"Silicon Valley VCs Say Detroit 3 Must Scrap Their Business Model to Succeed" Green Car Advisor

Silicon Valley VCs Say Detroit 3 Must Scrap Their Business Model to Succeed

Silicon Valley's venture capitalists believe the Detroit 3 automakers cannot become competitive again unless they scrap their traditional business model and embrace new, innovative ways of doing business.

That's the theme of a feature article Reuters distributed today, a copy of which can be read free of charge and registration at the new service's Website.

Speaking of the Detroit 3, Ray Lane, a managing partner at Kleiner, Perkins, Caufield & Buyers, said that "for years they have been led by accountants and lawyers, not engineers and entrepreneurs. That's OK if the industry isn't changing."

So what do Ford Motor Co., General Motors Co. and Chrysler Group need to do to regain marketplace dominance?

"Start over," said Marc van den Berg, managing director of VantagePoint Venture Partners, which backs upstart electric carmaker Tesla Motors and electric-vehicle infrastructure firm Better Place.

The only way the Detroit 3 can succeed is by completely overhauling the business model, moving beyond just designing attractive cars, Silicon Valley venture capitalists say.

"There is room for business model innovation and technology innovation," said Vinod Khosla, managing general partner of Khosla Ventures.

Khosla said U.S. automakers need to embrace innovation at all levels. He pointed to Better Place, which is building charging infrastructure and battery-swapping stations for electric vehicles.

"Better Place is saying,'Don't let the consumer buy the batteries,' " Khosla said. "That's a business model innovation."