At this point, the meme of another international automotive event — be it the Geneva Motor Show or even CES — eclipsing the Detroit Auto Show as "the premier auto show" has been well-trodden. Looking into the hallways of either Geneva or CES, or scanning the media coverage surrounding them, it would seem that this meme holds true: GM unveiled the Bolt in Las Vegas, and Nissan exhibited a refined IDS (Intelligent Driving System) in Switzerland, while many of the high-profile debuts in Detroit were quickly forgotten.
But this meme is only popularizing a misnomer; neither Geneva nor CES is becoming the new "premier auto show," because the technologies showcased at these events and elsewhere are beginning to deemphasize the "auto" part of the "auto show" altogether. The takeaway here is not that Detroit is now irrelevant and the center of automotive is shifting, but rather that the car itself is irrelevant — and the code is king.
The future isn’t the car. It’s the service, and the code is what enables and optimizes the service.
While there are many technologies converging to disrupt transportation, it’s become clearer today that three trends in particular will create a powerful, positive feedback loop of innovation. The future of transportation will revolve around Shared, Autonomous and Electric. Increased adoption of any one of those technologies increases the value of the others: A Shared network is cheaper and better if Autonomous, and even more so if Electric. A Shared network has a higher utilization capacity, meaning the long payback for Electric today is shortened dramatically. An Autonomous car can be more easily charged than filled with gas (the Rube Goldberg contraption that would be needed to autonomously fill a fuel tank is highly implausible). And this is just the tip of the iceberg — these positive feedback mechanisms continue ad infinitum.
Between today and a future defined by these trends, the challenges facing engineers and designers are coding problems, not car-making problems. Sharing requires efficiently managing a network of distributed assets. Autonomy requires intelligent interpretation of digital sensor data and, by extension, a way to translate that data into vehicle control inputs. Electric requires top-notch power electronics systems to manage how the battery and drivetrain interact.
The issues inherent to Sharing, Autonomy, and Electric are also the problems that the next generation of customers actually wants solved. As a thought exercise, think of how many millennials would choose to have free access to a Shared, Electric and Autonomous network of Toyota Priuses instead of a free BMW 7 Series. The future isn’t the car. It’s the service, and the code is what enables and optimizes the service.
The challenges facing engineers and designers are coding problems, not car-making problems.
Nonetheless, making cars remains a very, very difficult enterprise. Tesla is the only successful new automotive OEM since Chrysler was founded in 1925, and companies that can create reliable and exciting vehicles will continue to be rewarded for doing so. As innovation shifts from the car to the code, companies that commit to the Autonomous, Shared and Electric vision of the future will create significantly more new value than those who don’t. Whether in Silicon Valley or Detroit, any company that positions itself to hasten that future will benefit — and the industry as a whole will be better off for it.
Automotive executives often forcefully and convincingly contend that they will not become handset makers to companies like Apple and Google, who want to own the "brains" inside the cars. The reality is they have a choice to make: Would they would rather be BlackBerry, which continued to try and own the hardware and software in a walled-off OS to the detriment of its customers (market cap $4 billion) or Foxconn, which is now a key manufacturer of the iPhone (market cap $89 billion)?
Is Detroit still relevant? Yes. Are Geneva and CES also relevant? Yes. Is the car itself relevant? Not as much.
The Green Growth Fund (GGF) at Kleiner Perkins Caufield & Byers is a $1 billion fund dedicated to supporting sustainable technology businesses. The GGF team — including Brook Porter, Zach Barasz and Paul Yeh — applies deep investing and entrepreneurial experience to help companies transform the economy and increase resource efficiency. They invest in leading companies across the largest sectors of the economy, including transportation, industrial data and analytics, agriculture, digital energy, supply chain and financial services. Reach them @kpcb.
This article originally appeared on Recode.net.