By Christopher A. Sawyer
The Virtual Driver

(June 25, 2018) On the surface, it looks like a smart move. Not only does Ford’s purchase of the Michigan Central Station resurrect a dilapidated eyesore and promise to its former architectural glory, it continues the resurrection of Detroit (“America’s Comeback City” to use the local tagline), and creates a skunkworks for Ford’s “New Mobility” efforts away from the Old Think in Dearborn.

The combination is, we are told, perfect for attracting bright young engineers, code jockeys and others to Ford. It is they who want to live and work in vibrant, “authentic” cities, especially one in the midst of a an allegedly miraculous comeback.

Maybe.

Detroit has made a surprising rebound in the past six years, but the problems of the past have not gone away. The school system is a mess, depriving students of the tools and knowledge they need to succeed in life. Crime is still a major problem, and insurance rates are set to match this reality. The downtown area has seen a revival of sorts, but much of the city has yet to see any improvement.

The influx of suburban entrepreneurs and gentry has brought a vibrancy not seen since the days before the 1967 riots, but has done nothing to spread the opportunity to those who were there before they arrived. If this is not a true rising tide that lifts all boats, it will reignite the resentment and anger that currently is on hold.

Then there’s the idea of autonomy and New Mobility itself. Ford has been stung by Wall Street’s bargain basement valuation of its stock (about $12 per share), built on the prejudice that automobiles are old news in an information economy. Somehow, the auto industry believes that it will be able to monetize the information created by autonomous vehicles, and will profit from providing mobility “solutions” like electric bikes, ride sharing, etc.

That is why it is chasing an idea — autonomy — that is not at the top of buyer’s wish lists, currently costs nearly $23,000 per vehicle to create, will suck up a further $61 billion in development costs in the coming years, and is an option that — if they order it — buyers are only willing to pay $2,300 to have on their vehicles.

This is not a slam dunk by any means, and could drive a number of automakers to the brink as they undermine the reason for their product.

What remains unsaid is that these ideas would tear the auto industry asunder, transforming the market into one where there are low-tech, affordable vehicles on one side; high-tech, ultra-expensive vehicles on the other; and a broad middle that has been replaced by commodity ride sharing and self-driving mobility pods.

The builders of these machines will not be the ones reaping any rewards from tracking driver and passenger data, or pushing ad content. They will provide the “box” in much the same way as Dell or Lenovo, while the real money is made by the various service providers and aggregators. And like commodity computer makers who disappeared or fight for shrinking margins, volume automakers like Ford are rushing to bring this to fruition.

A standalone technical center in the Michigan Central Station will only help to bring that reality forward, and inflame a growing industry caste system between the “untouchables” who design, develop and engineer the vehicles and the New Mobility elite whose work could drive them out of existence.

The Virtual Driver