In the next few decades, the transportation sector is going to be blown up in every conceivable way. This isn't some sort of idle, dramatic prediction: we're already hitting the leading edge of it, fueled by a convergence of technology, vast climate change, urbanization, and a generation ambiguous about ownership.
For an industry that has often pegged itself to the notions of freedom and a wide-open road, you can see how this might be a problem.
This isn't our first rodeo, so we have a pretty good understanding of how this wave of disruption is going to play out. The incumbents — usually large, wealthy, and influential — can effectively ignore or throw roadblocks at the forces trying to disrupt them for a very, very long time. But in the end, they will change or risk being diminished into irrelevance: see Western Union's defiance of the telephone in the age of the telegraph, for instance. It's death and renewal, the Circle of Life, played out in the trillion-dollar context of high capitalism.
That's why it's so puzzling to me that automakers haven't universally agreed that pumping out gasoline-filled steel boxes ad nauseam is probably not a sustainable model anymore.
Granted, some have. In particular, Ford and General Motors have been shouting at anyone who will listen that they're at least vaguely aware of the market forces coming for their heads, and are responding in kind. (As Ford CEO Mark Fields likes to say, if they're going to be disrupted, they'd like to be the ones to do it.) And in response, they're throwing non-traditional products and services in every direction, seeing what hits.
For GM, this is mostly taking the form of the Bolt, a $500 million investment in Lyft, and the car-sharing service Maven, along with a handful of local pilot programs in places like New York City — the nexus of America's small-but-growing carless lifestyle. Ford, meanwhile, has announced dozens of programs domestically and abroad that trend wide of individual car ownership, everything from high-tech bicycles to ride-hail shuttles to group leasing programs that make it possible to share a single car with a bunch of friends.
No one can definitively tell you whether GM and Ford, both centenarians and keystones of the obsolete 20th century economy, will exist for another hundred years (or 25, for that matter). But if nothing else, you have to admire the fact that they're leaning into change, rather than blindly fighting it — particularly for Ford, whose founder literally invented and popularized the premise of making mass-market automobiles affordable to the American middle class.
But then you have Fiat Chrysler, a perennial underdog that is now being willfully disadvantaged by its own outdated worldview. Perhaps emboldened by 2015's record car sales — an anomaly unlikely to repeat itself, driven in large part by tumbling oil prices — FCA is doubling down on the past.
Automaker versus "mobility company"
During FCA's fourth quarter earnings call last week, chief executive Sergio Marchionne dispelled any notion of his company is properly preparing for a very different century of human transportation. "I think that ultimately trying to move the discussion away from the concept of auto making, trying to re-pitch our future as being involved in the transportation business in the broadest sense of the term doesn’t do much service to the sort of needs and objectives of the sector that it faces today," he said.
Can you think of a single instance in business where ignoring the future to meet the immediate needs of the present was a smart long-term strategy?
It gets worse: FCA has purchased an extraordinary number of emissions credits, which allow companies to exceed emissions standards by paying cash to cleaner companies in lieu of actually meeting said standards — and Marchionne is completely open about the fact that he'll buy them for as long as it makes sense to do so. "I will make the point here that it appears to be sort of a negative view that we’ve accessed purchase credits as a means of making the targets," he said. "The reality is that we always run numbers internally about the possibility of avoiding the rollout of technology if we can purchase the credits in a more reasonable price and I think that analysis will continue."
"Avoiding the rollout of technology" is the antithesis of innovation, and a company that views innovation as a broad threat to its business has no good reason to exist. (Conveniently, Tesla Motors sold all of its available emissions credits to Fiat Chrysler in 2013 and 2014, Automotive News reports, which is particularly rich.)
I understand Marchionne's conundrum. Investing in new paradigms of transportation is difficult if it means you can't pay your bills today. But he's also vacating the chief executive's fundamental responsibility to ensure the viability of his company for the long haul, and let me tell you: an FCA that leans on individuals buying gasoline-powered Jeeps isn't going to work as well in 2026 as it does in 2016. It probably won't work at all in 2036.
Marchionne, of course, will be long retired by then.
All of this gets at a growing rift in the auto industry between companies that still identify as automakers, and those that insist they're now in the "mobility" business instead. For these "mobility suppliers" (as post-Dieselgate Volkswagen has taken to calling itself), the idea is to make money getting people from point A to point B, regardless of how that may happen: ride share, car share, ride hail, autonomous, electric, hydrogen, hybrid, whatever. They don't really care — and they certainly don't feel compelled to sell you a car, they'll tell you — as long as they're getting a slice of the pie.
We celebrate the new
Making the turn from automaker to "mobility supplier" isn't easy, considering that much of the innovative momentum in the industry is coming from outside traditional automotive centers like Detroit. (Uber in particular is always sucking a lot of oxygen out of the room.) But that doesn't mean it isn't the shrewd turn to make: with the possible exception of boutique, small-volume shops, pure-play automakers will eventually have no place in the world.
Regardless, it's easy to be dismissive of even the most self-aware members of the automotive establishment, because we celebrate the new. We celebrate Tesla, we celebrate Elon Musk's audacity and Tony Stark-ness. We celebrate Google's dream of revolutionizing transportation safety through automation. We celebrate the notion that Apple might bring iPhone-like elegance to a car, even though the company hasn't even acknowledged it's working on one, and may not for years.
But as we push through this transformative era in transportation, I'll take the "mobility company" over the automaker every time, because at least the mobility company knows it needs to transform. For once — just once! — a buzzword speaks volumes.
Verge Video: Cool cars from 2015