The notion of maverick Silicon Valley automakers rising up to take down Motor City — a popular one in the early days of electric sports car startup Tesla Motors — was never entirely accurate. Fisker Automotive, Think and others making a serious go at developing electric and plug-in hybrid models are based outside the region.
But as Darryl Siry, Tesla’s former marketing chief, notes in an interesting post on his blog today, the old Silicon Valley vs. Detroit meme does offer a useful shorthand for questions about whether the federal government should bail out the big automakers, or give a leg up to smaller players that haven’t been around long enough to make the same mistakes. It also conveys the overhead and inertia widely seen as as contributing to the Big Three’s current financial situation.
But looking at Silicon Valley, or smaller automakers as existing solely in opposition to the industry’s giants is overly simplistic at best and a virtual death wish for the up-and-comers at worst because of the networked nature of the auto industry, as Siry writes:
What is becoming clear is that these two ecosystems are more linked than many realize, and that the pressures on the traditional automakers and suppliers threaten the viability of the startups as well. Ironically, if GM fails or causes their suppliers to fail, they may inadvertently kill the electric car again.
We’ve seen a slew of reports on the web of connections among the big automakers and their suppliers and dealers. This week American Axle & Manufacturing is in the spotlight after reporting a $112.1 million net loss last quarter and having auditors warn on Friday that pressure on the company’s chief customer, General Motors, could put it out of business.
Similar ties exist between Detroit’s network and younger car companies, perhaps more than they’d like to admit, and perhaps not as much as we’ll see down the road — depending on who stays afloat. Tesla, for example, wants to sell its battery packs and chargers to larger automakers (it has a small deal for a test fleet with Daimler) and Fisker plans to source the small gas engine, and possibly other components, for its plug-in hybrid Karma from GM. And, as Siry notes, the very same suppliers that have historically worked with Detroit’s automakers are now entering deals to supply startups with driveshafts, transmissions, interiors, suspensions and electronics.
While General Motors expects to beat out competition from all corners in large-scale manufacture of electric vehicles, CEO Rick Wagoner said (in brighter economic times last spring) that the company is “wide open” to working with startups.