Transportation Transformation

Over the next decade or two, you may not recognize metro Detroit — or what the auto industry produces
Transportation Transformation

It’s known as “prom night” to regular attendees, and with the U.S. auto industry expected to finish 2015 with record sales, don’t be surprised if there’ll be record turnout for the annual black tie gala marking the official opening of the 2016 North American International Auto Show.

Of course, that’s also going to put a strain on the downtown infrastructure — swells in their tuxedos and wives in backless gowns and open-toed shoes often having to walk for blocks in the snow and slush and cold to get to Cobo Center.

Me? I’m planning to take the easy way — as I did last year — calling for an Uber car for the ride downtown.

This affordable alternative to a traditional cab makes the drive quick and simple. And that’s one reason why Uber and competing ridesharing service Lyft are changing the way millions around the rest of the country are getting around.

In fact, a recent study by the consulting firm McKinsey suggests that ridesharing — and a rental-car alternative known as car-sharing — could transform the automotive industry.

In the not-too-distant future, many motorists are expected to abandon their cars — or at least cut down on their household fleet. That could spell the end of record car sales.

A Driverless Future?

The last time I called for an Uber car, I rode with a college-aged driver hoping to earn some extra cash to minimize her student loans. But if Uber CEO Travis Kalanick has his way, a customer might eventually call for a ride and find no one behind the wheel when the car pulls up.

“You’re not just paying for the car — you’re paying for the other dude in the car,” Kalanick said at a tech conference last year. “When there’s no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle.”

The concept might not be too far off.

On a 32-acre complex that has risen out of a grassy field on the back of the University of Michigan’s North Campus, a consortium of carmakers and suppliers has come together to test the latest in self-driving vehicle technology.

The $10 million project is meant to “create an accelerated learning environment” that will help transform a concept long the stuff of science fiction into something we experience every day, explains Peter Sweatman, director of the director of the University of Michigan Mobility Transformation Center and overseer of Mcity. The facility is designed to replicate both city and highway streets so researchers can put autonomous technology through a torture test.

But many manufacturers already are testing their vehicles on real roads. I have recently “driven” an autonomous 18-wheel Freightliner semi through the Las Vegas suburbs and served as co-pilot as a modified Nissan Leaf navigated the crowded streets of Tokyo.

Semi-autonomous systems like the Tesla AutoPilot and Cadillac’s Super Drive already are starting to roll out, and Nissan promises to have a fully self-driving version of the Leaf electric vehicle in production by 2020.

Mark Rosekind, administrator of the National Highway Traffic Safety Administration, believes that autonomous vehicle technology could be the biggest safety breakthrough in automotive history — and something that could also help reduce traffic congestion without the need to add more roads.

NHTSA is working on new standards needed to allow manufacturers to put the technology into production, but Michigan is one of a number of states already taking steps to let manufacturers test self-driving vehicles on public roads.

Michigan is also part of a bold experiment to see if connected car technology can improve traffic flow and reduce crashes.

A new test of vehicle-to-vehicle and vehicle-to-infrastructure communications systems is being put into place, with the backing of the U.S. Department of Transportation, along 120 miles of metro Detroit highways.

All told, connected car and autonomous technologies could lead to “zero fatality” roads within our lifetimes,” suggests Nissan CEO Carlos Ghosn.

While vehicles like the autonomous Nissan Leaf will still require someone to be sitting behind the wheel, ready to take control in an emergency, Uber CEO Kalanick may get his wish sooner than many expect. Silicon Valley giant Google is launching a test of custom-made, self-driving vehicles that will soon include a few models fitted with neither steering wheel nor pedals — just an emergency stop button.

That test is taking place near the tech firm’s California headquarters. But even here there’s a Michigan connection. The 100 prototype “Google Cars” are being produced by suburban Detroit’s Roush Enterprises.

New Players in the Game

While Google says it is looking for a partner, rather than planning to build vehicles on its own, its emergence as a tech powerhouse underscores another dramatic change in the auto industry.

When I first came to Michigan in 1976, the entire country was still reeling from the first Mideast oil crisis, and nowhere was that punch felt harder than in the Motor City.

The Detroit automakers — traditionally focused on big cars and trucks — had been hammered by a wave of pint-sized, high-efficiency imports from Japan.

The Big Three would never regain their traditional market dominance. Today, General Motors, Ford, and Fiat Chrysler account for less than half of U.S. new vehicle sales.

But there’s a new set of challengers lurking in the wings and ready to take on even the strongest of the Japanese and European imports that now control a huge chunk of the American market. And we’re not even talking about the Chinese carmakers, like Geely and Chery, who would love to capture a share of the world’s second-largest automotive market.

The folks who really worry the planners at GM’s Renaissance Center and Ford’s Glass House are new entrants to the automotive world. There’s Tesla Motors, founded by the brilliant and eccentric South African entrepreneur Elon Musk, for example. There’s also Apple, the consumer electronics giant widely believed to be developing a line of battery-powered autonomous vehicles, as well as Faraday Future, a mysterious new California startup apparently funded by one of China’s richest entrepreneurs.

For now, Tesla is producing barely 5,000 vehicles a month. Ford rolls out nearly that many F-Series pickups by Tuesday each week. But the battery carmaker plans to boost production as it ramps up its second product line, the Model X SUV. And with the planned debut of the $35,000 Model III in March, with production slated for 2017, Musk promises to boost sales to as much as 500,000 a year.

There are plenty of skeptics, but Wall Street investors are betting on his boast, and Tesla’s stock has traded at more than six times the price of GM shares.

And Apple? The electronics powerhouse has a market valuation that tops the worth of the world’s top 10 traditional automakers combined. It has a nine-figure cash war chest that could pose a serious challenge if it chooses to be a major player in the business.

Connectivity and Costs

Apple already has a place in the industry. Virtually every new 2016 model from Chevrolet, for example, will feature its new CarPlay technology, seamlessly integrating smartphone functions into a vehicle’s infotainment system. Google is also a major player with the similar Android Auto feature.

“Don’t underestimate the demand for connectivity,” says Mark Reuss, executive vice president, global product development, purchasing and supply chain, at General Motors. It is now one of the most important factors for shoppers considering which car to buy, and at the top of the list for millennials who have grown up never knowing a world without email and text messaging.

Ironically, the same technologies are creating major headaches for buyers and builders. Traditional quality and reliability problems such as faulty engines and transmissions have all but vanished. But there’s been a surge in consumer complaints. “Entertainment and connectivity systems remain the most problem-prone area for a third consecutive year,” says Renee Stephens, vice president of automotive quality research at J.D. Power and Associates.

But don’t expect to see a return to the way things used to be. A new study by consulting firm AutoPacific Inc. shows a solid majority of shoppers consider tech features like USB ports, built-in navigation, voice-activated controls, and streaming Bluetooth audio a must. That jumps to 90 percent when motorists are asked about the latest high-tech safety systems, such as forward-collision warning and blind-spot detection.

“The industry will never be the same,” Reuss says.

Technology is also reshaping what’s under the hood. And despite the plunge in fuel prices, alternative powertrain systems aren’t going away — if for no other reason than the tough new mileage and emissions standards being adopted around the world. The challenge for the industry will be to overcome problems like the high cost and limited range of those new technologies.

GM may have a breakthrough with the new Chevrolet Bolt EV coming next year. It expects to deliver 200 miles per charge — something that should eliminate so-called “range anxiety” while also coming in at a competitive $38,000.

Plug-ins will soon become commonplace, it seems. Mercedes-Benz, for example, plans to launch 10 of them by 2017. The technology has come a long way since it debuted on the original Chevy Volt. The Cadillac brand, meanwhile, plans to launch a plug-in hybrid version of its new flagship sedan, the CT6, which will match the performance of Caddy’s twin-turbo V-6. And Ferrari, McLaren, and Porsche now use plug-in powertrains on each of their most powerful models.

The challenge is going to be driving down cost. The average new car now costs about $35,000, according to tracking service TrueCar, and is rapidly climbing out of reach for many middle-class motorists.

Elio Motors wants to challenge that with a decidedly quirky little three-wheeler. It hopes to begin production in a year on a $6,800 model that will yield 84 miles per gallon.

Whether it’s the way cars are designed (almost entirely on computer screens) or the technology used in the cabin or under the hood, “we’re going to see more change in the next decade than we have in the last 50 years,” says GM CEO Mary Barra.

No automaker is immune from these changes, and no manufacturer can rest on its corporate laurels. The transition will be felt around the world, and especially in the Motor City.

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