Who will win the race to build the driverless car: Silicon Valley or Detroit? That’s the question Fortune’s Erin Griffith explores in her fascinating story for the July issue of our magazine, which we are publishing online today.
In the last few months, the driverless car has made a stunningly fast transition from science-fiction dream to big money business bet. In March, GM spent $1 billion on a tiny self-driving startup called Cruise Automation. That opened the floodgates. In May, Toyota struck a partnership with Uber, Volkswagen invested $300 million in ride-hailing company Gett, Apple poured $1 billion into China’s Didi Chuxing, and Google partnered with Fiat Chrysler to outfit 100 Pacifica minivans with self-driving technology. The race is officially on.
It’s a race with broad implications for other industries, where executives are watching to see who wins as the digital revolution invades traditional industries. Does the future belong to the tech companies – Google, Apple, Tesla, etc. – with their superior digital skills? Or can legacy companies, with deep engineering and domain expertise, develop digital skills quickly enough to get there first?
Ford’s Mark Fields says he’s determined to see his company “disrupt itself” before Silicon Valley players have the chance. And he argues that Detroit’s engineering culture has some advantages over the Valley’s digital approach. “You can’t hit ‘control-alt-delete’ when you are going 70 miles an hour.” The markets, on the other hand, seem to be betting on the Valley. Uber, amazingly, has a higher valuation than GM and Ford together (even though the car companies generate $145 billion more revenue.)
The end result, of course, could be a merger of the two. Apple has enough cash lying around to buy all the Big Three, if it wanted to; Alphabet could buy two of them. Watch this space.
You can read the full story here. More news below.
• Put the Gavel Down and No-One Will Get Hurt
Democrats took a leaf out of the Civil Rights movement’s playbook Wednesday, blocking the House of Representatives with a sit-in protest that lasted nearly 16 hours in protest at Republican obstruction of their efforts to expand background checks for gun buyers. The sit-in started late in the morning and continued past 3 a.m., when Republican leaders adjourned the House. The action drew tweets of praise from both President Barack Obama and the Democrats presumptive nominee Hillary Clinton. The two parties are pushing rival bills on background checks in response to the Orlando shooting, while a bipartisan bill in the Senate sponsored by by Sen. Susan Collins (R., Maine) and endorsed by the senior Democratic Senator Harry Reid is also gathering support. WSJ, subscription required
• Senate Votes Down Plan to Expand Surveillance
Meanwhile in the Senate, lawmakers voted down a Republican-backed proposal to expand the FBI’s secretive surveillance powers after the mass shooting at an Orlando gay nightclub last week. The legislation before the Senate, filed as an amendment to a criminal justice funding bill, would have widened the FBI’s authority to use so-called National Security Letters, which don’t require a warrant and whose very existence is usually a secret. Under it, the would have much broader power to request telephone and internet records from companies such as Google or Verizon without a warrant. Opponents, including some major technology companies, have said it would threaten civil liberties and do little to improve national security. Reuters
• Investors Rebel at Musk’s Plan to Rescue SolarCity
Tesla shares slumped by over 10% in the biggest daily volume registered this year, as investors gave a resounding thumbs down to Elon Musk’s plans to merge the carmaker with SolarCity. While few in financial markets doubt that both electric vehicles and solar power have a bright future in their own fields, the lack of industrial logic in the proposal, which offers no visible opportunities for cost savings or other efficiencies, has raised fears that Musk is milking shareholders in Tesla to bail out SolarCity, which has much weaker cash flow. Fortune
• GOP Businessmen to Endorse Clinton
Over 50 prominent executives—including several high-profile and long-standing Republicans—are set to endorse Hillary Clinton for President Thursday, according to The Wall Street Journal. They include AT&T Services Inc.’s Jim Cicconi, a veteran of the Reagan and Bush (senior) White House administrations, and former GM CEO Dan Akerson—both of whom have a very different kind of profile from the Silicon Valley leaders such as Tim Cook and Jeff Bezos, with whom Trump is already involved in personal feuds. The WSJ calls the endorsements a fresh expression of GOP unease at Donald Trump’s likely nomination. Cicconi said in a statement that a Trump presidency “would set our nation on a very dark path.” Elsewhere, Trump stepped up his personal attacks on Clinton, calling her a “world-class liar” and insinuating personal corruption. WSJ, subscription required
Around the Water Cooler
• Unilever Is Shocked—Shocked!—To Find It’s Been Stereotyping Women
Unilever, the owner of Ben & Jerry’s, Dove and much else besides, said it would make its ads less sexist after a two-year research campaign found powerful objections among women to the way they were depicted. Some 90% felt they were presented as sex symbols, 40% said they didn’t identify with their portrayal in adverts, and nearly a third complained that ads showed women as perceived by men. Unilever found that its ads stereotyped men as well as women, but the responses from women are more concerning because they are the target demographic for most of its ads. Unilever is one of the biggest advertizers in the world, with an annual spend of around $9 billion. Its announcement comes as the Advertising Standards Agency, the regulator in Unilever’s home U.K. market, has just launched a consultation on new rules to stop gender stereotyping and ‘body-shaming’ in ads. BBC
• Sun Goes Down On SunEdison CEO
After leading it for seven years through a roller coaster rise and disastrous fall and a brutal bankruptcy, Ahmad Chatila, the CEO of beleaguered clean energy company SunEdison, has finally resigned. He’ll be succeeded by John Dubel, SunEdison’s chief restructuring officer, who joined the company just this April. Chatila had driven SunEdison’s aggressive acquisition strategy that saw the company grow too big, too fast, and in too many directions. SunEdison filed for bankruptcy in April, leaving it with $20.7 billion in assets and liabilities of $16.1 billion. The bankruptcy was one of the largest non-financial bankruptcies in the U.S. in the past 10 years. Fortune
• Was That a Unicorn I Saw?
That rarest of beasts, the Lesser-Spotted 2016 Tech IPO, came out of hiding briefly yesterday. Twilio, which makes software that helps companies such as Uber and WhatsApp connect with their customers, raised $150 million, pricing above the top end of its previously announced range. Wall Street viewed the deal as an indicator of the willingness of public markets to back startups that are still making losses. The company, whose revenue rose 88% last year to $167 million, is now valued at $1.2 billion, despite not having turned a profit yet. There may be more to come if the British E.U. referendum today removes one of biggest uncertainties that has weighed on markets recently. NYT
• Germany’s Shock Last-Minute Concessions to Stop Brexit
On the subject of which, the pound hit a 2016 high against the dollar overnight and stockmarkets rallied hard in Europe this morning as the probability of a “Brexit” fell to below 20% (according to the bookmakers, anyway). The scaremongering and rabble-rousing is over, to give way, with near-certainty, to an equally bitter round of recriminations in around 18 hours’ time. In lighter vein, Germany’s best-selling newspaper Bild Zeitung has offered a series of concessions to British voters if they agree to carry on footing the bill for the E.U., promising–among other things–a new E.U. directive banning froth on beer, an end to jokes about Prince Charles’s ears, a regular supply of villains for every James Bond movie, poolside loungers reserved for Brits at Mediterranean hotels in the summer and, most importantly, recognition of England’s goal-that-never-was in the 1966 soccer World Cup final. If only. Bild Zeitung