Motor City stakes claim to be capital of autos’ future
Detroit — The Motor City's historic strength in manufacturing is enabling it to become the center for the future of the automotive industry.
Just a few years ago, conventional thinking assumed Silicon Valley's tech heavyweights held the upper hand in producing the next generation of vehicles. That was before the extensive problems experienced by electric-vehicle start-up Tesla Inc. in building EVs at its California plant, among other challenges to the tech-will-prevail thesis.
"There was this thinking that Silicon Valley was going to crush Detroit, that they knew how to do it better," said Michelle Krebs, an analyst with Cox Automotive. "Well, reality has set in" that Detroit knows is how to make cars. "Yes, they can be autonomous, they can be EVs. But … you still have to know how to build a car.”
Detroit does. And recent investments by all three Detroit automakers as well as a Silicon Valley self-driving company are helping the city build on its legacy of manufacturing know-how to stake the claim as the nation’s center for self-driving and electric vehicles.
Ford Motor Co. is investing $740 million to renovate a historic site in Corktown and develop future technologies there. General Motor Co. plans to spend $3 billion at its Detroit-Hamtramck plant to build electric trucks and potentially other models. Fiat Chrysler Automobiles NV earmarked $2.5 billion to retool two plants in Detroit to build next-generation Jeep SUVs and, eventually, electric vehicles. And Waymo LLC, the self-driving unit of Google parent Alphabet Inc. is investing $14 million to outfit vehicles with its autonomous technology at a former American Axle & Manufacturing plant in the city.
More than a century ago, Detroit’s identity as the Motor City was born. From the Ford Model T to the Dodge Viper and Chevrolet Impala, a procession of vehicles have been built inside the city limits. Fast-forward to 2019 and the production hasn’t stopped, but what's being built is changing.
“It’s almost like we are a Silicon Valley again, because if you look back over a century…we were a hub for natural resources, innovation and people — and we are seeing that again,” said Glenn Stevens, executive director of MICHauto and the Detroit Regional Chamber’s vice president of automotive and mobility initiatives.
The city’s reinvention as a hub of innovation is visible in Corktown, where Dearborn-based Ford is building a campus that will be an electric and autonomous technology center for the automaker and its partners. The technology will take shape at Michigan Central Depot, a towering symbol of Detroit’s decline as it sat vacant for 30 years. Ford plans to reinvigorate it to house 2,500 employees and create space for partners to have another 2,500 employees to develop and test new mobility technologies. The station’s transformation, which will include retail and hospitality businesses, will be complete by the end of 2022.
“Ford believes in the city of Detroit and its peoples’ future as a global hub for modern mobility,” Ford’s Corktown spokeswoman Christina Twelftree said. “Michigan is the automotive R&D capital of the world and Detroit is uniquely positioned to leapfrog other urban cores to explore the role transportation can play in revitalizing cities.”
Already there's a staff of 250 Ford Autonomous Vehicle LLC employees working in the neighborhood. A fleet of self-driving Ford Fusion Hybrids being tested with partner Argo AI is a common sight in the Motor City.
The global automotive industry has multiple cities wanting to stake the claim that they are the center for future automotive technologies. Because Detroit is "working from a position of history and a position of strength with regards to the ecosystem, it’s a great place for the center to develop,” Stevens said.
“We are very quickly becoming not only an automotive center, but an absolute global leader for the development of this next-generation mobility technology.”
GM’s Detroit-Hamtramck plant is yet another example of the city capitalizing on what it knows how to do best: build vehicles.
The automaker decided in November 2018 that Detroit-Hamtramck wouldn’t get another product after it stopped production of the Chevrolet Impala and Cadillac CT6. But in its new labor contract with the United Auto Workers, GM pledged to invest $3 billion in the plant to build electric trucks and vans. That commitment will come with 2,225 new jobs.
Details of what the vehicles will be and when production would start have not been released. Production of the Impala and CT6 have been extended to the end of February, beyond the previous January production end date, because of the six-week UAW national strike against GM.
“We think this is a good investment. It positions us well to lead in battery-electric trucks as well as internal combustion trucks,” GM CEO Mary Barra said on the company’s third-quarter earnings call.
The decision to make the Detroit-Hamtramck plant the center of electric vehicles makes sense logistically, given the proximity to GM's Warren Tech Center and suppliers. The Detroit-Hamtramck workforce has built an electric vehicle before, the discontinued Chevrolet Volt hybrid.
Fiat Chrysler decided its best bet for the future was to invest in Detroit. The automaker is transforming its Mack Avenue plant to build a yet-unnamed three-row, full-size Jeep SUV and next-generation Grand Cherokee. The plant will first build vehicles with traditional internal combustion engines; eventually it will build electrified versions of the models.
The transformation is expected to take 16 months, with production expected to begin at the end of 2020. The company expects to add 3,850 new jobs at the Mack plant. Fiat Chrysler's Jefferson North plant will also be retooled to build the internal combustion and electrified next-generation Jeep Grand Cherokee along with the Dodge Durango. The plant will get an additional 1,100 jobs.
"Building a new assembly site in Detroit was an obvious choice for us for a number of reasons," said Mark Stewart, chief operating officer for Fiat Chrysler North America. "First, we’ve been building cars on Jefferson Avenue for more than 100 years. Second, we’re repurposing a facility that has been idle since 2012. And it’s in close proximity to Jefferson North, which gives us maximum flexibility. Finally, but most importantly, Detroit is our home."
California-based Edmunds analyst Jessica Caldwell said it's logical for Detroit to see these investments because of the existing infrastructure, workforce and having the Detroit Three headquartered here.
“The thoughts around Detroit have changed,” she said. “We saw it once as a downtrodden place that once was the center for innovation … it has swung back. Going to Detroit is much different than it was 10 years ago. It looks like a different place.”