Detroit — Google's self-driving affiliate Waymo LLC will repurpose a former American Axle plant in the city to install fully autonomous vehicle hardware and software into cars, the Alphabet Inc. subsidiary said Tuesday.

The move is another signal that next-generation auto manufacturing is continuing to grow in Michigan — and that Detroit possesses the knowledge and the capabilities valued in an auto industry likely to be transformed by connected, autonomous and electric vehicles.

"Every year, more of your car is software," Mayor Mike Duggan said in a news conference Tuesday. "There has been a real risk that the shift of the automotive industry could move from Detroit to Silicon Valley, and we've been fighting that every step of the way. A major statement was made today in the battle of Detroit and Silicon Valley that a major Silicon Valley company has said the future of vehicles is in the city of Detroit."

The Michigan factory, carved from the American Axle & Manufacturing Holdings Inc. complex bordering Detroit and Hamtramck, puts Waymo at the center of the North American hub for automakers, suppliers and engineering talent. It sits across the Detroit River from the Windsor assembly plant that produces Chrysler Pacifica hybrid minivans it uses in its self-driving fleet.

Waymo's choice of the Motor City follows Fiat Chrysler Automobiles NV's announcement in February that it will convert its Mack Avenue Engine Complex on the city's east side into a facility to build multiple versions of the next-generation Jeep Grand Cherokee. That includes a new three-row Jeep model and their plug-in hybrid versions, with the flexibility to produce fully electric models in the future.

Ford Motor Co. also purchased Michigan Central Depot last summer to anchor its autonomous and electric vehicle campus in Corktown. And General Motors Co. is using its Orion Assembly Plant north of the city to produce its all-electric Chevrolet Bolt and a self-driving version for its GM Cruise LLC autonomous vehicle unit.

Waymo's investment of nearly $14 million could bring 400 jobs to an area of southeast Michigan that has in years past seen a steady decline in automotive jobs and is at risk of losing two GM factories, including the nearby Detroit-Hamtramck Assembly Plant.

"If you’re looking in the United States at places that have an abundance of manufacturing facilities, mechanical engineering talent and access to key hires," said Mike Ramsey, an automotive analyst for research firm Gartner Inc., "you really don’t have a city like Detroit where the automotive center of excellence is so densely collected at one spot."

Waymo, an acknowledged leader in the autonomous-vehicle race, is renting space at an existing facility at Detroit's American Axle campus near the west boundary of Hamtramck at Interstate 75 and Holbrook Avenue to outfit Chrysler Pacifica minivans with the technology at mass scale by mid-2019. Waymo will eventually upgrade Jaguar i-Pace electric SUVs there, too. They will be used in its small-scale robotaxi service that it launched in Phoenix in December to a few hundred customers.

In a statement, Gov. Gretchen Whitmer said Waymo's decision "is continuing the city's momentum and further cementing Michigan as a leader in mobility and the epicenter of advanced automotive manufacturing."

The selection follows the Michigan Economic Development Corp.'s approval of an $8 million performance-based grant for the project. The agreement required the California company to sign a three-year lease in Macomb, Oakland or Wayne counties, and to open the facility with 100 employees by 2021. Details of the lease were not disclosed.

Waymo CEO John Krafcik said in a blog post Tuesday the selected space is the "perfect facility" that provides up to 200,000 square feet to expand Waymo's operations. He also cited the region's talent from which it will hire engineers, operations experts and fleet coordinators.

American Axle last made front axles in Waymo's new facility in 2012 when a dispute with the United Automobile Workers led it to shut the building down. The company's business operations, however, recently moved into the administrative portion of the building. A local parts supplier most recently used the industrial space as a sequencing center.

“We are excited to partner with Waymo and be a part of bringing future automotive technology to our Detroit Campus,” Chris Son, American Axle's vice president of marketing and communications, said in a statement.

The deal was months in the making, Duggan said, crediting American Axle CEO David Dauch and Quicken Loans Inc. Chairman Dan Gilbert for making it happen. Gilbert said in a statement that Waymo's expansion affirms "Detroit's position as the start-up hub of the Midwest."

Waymo has contracts to buy up to 62,000 Pacifica Hybrids from Fiat Chrysler and 20,000 vehicles from Jaguar. The Silicon Valley company has used Pacifica Hybrid vans the past three years to test its self-driving system.

Canadian auto supplier Magna International Inc. will work with Waymo to integrate its self-driving system into its fleet. Waymo also has a small technical center in Novi that opened in 2016 to test its fleet in Michigan's winter weather conditions.

Southeast Michigan has attracted recently some major manufacturing investments, including from those in Silicon Valley — recognition that leadership in the Auto 2.0 spaces of mobility, autonomy and electrification depends on partnership and comparative advantage.

"What really remains in Detroit is engineering talent," Ramsey said. "The jobs in manufacturing are going to more highly skilled people. The places that have a lot of engineering talent are going to win the most."

A subsidiary of Webasto Group, a German sunroof, convertible top and heating systems manufacturer, on Tuesday said it is building a new factory in Plymouth Township. California-based Samsung SDI America Inc. is building its first U.S. high-volume automotive battery park manufacturing facility in Auburn Hills. California's KLA-Tencor Corp., a semiconductor equipment manufacturer, also is opening a research and development facility near Ann Arbor.

And last month, GM confirmed it would invest $300 million to build a new electric car in Orion assembly north of Detroit where it already builds the electric Chevrolet Bolt, test autonomous vehicles for GM's Cruise unit and the Chevy Sonic compact car.

But Waymo is one of the city's most important recruitments: "This time, this is Google and Silicon Valley who have said we are the best in the world at software, but when it comes to mechanical and manufacturing engineering to build cars," Duggan said, "we need to be in Detroit."

bnoble@detroitnews.com