Future-Focused Automakers Turning to Startups

This article is based on a story that originally appeared in It Is Innovation (i3) magazine, published by the Consumer Technology Association (CTA)®.

Overview Automakers are preparing for the future of mobility by investing in and partnering with all sorts of technology and mobility-focused startups, which allows them to expand their knowledge, capability and expertise to remain relevant in an industry on the verge of massive transformation.

According to Mike Ramsey, senior research director for automotive and smart mobility at Gartner, automakers are realizing that the technologies important in the future will not be mechanical.

“They’re software-based technologies, where the auto industry has traditionally been weak, and they have to acquire because they can’t develop — not right now,” Ramsey said.

The top 20 global automakers collectively participated in more than 50 startups in 2018, according to data compiled by Crunchbase.

Mostly the money went to tech companies for self-driving and electric cars and ride-hailing services. But developers of solid-state batteries, 3D metal printing and computer vision technologies were also in the mix, Crunchbase News reported.

“Pretty much every major automaker has done or is doing joint projects with startups,” says Quin Garcia, managing director of Autotech Ventures, which invests in transportation-related startups in cooperation with large transportation corporations, including automakers.

“Most major automakers have made strategic investments into externally managed VC funds, and most automakers have made some direct investments into startups or acquired such startups.”

Most automakers globally are trying to reposition themselves as a company that’s more than just manufacturing cars.

Quinn Garcia
Managing Director, Autotech Ventures

Automakers Working with Startups

These global automakers are looking to tech startups in an effort to stay competitive in a changing market.

  • GM acquired self-driving car company Cruise in 2016.

  • Toyota invested in ride-hailing firm Grab, which is based in Singapore, in 2018.

  • Volkswagen has invested in self-driving platform Argo AI.

  • Ford has also invested in Argo AI, as well as 3D metal printing company Desktop Metal.

  • Hyundai has a corporate venture arm called Hyundai CRADLE that has funded 30 companies since its creation in early 2017. It funds around five major themes: artificial intelligence, robotics, smart cities, smart mobility and ecofriendly energy.

  • BMW Group has a venture capital fund, iVentures, that launched in 2011 and focuses on consumer-facing mobility services. BMW also operates a technology accelerator in Brooklyn, N.Y., URBAN-X, that targets companies focused on working, living and getting around in cities in a sustainable and resilient way.

“Most automakers globally are trying to reposition themselves as a company that’s more than just manufacturing cars,” Garcia said.

So as technology continues to change the world, automakers and startups are forming innovation partnerships that bear watching.

Read more about the investments and partnerships automakers are making with startups in "Automakers and Startups Align" from i3 magazine.


Automakers and Startups Align

Technology is redefining the automobile even as new ways of getting around are appearing all over the world. The result is a slew of innovative startups vying for a piece of the action. 

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