This week, Waymo announced that it will turn an old factory in the Detroit, Michigan area into a retrofitting facility for level four autonomous vehicles. There’s plenty of unused factory space in the Midwest, but Waymo chose Michigan because of the state’s long history as the center of auto manufacturing.

“In the U.S., the auto industry is synonymous with Michigan,” a Waymo Medium post announcing the facility read. “Auto manufacturing has created hundreds of thousands of jobs in the state and built an economic engine that helps fuel the entire country.”

It was the latest in a string of announcements aimed at reinforcing the narrative Michigan economic leaders have been pushing for years — that Michigan’s manufacturing history will give it a leg up in becoming a center for autonomous and connected vehicles.

“Michigan is a good location if you’re looking for people with regular assembly skills, as well as skilled tradesman, and you know electrical and mechanical engineers,” Gartner autonomous vehicle analyst Michael Ramsey told VentureBeat in a phone interview.

Detroit and Ann Arbor, Michigan are among the top 5 cities for jobs in the self-driving car industry, according to ZipRecruiter. Buoyed by the University of Michigan, the type of autonomous vehicle sector that’s being built in Michigan looks different from the kind of community that’s being built in Silicon Valley and driven by the large tech companies, like Alphabet and Uber.

Depending on how the next several decades go, Michigan could become just as synonymous with autonomous and connected vehicles at it has become with car manufacturing. Whether that reality materializes or not will depend on four key ingredients — automakers, university-sponsored research, the public sector, and startups.

Automakers

As the two biggest automakers left in Detroit, Ford and GM still invest plenty of money in mobility-related research and development efforts into both Detroit and nearby Ann Arbor. Ford, for example, recently announced that it was donating $15 million for a new robotics lab at the University of Michigan.

But they’ve also made big bets elsewhere in recent years — Ford invested $1 billion in Pittsburgh’s Argo AI, while GM acquired San Francisco’s Cruise Automation for more than $1 billion back in 2016.

“The physical architecture and design and development — which is typically the more traditional part of their business — is still being done in Michigan [for both Ford and GM],” Ramsey told VentureBeat. “The software development — the testing and more cutting edge, really software side of the business — is being done in Silicon Valley, at least for General Motors. For Ford, actually most of that is being done in Pittsburgh.”

One advantage that Michigan has is its relatively low cost of living. Silicon Valley is becoming increasingly expensive — spurring engineers and technical talent to move elsewhere — which could encourage Ford and GM to invest more in Michigan. For now, however, with Silicon Valley’s reputation as the cutting-edge center for technology and Pittsburgh’s reputation for producing top talent out of Carnegie Mellon, automakers are likely going to continue to hedge their bets and spread out their R&D investments between those cities.

Research

Michigan’s public and private sectors have pumped a lot of money into Mcity, a testing facility that allocates research money for autonomous and connected vehicles. In 2017, automakers including Ford, GM, Honda, and Toyota each pledged to invest $1 million in MCity over the next three years. MCity has about 60 industry partners in total, each of which have pledged funding to the facility.

As of 2018, Mcity had invested $26.5 million in research, development, and deployment projects. Mcity funds not only technical research projects that seek to improve the engineering of autonomous vehicle systems, but also research projects that explore the societal implications of the technology, like how accepting consumers are of self-driving vehicles and how their perception of such cars has changed.

To that end, the University of Michigan law school also launched a Journal of Law and Mobility to explore the legal implications of self-driving vehicles and other advancements in transportation technology.

“[It’s] not just the engineering pieces, but a lot of the other social questions that [need to] be well understood before these systems are really going to benefit us. We’re working just as hard on those topics as on the engineering in Michigan,” Mcity Lab director Greg McGuire told VentureBeat in a phone interview. McGuire also told VentureBeat that in recent years there’s been more of a push into connected vehicle research in Michigan, which could help the state gain momentum if connected vehicles become widely deployed in the coming decade.

Public sector

“I think a lot of policymakers [here] recognize that they don’t just want to be manufacturers [anymore],” University of South Carolina law professor Bryant Walker Smith, who studies autonomous vehicles, told VentureBeat. “Michigan’s done a better job than other states in really thinking through research and development as part of a strategy.”

In 2016, Michigan became the first state in the nation to pass a comprehensive set of regulations for the testing of self-driving cars on public roads. The legislation did favor traditional auto manufacturers, rather than tech companies with self-driving research arms — like Alphabet and Uber — by requiring companies to either work with a motor vehicle manufacturer or get their vehicle approved by the National Highway Traffic Safety Administration in order to test their vehicles on the road.

State legislators will likely face increasing pressure as they try to create an environment favorable to both traditional auto manufacturers and the new automated vehicle companies that are attracted to Michigan. As is true in any state, Michigan’s willingness to work with self-driving car companies could change depending on who is in the legislature.

Michigan’s public-private Economic Development Corporation has also proven eager to work with self-driving car companies, approving up to $8 million in tax breaks for Waymo’s new factory. Expect to see this and other economic development organizations act more aggressively to woo companies that can help the state establish itself as a growing center for automated vehicle operations.

Startups

The best-known mobility startup in Michigan is May Mobility, which operates publicly available self-driving shuttles in Detroit and Columbus, Ohio. Headquartered in Ann Arbor, May Mobility has raised more than $11.5 million in venture capital to date.

A number of self-driving tech startups have also set up operations in Ann Arbor after stints at Techstars Mobility, an accelerator program Techstars launched in Detroit in 2014. There’s Seeva Technologies, an automotive supplier that develops visibility systems for autonomous vehicles and has dual headquarters in Seattle and Detroit. Another player is Polysync, which has developed a vehicle control interface for autonomous vehicle testing. Polysync was started in Portland, Oregon and set up an office in Ann Arbor after working out of the Techstars Mobility offices.

Other startups have come out of research projects at the University of Michigan. Computer vision startup Voxel51, led by an associate electrical engineering and computer science professor at the University of Michigan, has developed a cloud-based analytics platform that can help autonomous vehicles make sense of what’s on the road — distinguishing between highways and city streets, as well as various road signs and lane markings. Conversational AI startup Clinc, though not exclusively a mobility startup, is testing an in-vehicle voice recognition system with Ford.

Finally, other startups have come to the area through MCity, like French autonomous shuttle startup Navya, which set up a production plant in nearby Saline, Michigan.

Silicon Valley and Pittsburgh have an edge in that they are home to more well-funded autonomous vehicle startups than Detroit or Ann Arbor. But no one company will emerge as the de-factor leader until automated vehicles become a regular occurrence on public roads.

“Automated driving is going to be defined in the stories that we tell, and it’s hard to know what those stories are going to be. Is it going to be the first company that releases a product that we can all buy, or the first company that really mass markets an automated driving service?,” Walker Smith told VentureBeat. “What I can say is that Michigan is being very aggressive in trying to write that story, in a way that others are not.”