A look at traditional auto makers' attempts to reimagine themselves as software and service companies, in order to fend off rivals like Uber and Waymo
As IPO proposals value Uber at an eye-popping $120 billion, auto makers are racing to gain ground in everything from car sharing to driverless technology. Tweets: @sub8u Tweets: Subrahmanyam Kvj / @sub8u : “The battle between every startup and incumbent comes down to whether the startup gets distribution before the incumbent gets innovation” http://www.wsj.com/... http://twitter.com/...
Context & Ripple Effects
This piece lands at the hinge of the self-driving arc the related coverage traces: in August 2018, reporting showed how Detroit had shunned overtures from Chauffeur, the secret Google project that became Waymo, before belatedly embracing autonomy — and a year earlier, Google and Uber were already losing engineers to startups and car makers as the talent war flipped toward incumbents.
First-order effects
- Uber's reported $120 billion IPO valuation hands traditional automakers a board-level mandate: capital and engineering shift toward car sharing and driverless programs, because the market is pricing mobility platforms far above vehicle manufacturing.
- Volkswagen's push shows the execution risk immediately — its ID.3 launch was later beset by faulty in-car software, forcing a reboot of the company's software business rather than a clean pivot.
Second-order effects
- Partnership structures churn rather than settle: the spate of self-driving breakups and makeups through 2019 signaled consolidation as enabling tech commoditized, forcing automakers to pick fewer, deeper alliances instead of funding many pilots.
- Talent and supplier economics tilt toward whoever owns the software stack — car makers poaching from Google and Uber bid up autonomy engineering costs, squeezing the very incumbents trying to build those teams.
Third-order effects
- If platform valuations hold while hardware margins compress, automakers structurally risk becoming contract manufacturers for mobility services — the endpoint visible in later coverage of investors treating robotaxis as a two-horse race between Waymo and Tesla, with Uber's market cap falling roughly 25% in six months under the same disruption pressure.
The trend: Auto manufacturing is splitting into hardware suppliers and software-and-service platforms, with each IPO valuation and software stumble deciding which side of that line each incumbent lands on.