Only a year ago, it seemed that Google or Uber could be morphing into full-service car companies, and we were all waiting for a primer on the Apple car. But that’s old news.
If 2016 has shown us anything about the emerging tech-car industry, it’s that carmakers and tech companies have a codependent relationship. A heated competition is underway to make autonomous cars and streets safe enough that consumers will use them. What’s shifted over the past year is that it looks like tech companies won’t do it alone, but they are certainly key players in moving the industry forward.
Today, Uber was the latest to strike in the self-driving car wars. The ride-sharing company has announced its efforts to roll out rides to passengers in self-driving Volvo XC90s on the streets of San Francisco after doing so in Pittsburgh this fall, an industry first in the US. Yesterday, Google unveiled its separate self-driving car company Waymo. The new Waymo CEO John Krafcik said the company would not be in the business of building cars. Waymo, instead, may be the newest contender to tackle autonomous ride-sharing. Waymo is currently making Chrysler Pacificas into self-driving cars as part of a partnership with FCA. At one point, it seemed that the Google’s prototype car would be sold to consumers, but this move indicates that the tech company is shying away from manufacturing. Apple is also scaling back its self-driving car program. Tesla only becomes a contender if it can scale production to manufacture orders for the Model 3, and the other electric car company startups have yet to deliver on a strategy to produce cars in volume. To make self-driving cars a reality, a company has to have a product to do so, and the complex process of manufacturing is the real deterrent to tech companies.
The retooled solutions seem to be a much more multi-layered initiative, in which both legacy car companies and tech companies have something to offer and to leverage. “It’s the way to go,” says Jessica Caldwell, senior analyst at Edmunds.com. “Each can focus on its core business and advantages. For companies like Tesla, production has always been an issue. If the tech companies like Google and Uber and Lyft develop the platforms, they can have car companies supply the car. But also from an intellectual property standpoint they are stretching themselves too thin and not developing the best integrated solutions. This makes more sense.”
Everyone is feeling out what it means to sell full autonomy as product or a service, but the teams and the players are constantly morphing and shifting. Car companies and tech companies are joining forces, but even these lines aren’t so clear cut — and what’s still a mystery is who will be left standing to call the shots.
The new era in cars presumably started with the electric car craze, which just a few years ago built up the hype that pitted Tesla against everybody. But now it’s a much more complex play space. At first it seemed impossible that the tech industry could change the way we thought about cars. But then came Uber and its ride-sharing premise that has become a global phenomenon in over 500 cities, forcing automakers to take note. My discussions with industry leaders indicate that their panic is palpable. Self-driving has become a key part of the vision for the future of ride-sharing, fleet services, and the de facto solution for congestion.
The technology already exists to put self-driving cars on the road, but what is lacking is a way to ensure that these cars won’t wreak havoc. Making safe left turns at a stop light, anticipating intuitive driver moves, and understanding how laws will be written to reflect a transitional period remain as significant roadblocks. By most reports, full autonomy is still far in the future. But even five years ago, no one predicted this massive shift in the transportation industry would have occurred at all. Who will solve this problem and be in control of the data required to make it happen remains to be seen.
There is no standard approach to autonomy or even the technology it takes to build an autonomous car. Each of the players seem to have a unique strategy. BMW has announced its partnership with Mobileye, a supplier that makes cameras for self-driving. The major automotive supplier Delphi is marketing its self-driving efforts to a variety of OEMs. Volkswagen announced its intentions to create standalone company Moia, dedicated to mobility solutions. Ford, after declaring itself a mobility company, has pushed its partnership with the LIDAR supplier Velodyne. GM has alluded to a self-driving program that has yet to be announced that could be integrated into its Lyft investment.
But what gives the tech companies an edge over traditional car companies is the ability to be fast, loose, and more experimental, because much less is at stake. For a large car company, safety recalls can have a severe impact on perception, the bottom line of sales, and customer loyalty. That’s why Uber can give passengers rides and Tesla has so far survived questions about its AutoPilot software. “Some of the big recall stories don’t impact Google and Uber in the same way that it would affect Ford or Toyota,” Caldwell told me. “Obviously there goal is to create a safe experience. They probably have less to lose and less infrastructure in general. They don’t have the massive work forces and plants. It’s a very difficult and complex process to build a car.”
The technology to build self-driving cars is already here, but no one knows how to safely deploy it. The Obama White House has been a vocal supporter of self-driving cars, and introduced guidelines to begin to sort out the myriad of questions that autonomy creates on both federal and state levels. However, it remains to be seen how this relationship will play out in the next administration.
And then there’s the question of customers. Consumers might be forgiving of a ride-sharing service — a bad Uber ride doesn’t mean that every Uber ride is dreadful — but they continue to express reservations about riding in self-driving cars. Even with regulations, a self-driving car, or use of one, might not sell.
“The rate of technology moves quickly and it’s coming a lot faster that we thought. The idea of safety and consumer acceptance is important. There needs to be education,” Caldwell says. “The testing that Uber is doing in Pittsburgh and San Francisco and the real world testing is helping them to learn to expect the unexpected.”
For now, perhaps the most important role that tech companies can play in this space is to continue to agitate and push the car industry to keep up with the times, where change is all but inevitable.