[Corrected on 12/30/11, 1:25 p.m. See below.] Roughly 18 months after Menlo Park, CA-based TechShop announced it was partnering with Ford on a new location in metro Detroit, the communal, membership-based DIY maker space is ready to welcome the public next week at an open house on Dec. 27. [Paragraph has been updated to reflect the correct amount of time that has passed since TechShop announced it would open a Detroit location. We regret the error.]

“Detroit needs a place like this,” TechShop’s CEO Mark Hatch says. “That’s abundantly clear by the number of hacker spaces popping up, almost more than any other city. Detroit has an innate desire to do it yourself, not to mention thousands of engineers. It’s the right place at the right time.”

I arrived for my tour of the approximately $1.8 million Allen Park facility—about a 15 minute drive from downtown Detroit along I-94 West—and was greeted by a man wearing a t-shirt that said, “Trust Me—I’m An Engineer.” It was an appropriately lighthearted garment for a place that aims to give everyone from pre-teen hobbyists to garage-workshop inventors to seasoned engineers a pleasant, affordable space in which to bring their homegrown inventions to life.

And what a space it is. The long, slanted front desk was fabricated in the shop and is meant to inspire members by showing them how simply all the parts fit together. Walls are painted scarlet, teal, royal blue, and hot pink; natural light floods shop spaces that are a serious departure from typically dark and dank industrial facilities.

The atmosphere is bright and welcoming, and contains a tinkerer’s smorgasbord of machines, tools, and software: 3D printers, laser cutters, industrial-grade sewing and textile equipment, mills, lathes, saws, shopbots, an injection molder, a flow jet, a computer lab, a room for large projects that is big enough for a hovercraft, and even a “dirty room” for sandblasting. It even has an auditorium.

Anchoring the facility is a wireless-equipped open space with 4 x 8 work tables, each with access to power outlets, compressed air, and a vise. The various labs, organized by discipline, branch out from around this central hub. A common tool bin sits in the back of the room, and members can bring parts from home or purchase them in the small retail store that will eventually be located in the lobby area.

“We want people to have as few roadblocks as possible to getting into their creative … Next Page »

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Last week, the Center for Automotive Research (CAR) hosted its third annual conference on electric plug-in vehicles, titled “The Business of Plugging In.” The event drew global leaders from the realms of automotives, technology, finance, government, and policy. This year’s conference was different, says Brett Smith, Co-Director of Manufacturing, Engineering and Technology for CAR, in that is was less about hype and more about overcoming challenges.

“This year, the title of the conference was more appropriate than ever before,” Smith says. “When we were planning the event, we talked about how incredibly challenging it is to create a business model for electric vehicles. For the first time, at this year’s conference we heard car companies saying, ‘It’s really hard work, and we don’t yet know the outcome, but we still feel we have some really good ideas.’ “

Smith says one reason consumers have been slow to warm up to electric vehicles is because traditional, combustion-engine vehicles are still much cheaper and increasingly more fuel efficient.

“Electric vehicles have wonderful driving attributes,” Smith says. “But when it comes down to it, it’s hard to imagine paying between $8,000 and $20,000 more for a plug-in electric vehicle when similar economy models deliver such improved fuel efficiency. We’re talking about 40 miles per gallon compared to 60 miles per gallon. To most consumers, that’s not enough of a difference to justify paying a significantly higher price.”

Smith also says that as long as gas remains relatively cheap, it makes it “very hard” for consumers to recoup, through fuel savings, the money they spend upfront to purchase an electric vehicle. ”The car companies have a slide they show internally to a select group of individuals that shows the payback period for electric vehicles, and it’s not months, but years—dozens of years, in some cases,” Smith says. “At this point, it isn’t an economically viable decision for consumers. But there are many other reasons to buy electric vehicles.”

Among those, Smith says, are the social costs involved in owning a vehicle with a traditional engine, and the likelihood that cities and states will soon start taxing drivers who stick with cars that are hard on the environment.

“Car companies will continue to develop electric-vehicle technology for at least the next five to ten years,” … Next Page »

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Cars have come a long way since the Model T. Technology now allows your car to play music off your iPhone, to tell you how to parallel park, and to alert you when you’re about to bump into a shopping cart as you’re backing out. If Ford and New York City-based Bug Labs have anything to say about it, your car will soon be able to do much more: compare your fuel economy to that of your friends, measure your biometrics as your drive, or even alert you to the presence of allergens in the air.

“Think of the car of the future as a mobile computer on wheels, and these are the attachments,” says Peter Semmelhack, founder and CEO of Bug Labs. “The idea is a crowd-sourced, bottom-up approach.”

The two companies announced this week that they will team up in a joint development project to research and distribute open-source developer tools to advance in-car connectivity innovation. Known as “OpenXC,” the research platform will transform the car into a docking station for interchangeable plug-and-play hardware and software modules. Functions change with the addition or deletion of modules, giving owners the freedom to continually customize their vehicles.

Last week, at the TechCrunch Disrupt conference in San Francisco, the two companies demonstrated a socially-networked in-car fuel economy monitor that connected to the Internet via BUGswarm, Bug Labs’ cloud-based service.

“The crowd was made up of VCs, geeks, and bloggers, and the response was terrific,” Semmelhack says. “We didn’t go in expecting to hit any metrics, but we’ve already been approached by investors.”

Turning developers loose on open-source tools is a win-win proposition, Semmelhack says. “Ford isn’t … Next Page »

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It looks like A123 Systems is seeing some payoffs from the lithium-ion battery manufacturing facility it opened in Livonia, MI, late last year. Waltham, MA-headquarted A123 (NASDAQ: AONE) has nabbed a production contract from General Motors to provide the battery packs for an upcoming line of electric vehicles from the automaker, GM announced. The battery packs will be produced at the Livonia site. General Motors, which was previously testing the A123 technology in a development agreement with the company, did not disclose the financial terms of the production contract or which vehicles the A123 battery packs will power.

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At first glance, the nondescript office park at 800 Republic Drive in Allen Park, MI, is notable only for being situated next to the Detroit Lions’ practice facility. That’s set to change on Nov. 18, when the building will be transformed into TechShop Detroit, a joint project between Ford and TechShop, the DIY communal fabrication studio where everyone from garage-workshop tinkerers to tech-savvy rocket scientists can come and create their own homegrown inventions.

Ford is the first automaker to work with Menlo Park, CA-based TechShop, which operates a network of membership-based workshops similar to health clubs, except instead of getting access to treadmills and barbells, members who pay $100 per month can get their hands on 3D printers, laser cutters, industrial-grade sewing and textile equipment, vehicle bays, and virtually every kind of tool and software you can imagine. And the Detroit outpost of TechShop will be the first one to be paired with a facility geared toward helping TechShop members commercialize their inventions.

Imagination, says Jim Newton, TechShop’s founder and chairman, is the entire impetus for the operation.

“All we care about is that you have an idea, and our staff will help you turn that idea into a real, live thing,” Newton said at a press event today. “Our mission is not that big—we just want to usher in the next Industrial Revolution.”

TechShop Detroit will also help fuel a vision that Ford Global Technologies, the domestic auto industry’s only internal intellectual property management and licensing group, hopes to bring to life—a first-of-its-kind intellectual property exchange and technology showroom where everyday inventors, industry insiders, universities and research labs can display and even license their automotive innovations and other ideas.

“The showroom idea can be considered TechShop Plus,” said Bill Coughlin, president and CEO of Ford Global Technologies. “It will be an open meeting place that will enable inventors to showcase what they create in TechShop and then negotiate, network, and even sell their idea to players in the automotive industry, from manufacturers and suppliers to research institutions and startups.”

The innovation exchange, which will be housed in the Republic Drive facility alongside TechShop, will be managed by the Detroit-based AutoHarvest Foundation, a new nonprofit organization set up by auto executives to help connect the … Next Page »

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Nothing like a semi-serious Steven Chu joke to start your morning.

Speaking at an energy conference in Detroit today, the U.S. Energy Secretary and Nobel Prize winner recalled as a boy in the 1950s the Soviet Union launching Sputnik into space.

“It was very disconcerting. The German rocket scientists living in the Soviet Union were better than German rocket scientists living in the United States,” Chu said, as the crowd snickered.

Chu was referring to how German scientists, not American or Soviet, were responsible for the best rocket technology at the time.

Ironic that Chu referenced the space race between the Cold War foes, as the United States, who one-upped Sputnik by sending men to the moon, recently retired its space shuttle program. In its place, the United States is engaged in a great “energy race” with other countries like China to develop next generation energy such as solar and biofuels, Chu said.

“Despite the fact that times are tough, we have to think about the future,” he said. “If we don’t get moving, we will be importing these technologies instead of exporting them.” The Energy Secretary was also in Michigan to tour lithium battery maker A123 Systems’ new facility in Romulus, MI, made possible with federal stimulus money.

To that effect, Chu announced a new Detroit-based alliance between the U.S. Department of Energy (DOE) and the U.S Department of Defense (DOD) to boost development of cleantech technologies for the military, including lightweight composite materials for vehicles, alternative fuels, and advanced combustion engines.

Detroit makes sense to anchor the partnership for a number of reasons. The city’s Big Three Automakers-Ford, Chrysler, and General Motors-frequently collaborate with the DOE. The U.S. Army’s Tank Automotive Research Development and Engineering Center (TARDEC) is also based in Warren, MI.

The military needs Detroit’s help, DOD officials say. Last year, the armed forces spent $13 billion on energy, … Next Page »

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China has been a Godsend to Detroit. Even as Ford Motor, General Motors, and Chrysler have stumbled in recent years, the country has provided a nice boost to sales of American cars equipped with traditional internal combustible engines.

But when it comes to electric vehicles…well, China has its own plans.

The country is spending billions of dollars to develop home-grown battery and motor technology, hybrids, and full plug-in cars, trucks, and buses. And to protect its nascent industry, the Chinese central government has recently issued draft guidelines that limit foreign investment in certain electric vehicle components and require overseas firms to disclose intellectual property secrets to Chinese companies.

“China wants to place some serious restrictions” on foreign auto makers, says Kevin See, an analyst with Lux Research in Boston. “Clearly, the companies inside China are well positioned to benefit. China wants to protect its value chain all the way to the vehicle.”

The proposed restrictions have alarmed American officials. In an April  letter to U.S. Trade Representative Ron Kirk, Michigan Senators Carl Levin and Debbie Stabenow said the guidelines would block U.S. auto makers from accessing a potentially huge market for electric vehicles.

“We are concerned that these draft regulations continue China’s long history of breaking international trade rules,” the letter reads. “These new draft regulations appear to represent another attempt to illegally gain an unfair advantage over the U.S. automobile industry that will cost our country jobs.”

“If China does implement these practices, [Kirk's office] must use all its available resources—including possible legal action at the World Trade Organization—to end China’s discrimination,” the letter warns.

Since 2009, China has overtaken the United States as the world’s largest auto market. One trip to the country and you’ll see why.

Three years ago, I visited the Changan Ford Mazda car factory in Chongqing, China’s largest municipality, … Next Page »

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A few weeks ago, I wrote about how cars have become enormous smart phones on wheels. At the time, though, I didn’t know just how much Ford Motor agreed with me.

I certainly do now. The company (NYSE: F), based in Dearborn, MI, is aggressively recruiting software developers to write mobile apps specifically for its SYNC in-car connectivity system. Ford’s online SYNC Mobile Application Network has already attracted about 2,500 submissions. The company is wooing developers on college campuses and consumer electronic trade shows in Europe and the United States.

When you think about it, Ford’s foray into mobile apps makes sense for both the car maker and app makers.

Thanks to Apple’s iPhones and RIM’s ubiquitous BlackBerrys, world wide revenue from mobile app stores will hit $15.1 billion this year, a 190 percent increase from 2010, according to the research firm Gartner. That includes revenue from consumers who buy the apps and the apps themselves generating advertising revenue for their developers.

For apps makers, cars could offer another lucrative sales platform. And just as unique apps helped propel sales of iPhones and iPads, Ford is counting on apps to make their cars more appealing to prospective buyers.

In some ways, fuel economy, style, and even quality have become commodities, says Doug VanDagens, global director of Ford’s Connected Services Solutions unit.

A robust selection of apps can be “one of the most important differentiations for our company,” he says. “We want to sell more cars.”

So far, Ford’s apps, currently sold through iTunes and the Android market, are mostly intuitive, focusing on navigation, emergency calls, and traffic information. Eventually though, apps will expand into advanced search, social networking, and entertainment, VanDagens says, though he notes there are limitations.

“What’s applicable in the car is not applicable for the Xbox,” he says.

VanDagen says Ford’s main advantage is a broad architecture that’s “very app friendly” versus competitors he says force developers to adapt to specific car platforms.

Ford’s courting of the Silicon Valley world seems to be paying off.

CEO Alan Mullaly has delivered a keynote address at the annual International Consumer Electronics Show (CES) for three straight years now, a key technology gathering where people are more likely to see Steve Jobs or Bill Gates than a Big Auto executive. Ford has also won “Best of CES” award from CNET, and Popular Mechanics’ Editor’s Choice award for its MyFord Touch driver interface technology.

“We’re not super, super smart, but we are on top of what’s happening in the consumer electronics world,” VanDagens says.

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“Call John Smith.”

“I wanna call John Smith.”

At first glance, these sentences look pretty similar. But try telling that to the voice recognition technology behind Ford Motor’s SYNC system. You might as well be speaking Greek.

Voices recognition software has come a long way in recent years. Google’s Android platform, for example, allows users to search for information by speaking into their smart phones. But mastering the subtleties of human language remains beyond the reach of even our most sophisticated technology. (Remember how the IBM supercomputer Watson was kicking some serious butt on Jeopardy! until the final round when it answered “Toronto” to a question about U.S. cities?)

Voice commands are a key component to Ford’s SYNC system; the company, based in Dearborn, MI, promotes SYNC as a safety feature because it allows drivers to do stuff without taking their hands off the wheel.

With that in mind, Ford recently said it will partner with the appropriately named Nuance Communications, based in Burlington, MA, to develop software that can not only recognize specific words/phrases but the intent of the person speaking them.

Normally, SYNC relies on what’s called “structured commands.” The company basically records phrases that drivers must speak in order for the car to execute their wishes.

There are two problems with technique. First, there are an awful lot of commands. Drivers today can order their cars to do everything from make phone calls and find directions to play music and adjust the cabin temperature.

Secondly, Ford is only really guessing what people will say, which, more often than not, is not what they will actually say. For instance, Ford initially programmed SYNC to recognize the command “Play Tracks.” Unless you work in the music business, you probably don’t even know what a track is. A better command would be “Play Songs.”

“You can’t stop someone from saying something,” says Brigitte Richardson, Ford’s lead engineer on its global voice control technology/speech systems.

In other words, Ford can’t force people to adjust their speech to use its commands. People are going to speak how they are going to speak.

Working with Nuance, Ford wants to develop software based on more advanced algorithms called “statistical … Next Page »

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Play too many video games and you might get repetitive strain injuries (RSI). But Ford Motor is adopting video game technology so its workers don’t get RSI.

The company, based in Dearborn, MI, is using Hollywood-style motion capture technology (the kind that makes Green Bay Packers quarterback Aaron Rodgers so lifelike on Madden 2011) to design ergonomically friendly manufacturing plants for its workers in places like China and Brazil.

“We want to integrate ergonomics into the engineering process, create an interface between assembly worker and assembly line,” says Allison Stephens, an ergonomic specialist with Ford’s vehicle operations and manufacturing engineering unit. “We want to immerse someone in that environment [before the company builds the plant]. As you go global, how do you modify or adjust processes to deal with workers of all shapes and sizes?”

Makers of cars and airplanes are increasingly embracing digital manufacturing—the use of sophisticated 3-D software that simulates the working of a plant before it goes into operation.

With digital manufacturing, companies essentially perform a virtual dry run on a planned production facility, allowing engineers to figure out where to best position workers, equipment, supplies and tools, and in what order. Delmia, a unit of Dassault Systems based in Auburn Hills, MI, is one of the world’s largest makers of such software.

But Ford takes it one step further by employing motion capture technology, which movie studios and video game designers frequently use to create digital onscreen characters that realistically mimic human movement. Such data allows Ford to collect more detailed information like the angle of a worker’s elbow when performing a specific task.

Here’s how it works. Working with the University of Pennsylvania, Ford collected data from workers from six plants around the world, including arm girths and leg and torso lengths.

Using the data, the company created “Jack” and “Jill,” avatars that represent a composite male and female global worker for Ford.

Inside a virtual reality lab in Dearborn, Ford uses employees like Patty Racco, who best resembles the physical characteristics of Jill, as a kind of virtual guinea pig. Demonstrating the technology to a group of reporters, Racco, who is covered with sensors, mimics assembly work on a steel frame that represents a Ford Focus.

A series of 15 digital cameras “captures” information collected by the sensors and feeds that data into a computer. On a large screen, Jill (controlled by Racco) is seen working on a digital Ford Focus in a digital factory.

In one case, Ford discovered that Jill, (at 5’4, the smallest Ford worker) had a hard time installing a part in the car’s interior. So the company designed a tool that enabled Jill to reach into the car without straining her back and arms.

The technology also boosts product quality and efficiency by allowing Ford to develop “a plan for every part,” Stephens says.

Ford shares such technology with competitors like General Motors and Chrysler. What the company does consider proprietary is how it uses the technology.

Eventually, Ford wants to use “Santos,” another digital avatar developed for the military’s Virtual Solider Program. With Santos, companies can measure worker fatigue and the cumulative effects of heavy lifting and loading.

“The technology is coming soon in which we can run the entire assembly line digitally,” Stephens said.

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It took longer than expected but TechShop will finally open…uh, shop in Detroit this fall.

The Menlo Park, CA-based company, a self-described “membership-based, do-it-yourself workshop and fabrication studio” will open a 12,000 square foot facility at Ford Motor facility in 800 Republic, Allen Park, MI in October, TechShop CEO Mark Hatch tells Xconomy in an exclusive interview.

TechShop will sign the lease with Ford next week. Hatch expects construction on the $2 million facility will be completed in 12 weeks.

Founded in 2006, TechShop provides inventors and entrepreneurs with equipment, software, and training to innovate and create stuff. The company currently operates studios in San Francisco and Raleigh, NC and plans to enter New York and San Jose, CA. Membership fees from $75 a month to $1,200 a year.

Ford and TechShop first hatched the idea to open up a communal work center at the 2010 Maker Faire in San Mateo, CA. Ford was showing off its “American Journey 2.0″ project with University of Michigan students. As part of that program, Ford, Microsoft, and Intel gave students an opportunity to develop their ideas for future in-car connectivity using social networks, GPS, and real-time vehicle data.

But opening a Detroit-area facility proved more tricky than Hatch thought, mostly because TechShop couldn’t find local money.

“Yeah, it took a while,” Hatch says. “We were looking to the local community for help. It didn’t happen as quickly as we thought.”

In the end, Ford boosted its investment and TechShop tapped some of the $3.5 million it raised from its Series A investors and Autodesk to seal the deal.

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ALTe Powertrain Technologies has a lot of room to grow. Both literally and figuratively.

Inside the company’s mammoth 150,000 square foot headquarters in Auburn Hills, MI, pieces of white paper arranged on the floor neatly mark the location of soon-to-be assembled parts of its product: A powertrain kit that will convert ordinary gas-powered vehicles into plug-in hybrids.

Other than some showcase vehicles and a few engineers hunched over a laptop, the place is pretty empty. But that will soon change.

If all goes to plan, ALTe, founded by Tesla Motor veterans and backed by former Chrysler CEO Tom LaSorda, will start shipping out its powertrain kits in July 2012. The startup has already secured $16.5 million in capital and is looking to raise another $100 million in debt and win a $65 million loan from the U.S. Department of Energy.

“Everyone seems to be saying ‘yes’ right now,” CEO John Thomas tells Xconomy. “Two years ago, there were a lot of ‘maybes’ and ‘nos’. For the first time, it looks like our financing will be in place.”

“Now,” he says, “we finally get to go big.”

Thomas is the former general manager of Tesla, the Silicon Valley-based company that sells high-end electric cars to wealthy customers. The idea was to first target customers who can afford the pricey vehicles and then expand into the larger consumer market, he says.

But given the cars’ cost and limited range between recharging, average consumers will not be purchasing them in large numbers anytime soon, Thomas says.

“We fell in love with electrification but we felt it would take a long time,” he says.

What’s needed, Thomas says, is some sort of transitional technology that could lead the way to electric cars.

Enter Andy Grove. In 2008, the legendary former Intel chairman, alarmed by rising gas prices, began to push for retrofitting cars with electric car technology.

“Grove said ‘if you can convert gas guzzlers, you can have a significant impact on foreign oil consumption,’” Thomas recalls.

Inspired by Grove’s call, Thomas and others formed ALTe in 2009 to focus on a market where they believed gas to hybrid conversion technologies could pay for themselves: commercial and government fleets which operate approximately 10 million to 30 million vehicles in the United States.

“The fleet was dying for a solution,” Thomas says.

ALTe’s technology centers on a patented hybrid control unit, which essentially serves as the cars’ brains. The technology manages everything from power demand and consumption to how the newly installed batteries interact with the car’s existing internal combustion engine.

ALTe also developed an efficient, systematic approach to creating the conversion kits, wheras other companies tended to only focus on specific pieces of technologies, Thomas says.

The company has partnered with Manheim, the world’s largest vehicle wholesaler, to install the technology on customer fleets. ALTe will ship the kits out of Auburn Hills to warehouses located near Manheim facilities across the country. Customers who wish to do their own retrofits can learn the technology in training sessions at ALTe’s headquarters.

ALTe’s technology is not cheap: $27,000 for the basic kit and $40,000 for heavier vehicles like buses and vans. But Thomas insists the technology pays for itself. By boosting the vehicles’ fuel economy from 60 to 200 percent (and meeting emission standards), a customer can recoup the investment within eight to 30 months, he says.

Thomas says Europe and India are interested in the technology, and the Chinese are particularly interested because they are both trying to control pollution and to develop their own domestic car industry.

But there are plenty of potential customers in the United States, specifically the federal government, which is requiring its cars go green, Thomas says.

“If we sold to no one but the government, we would sell our factory out,” he says.

ALTe recently formed an advisory board of companies it expects to purchase its technology, including Frito Lay, DirectTV, Waste Management, Cox Cable, NBC, and Pacific Gas & Electric.

Thomas envisions ALTe as “an umbrella company” that provides carmakers with the technology and expertise to exploit the latest energy technologies, whether its solid state lithium ion batteries or hydrogen fuel cells. An IPO or a strategic alliance with a major supplier are possible, he said.

But in the end, “we expect electric vehicles to be the answer,” Thomas says.

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Somewhere lost in the Groupon/tech IPO bubble, er…I mean, resurgence, was Delphi Automotive Systems’ recent announcement that it is seeking to raise $100 million through its own IPO.

A successful return to Wall Street would cap an impressive turnaround for the Troy, MI-based maker of auto parts, whose reliance on General Motors drove its previous incarnation into Chapter 11 bankruptcy in 2009.

But the seeds for Delphi’s turnaround were arguably planted in 2003 when the company recruited a Baxter International executive to start a medical device unit.

Encouraged by state officials, Delphi had hoped to diversify away from automobiles into new industries. Medical devices made sense, given the auto industry’s expertise in engineering and manufacturing, says Christophe Sevrain, tapped at the time to lead Delphi Medical Systems.

“We thought it would be pretty straight forward,” Sevrain told Xconomy. “We were very, very good at manufacturing. We felt autos had a lot to bring to the medical industry.”

The truth, of course, was bit more complicated. Delphi Medical, which made home infusion devices, spinal surgery products, and 3D eye mapping technology, had the technology thing down. Convincing other people to buy it was another matter, Sevrain says.

“My concern was not the technology but rather how are we going to market ourselves, especially when no one knows you,” he says. “We didn’t know what to say to our customers.”

It didn’t help when Delphi, in the early days of the medical device foray, kept using automotive lingo instead of medical terms. Also, while auto makers stressed costs above all else, medical device customers valued devices that could be implemented quickly into the busy workflow of a hospital.

But the biggest challenge to Delphi came from within, Sevrain says.

“Delphi was a poster child for [inflexibility],” he says. “It was a very rigid company. A lot of people did not want to change. There was a tremendous amount of resistance [to making medical devices]. People liked to stick to what they knew the best.”

Remarkably, Delphi overcame these obstacles. It helped that Sevrain, the managing director of Delphi Medical, reported directly to the vice chairman of the company. In just three years, the unit generated over $100 million in revenue.

Despite its success, Delphi ultimately sold its medical device business to several buyers during bankruptcy, preferring instead to focus on its core auto parts operations. But Sevrain believes Delphi’s culture changed for the best.

Delphi Medical “changed the status quo,” he says. “The company was now more willing to change and adapt.”

Case in point: Delphi’s recent partnership with WiTricity, a startup based in Watertown, MA, to develop wireless charging stations for electric vehicles.

At the Society of Automotive Engineers’ annual conference in Detroit, Delphi chief technologist Andrew Brown told me the relationship reflected the company’s new mindset: that working with outside parties helped boost innovation and speed products to market. Such a collaboration would’ve been unthinkable just a few years ago, given Delphi’s conservative and insular culture.

Our attitude was ‘if it wasn’t invented here, it was not worth very much,’” Brown says. “In today’s world, you don’t have to do it yourself. Not all of the smart people work for you.”

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When a car today can parallel park on its own, find the best Mexican restaurant in a 10-block radius, and access e-mail on voice command, I suppose checking your blood sugar would just seem like icing on the cake. (Pun intended)

“We are trying to create a car that cares,” says Gary Strumolo, manager of vehicle design and electronics design for Dearborn, MI-based Ford Motor’s research and advanced engineering lab. “It reflects a paradigm shift from infotainment to health and wellness. It changes the mindset quite a bit.”

Strumolo was referring to Ford’s recent announcement that it’s partnering with medical device giant Medtronic and other healthcare firms to equip its cars with technology that can help diabetics and allergy sufferers monitor their glucose levels and air pollutants, respectively.

The research comes on top of the Big Three automakers’ efforts to create cars that warn drivers when they drift into another lane or alert them to an accident several miles down the road.

“Ford has always been concerned about safety,” Strumolo says. “We saw this as an opportunity to expand beyond the conventional definition [and expand into health and wellness], a virtually untapped area relative to the auto industry. It’s a logical extension.”

Is it, though? With all the bells and whistles automakers are throwing into their products, almost anything can be considered a logical extension.

In fact, cars today aren’t really cars but rather giant, moving smart phones that harness the power of sophisticated wireless networks to download the latest doo-hickey off the Internet. In other words, cars have become the ultimate mobile device.

Think about it. A cell phone used to be about making calls. Thanks to third party applications, we can now take Polaroid-esque photos, play Medal of Honor, surf the Internet, watch videos, open our garage doors, turn out the lights, detect metal, the list goes on.

Cars are certainly heading into that same direction, if we’re not already there.

“In some sense, we do realize that people tend to multi-task,” Strumolo says. “They want to continue to multi-task no matter where they are.”

In fact, Ford’s new initiative mirrors the enthusiastic chatter I hear from healthcare experts who envision mobile devices as the central hub to managing one’s health. Smartphones today can access electronic medical records, monitor heart rates, and even help you meditate and sleep. Cars are not far behind.

“Drivers might never get into a crash in their lifetime but they will continue to have chronic diseases,” Sturmalo says.

Ford also says it’s working with the Massachusetts Institute of Technology to examine how car technologies can help drivers relax and reduce stress. For example, a car might sense you’re stressed from say, heavy traffic, and automatically play relaxing music, put calls to voice mail, and restrict your speed.

But how much is too much? Frankly, I get a headache when I try to remember all of things my iPhone can do and I only have, like, five apps. As for driving, well, let’s just say someone should invent something that alerts motorists when I’m on the road.

Of course, Ford notes, all of this technology is voluntary. But experience shows that people generally like their toys and feel guilty if they don’t use them. It strikes me that helping our cars do more and more things our phones do could make for the opposite of a safe driver. That could make for a distracted driver.

How ironic would it be if a driver crashes his car because he’s too busy checking his blood pressure? And a distracted driver can wreak a lot more havoc than a distracted smartphone user.

I don’t doubt Ford’s sincerity about safety. Some of these ideas, like its research into stress and relaxation, may actually help reduce road rage.

But if the automaker really wants to prevent accidents, maybe it should invent a way for a car to help drivers safely shave, apply makeup, or eat on the road.

Now that would be impressive.

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Simon Boag sounds downright sheepish.

“We’re spoiled,” Boag, the new CEO of the $100 million Stage 2 Innovations Fund, told Xconomy. “We realize that. We’re extremely lucky to be in this position.”

The fund, announced earlier this week, is targeting growth/expansion startups on the brink of commercializing their technology. An anonymous billionaire is putting up the entire $100 million. Former Chrysler CEO Tom LaSorda is a co-founder.

I can’t stress enough what a big deal this is. Over the years, I’ve written about Midwest venture funds that say they are going to raise (insert unrealistic amount right here) dollars only to see the funds fall short of the mark or fizzle all together.

The most infamous example that comes to mind is San Francisco-based investor Steve Burrill’s boast that he would create a $1 billion fund to back a biotech park in rural Minnesota in 12 months. Three years and several empty promises later, the state is still waiting.

$100 million in the bank not only gives you instant credibility but more importantly, the ability to actually….you know, do things.

Instead of constantly wooing investors, the upfront money “affords you the time and luxury to really dig into the projects,” says Boag, a former Chrysler and General Motors executive.

Here’s how the fund works. Stage 2 is looking for companies, especially in auto and medical devices, which already possess patents and ready to commercialize in 18 months.

“These companies need to scale up quickly,” Boag says. “When you come out, you come out on fire, en mass.”

Stage 2 will either take a majority stake in the company or retain exclusive licensing rights to the technology. The fund is looking startups that can eventually generate $100 million to $200 million in net income.

“There remains significant opportunity for a mid- and later-stage venture companies here in Michigan,” says Jeff Bocan, managing director of Beringea, a venture/private equity firm based in Farmington Hills, MI. “That’s what we’re focused on. I think their strategy makes sense. It all comes down to execution.”

The anonymous donor and LaSorda, who runs his own manufacturing consulting firm called the LaSorda Group, will make the final decisions on investments. Boag says each deal amount will vary but he doesn’t think Stage 2 will require outside capital.

“We have enough money that we don’t need other partners,” he says. “But we wouldn’t close the door if there is the right opportunity,” especially if there’s a large deal.

With high gas prices, Stage 2 is especially interested in automotive technology that promotes fuel efficiency, Boag says.

“Consumer behaviors are changing,” he says. “People are driving less miles. Put all of these factors together, that’s a great sweet spot.”

Stage 2 also likes medical devices that help lower skyrocketing healthcare costs. “Small- and medium-sized companies play a big role” in Michigan’s economy, Boag says. “They need to play a bigger role. We know that from the last three years” when the Big Three automakers struggled.

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When I was in elementary school, we played kickball during recess. There weren’t any umpires, so we had to police ourselves. If there was an intractable dispute, we would yell “Do Over!” and simply repeated the play. No harm, no foul.

However, things are little more complicated–and expensive– in the adult world. For manufacturers of big ticket items like cars and airplanes, a do-over means production delays, angry customers, and millions of dollars in losses.

That’s where Delmia, a unit of European software giant Dassault Systemes, comes in. The company, based in Auburn Hills, MI, is one of the world’s biggest players in digital manufacturing–the use of sophisticated 3D software that simulates the working of manufacturing plant before it goes into operation. Delmia’s customer list is literally a global Who’s Who, including Toyota, Nissan, Boeing, Airbus, the U.S. Defense Department, and NASA.

With digital manufacturing, companies essentially perform a virtual dry run on a planned production facility, allowing engineers to figure out where to best position workers, equipment, supplies and tools and in what order. The goal is to maximize efficiency and reduce potential errors that lead to defective products. To prevent accidents and workplace injuries, the software can also factor in detailed demographic information on workers, including gender, height, weight, and languages.

“The virtual factory runs in concert with the real factory,” says Delmia vice president Patrick Michel. “It focuses on the ‘what if?’ scenarios. Starting with a product, how are we going to build and engineer the manufacturing process?”

“The manufacturing point of view is different from the engineering view,” he continues. We’re looking to find patterns that are not obvious. It’s amazing the stuff you find that you hadn’t anticipated.”

The stakes are pretty high, Michel says. Boosting production time by 10 to 20 percent can mean three extra cars a year, he says. On the flip side, any delay can cost a company $1 million to $5 million a day. Just ask Boeing about the pain it has felt from manufacturing delays for its next-generation composite material airplane, the 787.

“Manufacturing productivity must be ever increased and producers must constantly look for ways to meet the faster, better, cheaper mantra of today’s economy,” according to a report by CIMdata, a research firm in Ann Arbor, MI. “To meet these pressures and remain competitive, leading manufacturers are going digital.”

In the report, CIMdata estimates that a company that annually invests $5 million to $10 million in digital manufacturing can save it $50 million to $100 million a year.

Nevertheless, demand for such software dipped in 2009 as manufacturers struggled to cope with the global economic downturn. But “there are signs that business is starting to pick up,” Michel says.

Delmia wants to be prepared for an upswing, especially by expanding beyond its core automobile and aerospace customers and into more highly regulated products like vaccines, drugs, and medical devices. Digital manufacturing can help those customers meet regulatory requirements set by the Food and Drug Administration, Michel says.

In March, Dassault paid $36.5 million to acquire Intercim, based in St. Paul, MN, a manufacturing software maker that specializes in life sciences. Last month, Dassault purchased Enginuity, which makes research and development software for regulated formula-based industries like cosmetics, pharmaceuticals, and specialty chemicals.

Delmia is also courting energy customers, including nuclear power plants.

The $500 million or so digital manufacturing industry is highly fragmented, with Delmia and Siemens accounting for 20 percent of the market. But Michel made clear that Dassault is not buying companies simply to boost sales.

“We don’t do it for market share,” Michel says. “We’re interested in strategic value. We’re always looking for one plus one equals three.”

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Given Michigan’s expertise in batteries and automobiles, the state’s top high tech sectors should be clean technology and advanced manufacturing, right?

Wrong.

Michigan, home to the Ford, Chrysler, and General Motors, is actually a life sciences state, at least according to the annual report of the Michigan Venture Capital Association (MVCA).

Of the $215 million venture capitalists poured into Michigan last year, about 73 percent, or $156 million, went to medical device, biotech, and drug startups.

In fact, life sciences companies account for 45 percent of the $2.6 billion of capital under management in Michigan, the report says.

Meanwhile, cleantech and advanced manufacturing startups captured a combined 18 percent, or $50 million, of Michigan’s venture capital pie in 2010. Those sectors make up just five percent of all capital managed in the state.

Fifteen life sciences startups, including Accord Biomaterials, Lycera, and Metabolic Solutions Development, won funding in 2010 versus just three advanced manufacturing/materials companies and one cleantech startup.

The numbers are striking for a couple of reasons: one, it’s not even close. For a state that prides itself of on its automotive prowess, cleantech and advanced manufacturing, outside the R&D labs of the Big Three automakers, occupies a shockingly small place in Michigan’s high tech universe.

Second, and perhaps most importantly, the numbers reflect a significant discrepancy between perception and reality. Very few people tell me they think Michigan is a life sciences state, despite evidence to the contrary.

In addition to life science startups attracting the lion’s share of venture capital, look at the state’s most notable exits in recent years: Accuri Cytometers, HandyLab, Health Media, Esperion Therapeutics, Incept Biosystems, all medical-related companies.

Meanwhile, investors and politicians continue play up Michigan’s cleantech credentials.

And not without good reason: the state’s history and talent base strongly suggests Michigan should be a cleantech power.

“There’s no question the state’s innovation ecosystem lies with automobiles and advanced materials,” says Ryan Waddington, co-founder and managing director of Huron River Ventures, a new cleantech fund.

But should be and is are two completely different things.

One can argue, given the data, that Michigan should hit the gas on developing life science clusters.

“We have no good, strategic plan,” Stephen Rapundalo, CEO of MichBIO Institute in Ann Arbor, recently told Xconomy. “We don’t even know what we have.”

Speaking at Xconomy’s recent Michigan 2031 forum, Esperion Therapeutics CEO Roger Newton said the Michigan Economic Development Corp. was not doing enough to promote medical device and biotech companies.

Michigan life science startups may get all of the cash but the state’s nascent cleantech/advanced manufacturing sectors get all of the love.

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In February, Munich-based car giant BMW set up a corporate fund, BMW i Ventures, in New York City, with the goal of fostering startups that are developing location-based technologies. The fund’s first investment was MyCityWay, a company founded by three former Wall Street execs who created a series of apps designed to help people find products and services in 50 cities around the world—starting with their hometown of NYC. BMW is currently searching for office space to house the fund and an accompanying technology incubator.

BMW’s head of Project Mobility Services, Bernhard Blattel, is based in Munich and working with a team of four New York-based colleagues to get i Ventures off the ground. Xconomy spoke with Blattel by phone about why the automaker is fostering the development of technologies that are not necessarily car-based, and why it chose New York as the fund’s home.

Xconomy: What was the genesis of BMW i Ventures?

Bernhard Blattel: We were seeing trends that we thought provided growth opportunities for a company like BMW. One trend is growing urbanization—the tendency for people to move into urban areas. These people will still have the need for mobility, and the desire to be comfortable when they’re being mobile.

One enabler of transportation in urban areas is electric cars, which speaks to new products, like our new i3 and the i8 vehicles. But on the other hand, we think that connectivity, location-based services, and the rising penetration of smartphones will make the future a great enabler for a new set of services that will help customers to be more mobile.

We believed that we could combine our engineering know-how, products, great brand, and marketing with the agility and the drive and innovative ideas within startup companies. That’s why we created i Ventures and decided to invest in these companies.

X: You created the fund and chose its first investment in parallel. Why that strategy?

BB: When we started the plan for BMW i Ventures, we thought it was important to show our board and other people internally what we meant when we said we were going to invest in these new companies. So we had to very quickly focus on making the first investment.

We chose MyCityWay because it is a one-stop city portal. It goes way beyond classical concentric services, and provides a complete menu of city information. We were able to demonstrate immediately what the mission of BMW i Ventures is.

X: But the MyCityWay app was not designed to be used in a car. So why is it of interest to BMW?

BB: It’s an example of the scope we have for Project Mobility Services. Of course, mobility services will sometimes have to do with cars—that’s our home turf. But we’re convinced that the key to success of this new field is to … Next Page »

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When I first started at Xconomy three months ago, people consistently urged me to meet two people: Dug Song and David Brophy.

Song, a successful local Internet entrepreneur, was obvious. But why Brophy, a long time business professor at the University of Michigan?

Well, it’s a little something called the Michigan Growth Capital Symposium (MGCS). Since Brophy created MGCS in 1981, the symposium has morphed into the state’s premier investor event for startups seeking money.

For the symposium’s 30th anniversary next month in Ypsilanti, Brophy and his team did a little number crunching. Over the past decade, 300 companies have presented at MGCS, with 71 percent of them eventually raising a total of more than $1.7 billion in capital. Twenty percent of those startups later enjoyed successful exits.

“There’s no question that the quality [of presenting startups] has improved,” Brophy, a professor of private equity at the Ross School of Business, told me in his office the other week. “The light bulb has gone on.”

It’s probably no accident that Brophy launched MGCS in the early 1980s, when Japanese automakers first challenged Detroit. “It was the first decline in the auto industry,” Brophy recalls. “Then we had a good year and then everyone would forget about it…There was a sense of entitlement. People would tell their kids that working at Ford was much better than going to college.”

Of course, we all know how this story ends. Michigan, Brophy says, was unprepared for the emergence of a knowledge-based economy that valued brains over brawn.

“We got to find a new way,” Brophy says. “Unfortunately, every other state and country has come to the same conclusion.”

When thinking about MGCS, Brophy concluded the biggest obstacle to diversifying Michigan’s economy was finding investors to pay for it.

“How come we have so many startups that don’t go anywhere?” Brophy says. “When there is money visible, people will go out and monetize their creations.”

At first, the pickings were slim. Brophy had to scour the state to find startups to present to investors. “We really had to beat the bush,” Brophy says.

But things soon picked up after large research universities began embracing technology transfer.

In the past ten years, 23 percent of all companies presenting at the symposium originated from universities, according to MGCS, including the University of Wisconsin at Madison, Purdue University, Rutgers University, Carnegie Mellon University, and the University of Chicago.

Seventy percent of that number were spun out of Michigan’s University Research Corridor, consisting of U-M, Wayne State University, and Michigan State University. Those local startups went on to raise $430 million.

Six companies, all from U-M, found successful exits, including HandyLabs, Arbor Networks, Incept Biosystems, Sensicore, HealthMedia, and Accuri Cytometers.

Today, the MGCS has had to turn away companies. “I received an e-mail from a company bitching about not being included” in the symposium, Brophy says with a satisfied grin.

Michigan has also come a long way from its auto-only days. Of the 41 companies presenting at this year’s symposium, there are only two auto-related startups. About one-third of the lineup are healthcare or life science-related, with the remainder focused on information technology and clean tech.

Among those presenting next month: Esperion Therapeutics, InPore Technologies, Life Magnetics, Nextronex Energy Systems, and OnShift.

Brophy has nothing against the auto industry. In fact, he thinks Michigan should use its auto-related brain power to develop clean energy technologies.

“To the extent we contributed to the energy crisis, we should fix it,” he says.

But he does have a problem with an economy that confines fourth-generation young Michiganders to a career of “attaching nuts to left wheels for Ford trucks.”

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If you haven’t heard about Ann Marie Sastry by now, then maybe you’ve been spending too much time (and money) pumping gas into your internal combustion engine.

The University of Michigan professor has won plenty of kudos and cash for her efforts to develop a solid-state lithium ion battery for next generation electric cars. Her startup, Ann Arbor, MI-based Sakti3, has attracted big-name investors like General Motors, Beringea, and Khosla Ventures.

Now Sastry can add one more coat of gloss to her already bright star. MIT Technology Review named Sastry’s battery as one of the year’s top ten emerging technologies.

In its May/June issue, the publication says Sakti3 could revolutionize electric cars by packing more energy into a battery that occupies much less space under the hood than existing batteries.

“If electric and hybrid vehicles are to account for more than a small percentage of vehicles on the road, cheaper and better batteries are needed,” Stephen Cass, special project editor at MIT Tech Review, said in a statement. “Sakti3 could deliver the needed breakthrough by focusing on ways to economically mass-produce a new type of battery-a so-called solid-state battery-that can safely store more energy than a traditional lithium-ion battery, which would reduce the cost of electric and hybrid vehicles and extend their range.”

In compiling its list, MIT Tech Review says it has just one criterion: “is the technology likely to change the world?”

That seems fitting since Sastry likes to think globally.

I had the chance to size her up at Xconomy’s Michigan 2031 forum last week in Detroit. Beyond her obvious intelligence and poise, what struck me most about Sastry was her confident embrace of big ideas and big ambitions.

Whether it’s Midwest modesty or the weak economy, Michigan today seems to lack visionaries who think world first and local second. Not so with Sastry.

“If you have world-class technology, then you find the best people to work with, people who know what the hell they’re doing because you know what the hell you’re doing,” Sastry told the forum. “If you’re good at what you do, then good people will want to join you. Don’t be afraid to look for world-class people.”

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