California is steering the automobile industry toward its future
PALO ALTO, Calif. — Within walking distance of Tesla Motors' Palo Alto headquarters and across the street from Hewlett-Packard, Ford Motor Co. has set up a new Silicon Valley outpost.
With a team of 100 reporting to a former Apple engineer, the Detroit giant is researching how humans experience machines, running autonomous-vehicle driving simulations and testing software that examines how bicycles and cars interact.
"For 100 years, automobiles have been a mechanical engineering industry," said the center's director, Dragos Maciuca, who on his morning commute drives past a nearby research center of German automotive electronics and parts supplier Bosch. "Now, there is the shift to software — and the mecca of software is Silicon Valley."
Ford's Western hub, opened in January, is just one sign of California's emergence as the global center for the future of personal mobility. Other automotive powerhouses with Valley offices include Toyota, Honda, Hyundai, Volkswagen, BMW, Mercedes-Benz, Nissan and automotive suppliers Continental, Delphi and Denso.
The state has led development of self-driving cars, advanced green vehicles and automotive software, including Google's and Apple's growing — though still somewhat secret — automotive operations. California's aggressive environmental regulation and generous electric car subsidies have nurtured companies such as Tesla and its emerging rival Faraday Future.
The state also has given birth to tech-driven ride services such as Uber and Lyft and car-sharing companies Turo and Getaround. Many envision the state's converging tech and auto industries playing a leading role in a future in which riders can order driverless vehicles on demand.
"We have the best software engineers in the country, and the most of them, and a good university system," said Pasquale Romano, chief executive of ChargePoint Inc., the company building a large network of electric car charging stations. "It's all the components necessary to make California the next Detroit."
That's driving growth of high-paying jobs. Auto company and supplier employment in California has jumped nearly 26 percent since 2011 to almost 47,000 jobs this year, according to Employment Development Department data.
The automotive industry here is still small compared with Detroit, and an increase of about 10,000 jobs has a small effect on the state's large and diverse economy. It's total size is still far from the 326,000 automotive industry workers employed in Michigan, according to the Center for Automotive Research.
California also struggles to add manufacturing because of high costs of labor, real estate and complex environmental regulation. Detroit's huge manufacturing base, by comparison, extends into a long supply chain, with each manufacturing job tied to an additional 6.6 positions, according to the center.
Still, Tesla and companies such as electric bus builders Proterra and BYD are adding manufacturing jobs in California, and the automotive tech boom here shows no sign of slowing.
The growing car company presence in the tech mecca is in part a response to Google's push into the automotive sector with self-driving car development.
"No other company has as much relevant technology to advance autonomous driving software," said Egil Juliussen, senior research director at IHS Automotive.
Credit Google for Toyota's announcement this month that it will hire 200 employees and pour $1 billion into artificial intelligence research at a new tech center with headquarters in Palo Alto and a satellite office in Boston.
"Google is the current technology leader in this arena," Juliussen said.
Elsewhere, Chinese investors are pouring money into California electric car startups.
The projects include Faraday Future, which employs 400 near Los Angeles. There is also Karma Automotive — reborn from the Fisker bankruptcy — which employs 250, and Atieva, a company that says it's developing "a breakthrough electric car in the heart of Silicon Valley" but has said nothing else publicly about its business. It is advertising to hire 100 engineers on its website.
The state has long played an important role in the auto industry. It's the biggest market in the U.S. It sets styling trends and is home to design studios for Honda, Toyota, Ford and other carmakers.
But it's had its setbacks. Toyota is moving more than 2,500 sales and marketing jobs from California to Plano, Texas, over the next two years, and taking hundreds of vendor jobs with it. And five years ago Toyota closed a factory it had jointly operated with General Motors, idling 4,700 jobs.
Although Tesla now owns the factory and has replaced most of the positions, it's not clear whether the automotive tech sector and nascent electric car companies will grow fast enough to replace the sales and marketing jobs Toyota is moving.
Faraday, the new electric car startup, said it plans to announce the location of a $1 billion auto factory in the coming weeks. California is one of several states competing for the factory, but most analysts believe the electric car company will pick a site outside of Las Vegas — close enough to its headquarters, but still in a lower cost state that has a track record of handing out big economic development packages.
That would follow the lead of Tesla, which chose Nevada for the location of a new battery factory after the state offered an incentive package worth $1.3 billion over 20 years.
Karma has leased a large factory where it will assemble plug-in electric hybrid vehicles that could be for sale as early as the middle of next year. But this won't be a full-scale auto factory. It will have only a few hundred employees. Karma will buy powertrain components from BMW and body panels from Canada.
As cars become more like rolling iPads in the coming decades, traditional manufacturing operations could become less important, said Bill Hampton, publisher of AutoBeat Daily near Detroit.
"You're getting way far away from bending metal and bolting cars together," Hampton said.
(Los Angeles Times staff writer Russ Mitchell contributed to this report.)
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