On Air Now

Current Show

Coast to Coast AM   12:00 AM - 6:00 AM

Contact Coast to Coast AM at 1-800-825-5033

Show Info »

Upcoming Shows

Program Schedule »


Listen Live Now » 550 AM Wausau, WI 99.9 FM Stevens Point, WI


Current Conditions(Wausau,WI 54403)

More Weather »
54° Feels Like: 54°
Wind: NW 12 mph Past 24 hrs - Precip: 0.18”
Current Radar for Zip


AM Light Rain 59°


Mostly Clear 40°


Partly Cloudy 67°


Silicon Valley warning: Detroit still doesn't get it

A wheel of a 2010 Ford Taurus is pictured during a Ford event in New York, August 6, 2009. REUTERS/Brendan McDermid
A wheel of a 2010 Ford Taurus is pictured during a Ford event in New York, August 6, 2009. REUTERS/Brendan McDermid
</head> <body> <p>By Poornima Gupta</p> <p>SAN FRANCISCO (Reuters) - From Detroit's union halls to its boardrooms, the consensus belief is that billions of dollars in federal investment and loans kept the American auto industry from collapse.</p> <p>But drive up Silicon Valley, and you hear a sharply different -- and far darker view -- from some of the world's most prominent venture investors.</p> <p>The U.S. auto industry, they warn, remains too wedded to a dying business model and too out of touch with the sources of innovation to become competitive again.</p> <p>Instead, they look for a new group of upstart companies to shoot to prominence and profitability, eclipsing the automakers once known as the "Big Three" just as Google Inc came from nowhere a decade ago to eclipse established technology companies.</p> <p>"I do not believe that the U.S. auto business can be competitive," said Ray Lane, Managing Partner, Kleiner Perkins Caufield & Byers. "I don't see any of these new car companies based in Detroit."</p> <p>Lane, who is backing plug-in hybrid carmaker Fisker Automotive that is planning to launch a $39,000 model, said Detroit has lost its entrepreneurial spirit.</p> <p>"For years they have been led by accountants and lawyers, not engineers and entrepreneurs," Lane said. "That's OK if the industry isn't changing."</p> <p>So, what do the three U.S. automakers need to do to get back their once-dominant position in the marketplace?</p> <p>"Start over," said Marc van den Berg, Managing Director of VantagePoint Venture Partners, which backs high-profile electric carmaker Tesla Motors and electric vehicle infrastructure firm Better Place.</p> <p>The U.S. auto industry has been hit hard by high fixed costs and plunging sales in the past year. Even after $3 billion in federal trade-in incentives helped stabilize the market in recent months, overall sales remain down 28 percent.</p> <p>General Motors Co and Chrysler have been put through federally sponsored bankruptcies and restructured with $60 billion in federal funding.</p> <p>Even Ford Motor Co, which avoided bankruptcy, is counting on government support in other areas, including nearly $6 billion in low-cost U.S. loans to retool old factories.</p> <p>The only way to succeed is by a complete overhaul of the business model, where the carmakers move beyond just designing attractive cars, Silicon Valley venture capitalists say.</p> <p>"There is room for business model innovation and technology innovation," said Vinod Khosla, Managing General Partner of Khosla Ventures.</p> <p>Khosla said U.S. automakers need to embrace innovation at all levels, giving as an example Better Place, which is building out charging infrastructure and battery-swapping stations for electric vehicles.</p> <p>"Better Place is saying don't let the consumer buy the batteries," said Khosla. "That's a business model innovation."</p> <p>"There's lots of such innovation possible," he said.</p> <p>THINK GOOGLE, AMAZON</p> <p>The Silicon Valley financiers have high stakes in the transportation sector and are looking to herald the next wave of innovation in cars.</p> <p>Khosla, famed Sun Microsystems co-founder, is backing a number of biofuels makers including Coskata.</p> <p>His former firm Kleiner Perkins, a prolific fund that backed now-household names such as Google and online retailer Amazon, has set its sights on the green technology sector with bets like Fisker and fuel cell maker Bloomenergy.</p> <p>Kleiner Perkins' Lane said both Google and Amazon were spectacularly successful more due to their unique business model rather than technology.</p> <p>"Amazon is an innovation in business model, not in technology," he said. "It was nifty technology that Google had developed, but there were 10 others that had technology."</p> <p>"It was innovation in the business model that produced the value in Google," Lane said.</p> <p>Raj Atluru, managing director of another Silicon Valley venture capital fund, Draper Fisher Jurvetson, said big carmakers would still exist, but new names will herald change in the industry.</p> <p>"Tata Nano is going to change the entire supply chain. They are changing the economics," Atluru said. "Chery has gone from a start-up automotive company to $6 billion in revenue."</p> <p>Draper Fisher, which has brought industry-changing companies like Internet phone company Skype and Internet mail firm Hotmail to the marketplace, is betting on low-cost Indian electric car firm Reva.</p> <p>Chery Automobile Co, China's biggest carmaker, is among the growing ranks of Chinese firms with global ambitions while India's Tata Motors has already taken the market by storm with its $2,500 Nano small car.</p> <p>Lane said a number of changes are coming to the industry, including efficiencies in power train and electrification.</p> <p>The changes "will set us up for the next 50 to 100 years in a totally different industry than the one that was created in the last 100 years," he said.</p> <p>(Reporting by Poornima Gupta; Editing by Phil Berlowitz)</p> </body> </html> </div><!-- end article-body --> </div><!-- end aticle-body-wrapper --> <aside> <ul class="social-share-btns clearfix"> <li><g:plusone size="medium" href="http://wsau.com/news/articles/2009/sep/18/silicon-valley-warning-detroit-still-doesnt-get-it/"></g:plusone></li> <li><div id="fb-root"></div><script src="http://connect.facebook.net/en_US/all.js#appId=112315878855956&xfbml=1"></script><fb:like href="http://wsau.com/news/articles/2009/sep/18/silicon-valley-warning-detroit-still-doesnt-get-it/" action="recommend" send="true" layout="button_count" width="150" show_faces="false" font=""></fb:like></li> <li><a href="http://twitter.com/share" class="twitter-share-button" data-url="http://wsau.com/news/articles/2009/sep/18/silicon-valley-warning-detroit-still-doesnt-get-it/" data-text="Silicon Valley warning: Detroit still doesn't get it" data-count="horizontal">Tweet</a><script type="text/javascript" src="http://platform.twitter.com/widgets.js"></script></li> </ul><!-- end social-share-btns --> </aside> </div><!-- end article-container --> <section class="clearfix text-ad-container"><div class="text-ad"></div><div class="text-ad"></div><div class="text-ad"></div></section> <div id='taboola-below-main-column'></div> <script type="text/javascript"> window._taboola = window._taboola || []; _taboola.push({mode:'thumbs-2r', container:'taboola-below-main-column', placement:'below-main-column'}); </script> <div id='taboola-text-2-columns'></div> <script type="text/javascript"> window._taboola = window._taboola || []; _taboola.push({mode:'text-links-5r', container:'taboola-text-2-columns', placement:'text-2-columns'}); </script> <script> window._taboola = window._taboola || []; _taboola.push({flush:true}); </script> <section class="comment-container"> <h1 class="h2 visuallyhidden">Comments</h1> <a href="/news/articles/2009/sep/18/silicon-valley-warning-detroit-still-doesnt-get-it/#disqus_thread"></a> <div id="disqus_thread" class="section-widget"></div> <script type="text/javascript"> var disqus_shortname = 'wsau'; var disqus_title = 'Silicon Valley warning: Detroit still doesn't get it'; var disqus_url = 'http://wsau.com/news/articles/2009/sep/18/silicon-valley-warning-detroit-still-doesnt-get-it/'; (function() { var dsq = document.createElement('script'); dsq.type = 'text/javascript'; dsq.async = true; dsq.src = 'http://' + disqus_shortname + '.disqus.com/embed.js'; (document.getElementsByTagName('head')[0] || document.getElementsByTagName('body')[0]).appendChild(dsq); })(); </script> </section><!-- end comment-container --> </article> </div><!-- end of col-1 --> <div id="col-2"> <form class="section-search-form clearfix" method="get" action="/search/"> <fieldset class="clearfix"> <input class="section-search" type="text" rel="Search News" name="q" placeholder="Search News" /> <input class="section-search-submit" type="image" alt="Search" src="http://static.mwcradio.com/images/icons/section-search.gif" /> </fieldset> </form> <div class="ad-300x250"></div> <aside class="aside-module top-stories"> <h1>Top Stories</h1> <ul class="unstyled-list single-col-list"> <li><a href="/news/articles/2014/sep/21/brewers-win-crucial-game-at-pittsburgh-1-0/" title="Full Article: Brewers win crucial game at Pittsburgh 1-0">Brewers win crucial game at Pittsburgh 1-0</a></li> <li><a href="/news/articles/2014/sep/21/badgers-roll-up-big-yardage-against-bowling-green/" title="Full Article: Badgers roll up big yardage against Bowling Green">Badgers roll up big yardage against Bowling Green</a></li> <li><a href="/news/articles/2014/sep/20/dog-attacks-cops-in-marshfield/" title="Full Article: Dog attacks cops in Marshfield">Dog attacks cops in Marshfield</a></li> <li><a href="/news/articles/2014/sep/20/kentucky-firefighter-dies-after-ice-bucket-challenge-accident/" title="Full Article: Kentucky firefighter dies after ice bucket challenge accident">Kentucky firefighter dies after ice bucket chall...</a></li> <li><a href="/news/articles/2014/sep/20/first-graduates-complete-special-welding-program-partnership/" title="Full Article: First graduates complete special welding program partnership">First graduates complete special welding program...</a></li> </ul> </aside> <div class="text-ad"></div> <nav class="aside-module"> <h1>News Sections</h1> <ul class="unstyled-list two-col-list clearfix"> <li><a href="/news/sections/local/" title="Local News Section">Local</a></li> <li><a href="/news/sections/state/" title="State News Section">State</a></li> <li><a href="/news/sections/national/" title="National News Section">National</a></li> <li><a href="/news/sections/world/" title="World News Section">World</a></li> <li><a href="/news/sections/localsports/" title="Local Sports News Section">Local Sports</a></li> <li><a href="/news/sections/sports/" title="National Sports News Section">National Sports</a></li> <li><a href="/news/sections/politics/" title="Politics News Section">Politics</a></li> <li><a href="/news/sections/business/" title="Business News Section">Business</a></li> <li><a href="/news/sections/health/" title="Health News Section">Health</a></li> <li><a href="/news/sections/science/" title="Science News Section">Science</a></li> <li><a href="/news/sections/technology/" title="Technology News Section">Technology</a></li> <li><a href="/news/sections/entertainment/" title="Entertainment News Section">Entertainment</a></li> </ul> </nav> <div class="text-ad"></div> <div class="ad-300x250"></div> <aside id="recentcomments" class="aside-module dsq-widget sidebar-comments"> <h1 class="dsq-widget-title">Recent Comments</h1> <script type="text/javascript" src="http://wsau.disqus.com/recent_comments_widget.js?num_items=3&hide_avatars=0&avatar_size=32&excerpt_length=200"></script> </aside> <div class="text-ad"></div> </div><!-- end col-2 --> </div><!-- end page-content-wrapper-inner --> </div><!-- end page-content-wrapper-outer --> <div id="site-footer-wrapper"> <footer id="site-footer" class="clearfix"> <ul class="footer-list footer-bucket"> <li><a href="http://static.mwcradio.com/pdf/footer-files/privacy.pdf" title="Privacy Policy">Privacy Policy (PDF)</a></li> <li><a href="http://static.mwcradio.com/pdf/footer-files/termsofuse.pdf" title="Terms of Use">Terms of Use (PDF)</a></li> <li><a href="http://static.mwcradio.com/pdf/footer-files/contestrules.pdf" title="Contest Rules">Contest Rules (PDF)</a></li> <li><a href="http://static.mwcradio.com/pdf/footer-files/contest-rules-addendumC.pdf" title="Contest Rules - Addendum C">Contest Rules - Addendum C (PDF)</a></li> </ul> <ul class="footer-list footer-bucket"> <li><a href="/advertise/" title="Advertise With Us">Advertisers</a></li> <li><a href="http://www.midwestcareers.com/" title="Midwest Careers">Employment</a></li> <li><a href="/eeo/" title="EEO">EEO</a></li> </ul> <div class="footer-bucket"> <ul class="footer-list footer-social-list"> <li> <a href="http://facebook.com/WSAUNewsTalk" title="WSAU on Facebook"> <img src="http://static.mwcradio.com/images/icons/facebook20.png" alt="Facebook" /> Facebook </a> </li> <li> <a href="http://twitter.com/WSAU" title="WSAU on Twitter"> <img src="http://static.mwcradio.com/images/icons/twitter20.png" alt="Twitter" /> Twitter </a> </li> </ul><!-- end social links --> <ul class="footer-list footer-bucket"> <li> <a href="https://play.google.com/store/apps/details?id=com.midwestcommunications.wsauam" title="Download Our Android App"> <img src="http://static.mwcradio.com/images/icons/android20.png" alt="Android" /> Listen on Android </a> </li> <li> <a href="https://itunes.apple.com/us/app/wsau-550-am-99.9-fm/id634061810" title="Download Our iOS App"> <img src="http://static.mwcradio.com/images/icons/apple20.png" alt="Apple" /> Listen on iPhone/iPad </a> </li> </ul> </div> <ul class="footer-list footer-bucket contact-info"> <li>© 2014 WSAU</li> <li>Call Letters: WSAU</li> <li><span class="frequency-location">550 AM Wausau, WI</span></li> <li><span class="frequency-location">99.9 FM Stevens Point, WI</span></li> <li>Studio Line 1: 715-845-2155</li> <li>Text Us at 39327</li> <li><a href="/contact-us/" title="Contact Us">Contact Us</a></li> </ul> </footer> </div><!-- end footer-wrapper --> <script src="https://ajax.googleapis.com/ajax/libs/mootools/1.4.5/mootools-yui-compressed.js"></script> <script src="http://static.mwcradio.com/js/mootools-more-"></script> <script src="http://static.mwcradio.com/apps/nowplaying/js/jug-application.js"></script> <script src="http://content.aimatch.com/swfobject.js"></script> <script src="https://apis.google.com/js/plusone.js"></script> <script src="http://static.mwcradio.com/js/mwc.js?5"></script> <script src="http://static.mwcradio.com/datepicker/Locale.en-US.DatePicker.js"></script> <script src="http://static.mwcradio.com/datepicker/Picker.js"></script> <script src="http://static.mwcradio.com/datepicker/Picker.Attach.js"></script> <script src="http://static.mwcradio.com/datepicker/Picker.Date.js"></script> <!--[if lt IE 7 ]> <script src="//ajax.googleapis.com/ajax/libs/chrome-frame/1.0.2/CFInstall.min.js"></script> <script>window.attachEvent("onload",function(){CFInstall.check({mode:"overlay"})})</script> <![endif]--> <script src="http://static.mwcradio.com/js/lightface/LightFace.js"></script> <script src="http://static.mwcradio.com/apps/scoop/js/article_details.js" type="text/javascript"></script> </body> </html>