“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” —Buckminster Fuller
Michigan often promotes and thinks of itself as the automotive center of the world. While there is no doubt that many significant innovative vehicle product and manufacturing technologies were developed and deployed by Michigan-based auto companies and suppliers over the past century, profound changes in the underlying technologies, business models, and market dynamics are taking place.
The terms I use to summarize these changes are the shift from a “Just in Case Asset” model to a “Just in Time Access” model. Just in Case Asset has been the prevailing model for over 100 years. In it, individuals own/lease and operate five- to seven-seat vehicles to cover marginal use cases, but usually only have one or two people on board and the vehicle is idle 95% of the time. Just in Time Access describes a system in which the appropriate mobility mode is matched to the mobility need on demand.
Mobility modes are expanding beyond conventional personal use and commercial vehicles to purpose-built autonomous vehicles—a wide array of two- and three-wheelers, drones and piloted or autonomous electric vertical take-off and landing aircraft (eVTOL). This transition is enabled by technical advances in propulsion electrification, autonomy, connectivity, business model innovations that provide “Mobility-as-a-Service” (MaaS), and market demand for transportation that is safer, more affordable, sustainable, accessible and pleasant.
This is particularly evident in urban areas. For example, Waymo now books over 450,000 paid autonomous “robo-taxi” rides per week in five cities and is rapidly expanding to additional markets and introducing new vehicle types. In essence, we are witnessing the beginning of the end of the legacy automotive industry and the emergence of a more comprehensive and integrated mobility industry, system and infrastructure that significantly improves the movement of people and things.
Compounding this is the fundamental shift in the center of automotive power and influence away from industrial centers in the United States, Europe, Japan and Korea to big technology firms predominantly on the U.S. West Coast, along with a market center of gravity shift to China. China manufactures three times as many vehicles as the United States, more than half of new vehicles sold there are electric (pure electric and hybrid-electric), vehicle development time is approaching half that of U.S. and European automakers, quality is on par, and tech features are viewed by some as more advanced. Chinese robo-taxi firms operate in 30 cities with a fleet roughly the size of Waymo’s, and over the last two decades they built a 30,000-mile high-speed rail network. The United States has one 460-mile line.
Beyond advances in vehicle electric propulsion and higher levels of autonomy, the term “software defined vehicle” (SDV) has become popularized in the past few years. It refers to how the performance, function and features of a vehicle can be changed and improved over time via over the air software updates, much like a smartphone or laptop can be upgraded and modified via software, rather than being dependent on hardware.
This is a fundamental departure from the days when vehicle performance and features were defined by their mechanical systems and only changed at model year refreshes. The SDV trend is disrupting the traditional tiered supply chain and changing the balance of power. Software and chip tech companies are moving up the chain while legacy auto makers attempt to in-source software development, mimicking what younger rivals like Tesla and Rivian did from the start. Extrapolating the SDV concept from vehicles to business models, I think it is fair to say that “Software Defined Mobility” could ultimately be more impactful since it is at the core of how Mobility-as-a-Service connects mobility customers with mobility providers and the appropriate fit-for-purpose vehicles.
So, it is pretty clear that there has been a lot of fundamental technical, business model, and market transformation and disruption going on over the past decade or so. And there’s more change coming. In my view, further applications of electrified propulsion, higher levels of autonomy and connectivity, and the shift to the Just in Time Access model is inevitable. Significant improvements in economically viable efficiency, safety, and accessibility will overwhelm incumbent legacy solutions. Not everywhere and not all at once, but they will become more prevalent. This creates opportunities for innovators.
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