Why Google's Self-Driving Project Is Setting Up Shop Near Detroit

By Markets Fool.com

Google's new metro Detroit office will lead its effort todevelop a self-driving version of Chrysler's Pacifica minivan. But it's likely to havemuch more on its agenda. Image source: Fiat Chrysler Automobiles.

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Alphabet's Google Self-Driving Car Project announced on Wednesday that it's setting up shop near Detroit. The company said that it has secured a 53,000-square-foot facility in Novi, Michigan, about 30 miles northwest of downtown Detroit.

Google moves to "lay down roots" in the auto industry's hometown

"For the past few years, members of our team have been working from the Greater Detroit area. Now it's time to lay down roots: we're establishing a self-driving technology development center in Novi, MI," the company said In an unsigned post to the Project's Google Plus account.

Many of our current partners are based here, so having a local facility will help us collaborate more easily and access Michigan's top talent in vehicle development and engineering. At this 53,000 sq ft development center, our engineers, working with local partners, will further develop and refine self-driving technology. One of the first tasks will be to ready our self-driving Chrysler Pacifica hybrid minivans.

If you want to build cars, you go to where the car-building experts are

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It's no surprise that Google's self-driving crew would move to set up shop near Detroit. Just as the major automakers have set up offices in Silicon Valley to tap tech expertise, Google is clearly looking to tap the vast automaking expertise available in and around Detroit. Having an office in the area will make it easier for Google to hire and retain auto-industry veterans as it ramps up its efforts to turn its years of self-driving research into commercial products and services.

As the Project noted in its statement, one of the initial priorities of the staff at the new office will be to work with Fiat Chrysler Automobiles to create a fleet of self-driving Chrysler Pacifica minivans. Earlier this month, the two companies announced a deal to create "around 100" self-driving hybrid Pacifica minivans for Google to use in the next phase of testing its self-driving systems.

The Google self-driving team's new facility in Novi, Michigan. The team expects to move in over the next several months. Imagesource: Google.

But it's possible that the Google team will use the new Michigan office as a base for expanded partnerships with other automakers or auto-industry suppliers over time. Project chief John Krafcik has said that Google has no intention of going into the (high-fixed-cost, low-profit-margin, high-headache) business of building cars, hinting that it would eventually seek one or more partners to build vehicles that incorporate its self-driving systems.

While Google's deal with FCA would suggest that the Italian-American automaker is in a good position to get that business, both sides have made it clear that the current deal between the two isn't exclusive.

What's next for Google's Self-Driving Car Project?

The Project's statement said that it would "begin moving in" to the Michigan facility "throughout 2016." It's likely that we'll hear a lot more about the Project, its collaboration with Fiat Chrysler, and any other potential partnerships, after the office is up and running later this year. In the meantime, Google will be hiring; Detroit's automakers had best keep a close eye on their top talent.

The article Why Google's Self-Driving Project Is Setting Up Shop Near Detroit originally appeared on Fool.com.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Rosevear has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.