Legacy Automakers Must Invest in Employees, Tech Alike

Legacy automakers are pouring hundreds of billions of dollars into emerging technologies. But they’ll need more than big spending to stay competitive amid an unexpected electric-vehicle market slowdown and rising manufacturing costs.  

That’s why automakers should take a page from today’s tech giants – which they continue to resemble more and more each year – and be willing to vie with them for top-tier talent.

Here are three ways they can get started:

Take Inspiration From SaaS and Smartphone Business Models

The tech industry has long understood that consumer appetite for the latest and greatest is insatiable. Take smartphones: In 2023, almost seven in 10 Apple users reported using an iPhone that was less than three years old.

Broadly speaking, the auto industry hasn’t been able to gin up the same fervor. Much of that has to do with the slower speed of vehicle development, which requires automakers to engineer and test new prototypes, ensure they meet compliance standards and build or update necessary production infrastructure.

Fortunately, better software integration has the potential to meet consumers’ calls for cutting-edge technology without blowing their budgets. Say a driver can’t afford to purchase a brand-new car; they could instead subscribe to applications that enhance the capabilities of their current vehicle. To some extent, this is already happening with Apple CarPlay, which comes standard on over 800 vehicle models. This approach also could offer people choice and customizability: It’s not hard to imagine a future in which vehicles roll off the lot as a blank canvas, enabling consumers to select the features that meet their needs.

Redouble Efforts to Upskill Employees

This shift, however, underscores the need for engineers with advanced programming skills, capable of continuously developing, testing and updating software.

The EV transition will be a paradigm shift for automotive talent, requiring multidisciplinary expertise in areas such as electrical and chemical engineering. Software engineers also are beginning to play a crucial role in vehicle development as digitization becomes more prevalent.

To get ahead of the curve, automakers must establish robust initiatives to retrain and upskill their workforce. That means providing access to internally crafted training curriculums, programming courses and certifications, and online classes from platforms such as Udemy. These tools can help employees solve longstanding problems and create better products, thus enhancing their value to an organization.

It's important to recognize that mechanical engineers have the critical thinking skills to rise to the occasion. And it’s going to be a lot cheaper to reinvest in them than to replace them.

Jumpstart Your Talent Pipeline

To recruit topflight engineering talent, automakers will have to play to their strengths while addressing their shortcomings.

For instance, tech industry engineering talent isn’t situated in Detroit but around tech hubs like San Francisco, New York City and Austin. As many tech companies attempt to bring their employees back into the office, now may be an ideal moment to offer prospective hires the opportunity to work wherever they choose. Those unwilling to provide that level of flexibility might consider opening up small brick-and-mortar offices around the U.S. tailored to the needs of knowledge workers.

Automakers also should emphasize their longevity and resilience. Companies including General Motors and Ford have been around for over a century, and they’re not going away anytime soon. That kind of staying power stands in stark contrast to the boom-and-bust cycle of many venture-backed tech startups. A young engineer who has had five jobs in five years may be keen to work at a company with a strong foundation and opportunities for long-term career development.

A Technological Revolution Is Here

If auto companies want to succeed, they’re going to have to keep investing – not only in innovative technologies but also in their employees.

New developments may speed up or slow down depending on macroeconomic headwinds, geopolitical tensions, regulatory policies or any number of other factors. The widescale transition to EVs, for example, is going to take more time than we all thought several years ago.

But what’s clear is that we’re still in the midst of a widespread technological revolution. Automakers that want to come out on top can’t afford to let up on the gas now.

Casey Sivier (pictured, above left) is a client success executive at Actalent, a global provider of engineering and sciences services and talent solutions.