Like companies in many other sectors, traditional automakers are trying to figure out how to respond to technological innovations that could transform their industry. Advances in driverless cars and ride-sharing are likely to disrupt many existing businesses. In recent weeks we have seen concrete examples of the different approaches that companies can take. We also have had glimpses of likely changes in many other industries, including financial services.
The basic, still unresolved issue for the auto industry also is crucial to many other sectors: How best to combine existing platforms with new content?
General Motors is the most recent example of a company that sees an important part of the solution in buying and integrating new content. Its recent $500 million investment in Lyft is the biggest attempt so far to combine a traditional auto company with a ride-sharing platform. And it’s an explicit and loud recognition of a transformation that GM President Daniel Ammann said would do more to change transportation over the next few years than any that has occurred in the last 50 years.
By investing in Lyft, GM believes that it can do more than import the startup's technologically savvy DNA; and it can do more than leverage the mobile connectivity that comes with Lyft, including turbocharging GM’s own OnStar communications division. GM also aims to increase demand for its vehicles by establishing rental fleets for Lyft drivers. And it is looking to enhance the related financing opportunities through its captive finance subsidiary.
For Lyft, this GM investment is a way to enhance its presence in a sector dominated by the highly disruptive and consistently evolving Uber. The GM partnership also places the company on the inside in the race to develop driverless cars, which could constitute an historic transformation for mobility services.
GM’s approach is in stark contrast to the strategies adopted so far by Ford and Toyota, which have emphasized a much more organic evolution, with only the occasional, small and highly targeted foray into tech (such as the Japanese company’s decision to hire James Kuffner, who worked at Google as a research scientist and was a member of its robotics team).
Fiat-Chysler is keeping more of its options open, as Chief Executive Officer Sergio Marchionne said to the Financial Times recently regarding what he labeled “tech intruders.” “We have to remain open and relatively flexible as to what solution can be for a group like Fiat Chrysler," he said. "But it’s not an obvious or an easy choice because in a sense we will be losing control over the DNA of our company.”