The evolution of big auto and Silicon Valley

silicon valley postcard
Shutterstock Callahan

This article is drawn from the Transport Weekly newsletter from GreenBiz, running Tuesdays.  

The auto industry's attempts to work with Silicon Valley have a history of being rather awkward. Some Valley auto shops have seemed like purely defensive moves, while others birthed strange chimeras that remind me of this newly discovered ancient marine reptile (combine a duck bill, stegosaurus plates, crocodile's tail and a tiny head and eyes) . . . not surprisingly, it went extinct

Well, the auto sector is in such need of tech innovation that its presence in — and increasing reliance on — Silicon Valley surely will not be going extinct any time soon (unless software does completely eat the auto world).

Quite the contrary, the auto sector's interest in the Valley has only grown as we've seen with major acquisition deals such as GM and Cruise. Today all global automakers have some kind of R&D division, venture capital arm or startup incubator, and most of those will only see their resources and importance rise. 

And many of them have evolved from their more awkward teenage years. Last week I met with Honda's Xcelerator group and learned about their rather refreshing and down-to-earth model. Quite simply, they build relationships with startups that could be strategic to the Japanese automaker.

Much of the work that the org does is to use Honda resources — engineers, work spaces, vehicles — to collaborate with startups on building prototypes and pilot projects. Honda Xcelerator will fund those, and occasionally do an investment in a startup, but that's not its main goal. If the collaboration proves fruitful, greater Honda can consider a deeper partnership. 

As a result of this startup-friendly model, Honda Xcelerator has quite the extensive list of 40 startups it's worked with. And its partners tend to praise the direct, simplified and non-exclusive relationship.

Quite frankly, the culture and communication gap between startups and big companies can be large, regardless of how useful each would be to the other. "[T]here is a big disconnect. How can someone at a big company know how to relate to someone like us? And how do we bridge that gap? It's a huge issue," said Perceptive Automata's VP Strategy & Business Development James Gowers.

Perceptive Automata has been working with Honda Xcelerator and now it's working with the Honda team at HQ in Japan. Gowers says the process has been "one of the best." 

While the global automakers are spending money on integrating with Silicon Valley, there's also other new auto tech models: the rare Valley-born automaker such as Tesla; the startups backed by big money from China (Nio, Faraday, Byton, Lucid); and the companies offering consumer tech products that are moving into vehicles (Dyson, Apple, Google).

We'll see which unions are best positioned.