiring. They're hiring auto executives," Allen added.

Earlier this year, Apple hired Doug Betts, a former Fiat-Chrysler executive in charge of global quality, fueling speculation that Apple is working on its own autonomous car.

The Wall Street Journal and other sources published reports that Apple plans to ship its own a car in 2019, and that the company has been hiring auto industry veterans for the secret project (code-named Titan).

Automakers are staking a claim in Silicon Valley

In some ways, Silicon Valley is becoming the new Detroit, but instead of hardware -- chassis and engines -- its product is a software-defined vehicle.

Software is the key differentiator in the functionality of automobiles. The average vehicle today has about 50 computer processors that control everything from engine control units (ECUs) to Advanced Driver Assistance Systems (ADAS), such as parking assist and adaptive cruise control.


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