“Why are tech companies pushing into autonomous driving? Because they can, and because they have to.”
Chris Gerdes, co-director of the Center for Automotive Research at Stanford University.
Our decaying infrastructure, reflecting our unwillingness to repair and expand our highways as American engineers advise, well beyond anything set out in the current possible bipartisan infrastructure bill, is just one of the forces that is pushing us to use artificial intelligence to maximize the use of what roads and highways we have or can salvage. Despite continued marginalization of the impacts of man-induced climate change claimed by more than a few social conservatives, pressure to move away from gasoline/diesel powered vehicles continues to mount. The continued population explosion in second and third world nations is also increasingly linked to the increase in demand for cars and trucks.
Carmakers have notoriously low internal profit margins. On average, only slightly higher than 5%. But it is equally clear that we are in a period where gas and diesel vehicles are rapidly being replaced with electric and hydrogen fuel cell powered alternatives. Parallel with that transition is an accelerating implementation of self-driving vehicles, which will literally take over the driving process from individuals and hand it over to complex networks of centralized computer systems, GPS guidance and sophisticated onboard Lidar (Light Amplification by Stimulated Emission of Radiation) sensors, all governed by increasing levels of artificial intelligent software.
Estimates suggest that in about a decade, there will be almost 60 million vehicles powered by alternative energy, a vast portion of which will also have self-driving capability. Sooner or later, our use of some or even all public roads may well carry a requirement of relinquishing individual control over the operation of a car to a fully automated traffic control system that will determine exactly how that vehicle is driven. We may even evolve into a world where you subscribe to access a certain kind of car on demand, rather than purchasing it.
If projections are accurate, there is a two trillion-dollar market for this new generation of alternative energy vehicles between now and 2030. For those tech companies unwilling to invest in the relevant new technologies, notwithstanding that low rate of return generated by carmakers compared with the 30% plus margins in tech companies, they are likely to be seriously left behind unless they partake. Nevertheless, for tech companies to play ball, they will have to make massive investments. They have to hope that they continue to be viewed as tech companies and not carmakers, a reality that Testa has enjoyed to date, to justify the cost.
Writing for the July 5th Los Angeles Times, Reed Stevenson and Mark Gurman lay out the expectations. “At first glance, the forays Apple Inc., Google and other technology giants are making into the world of cars don’t appear to be particularly lucrative… Building automobiles requires factories, equipment and an army of people to design and assemble large hunks of steel, plastic and glass. That all but guarantees slimmer profits… But for Apple and other behemoths that are diving into self-driving tech or have grand plans for their own cars, that push isn’t just about breaking into a new market — it’s about defending valuable turf…
“Big Tech has the means — including artificial intelligence, massive data, chipmaking and engineering — to disrupt this century-old industry… What’s at stake, essentially, is something even more valuable than profitability: the last unclaimed corner of consumers’ attention during their waking hours.
“The amount of time people spend in cars, especially in the U.S., is significant. Americans were behind the wheel for 307.8 hours in 2016, or about six hours a week, according to the latest available data by the American Automobile Assn… That’s a fair chunk of someone’s life not spent using apps on an iPhone, searching on Google or scrolling mindlessly through Instagram. Any company that’s able to free up that time in a meaningful way will also have a good chance of capturing it.
“The world’s inexorable shift toward intelligent cars that are better for the environment is impossible to miss. If governments haven’t already declared plans to be carbon neutral by, in some cases, the end of this decade, there’s plenty of research that shows combustion-engine cars are going the way of the dinosaurs.
“BloombergNEF’s annual Electric Vehicle Outlook, published last month, sees global oil demand from all road transport peaking in just six years, assuming no new policy measures are introduced… By 2025, electric vehicles are forecast to hit 16% of global passenger vehicle sales, rising to 33% in 2030 and 68% in 2040. Eventually, autonomous vehicles will reshape automotive and freight markets entirely…. Against that backdrop, it’s unsurprising that after years of chipping away at self-driving cars, tech companies have been stepping up their activities and investments in earnest.
“Autonomous cars are only as good as the human drivers they learn from — so the people who teach these systems need to be excellent drivers themselves… Over the last several months, Apple has prioritized plans for the ‘Apple Car’ after previously focusing on making an autonomous driving system, Bloomberg has reported.
“That has fueled intense speculation over which automakers and suppliers the company behind the iPhone might partner with to realize its vision… Although Apple has recently lost multiple top managers on the project, it still has hundreds of engineers in its larger car group…
“The onslaught has automotive incumbents girding for battle. Industry titans such as Ford Motor Co., General Motors Co. and Toyota Motor Corp. have stepped up their own self-driving efforts… The Japanese automaker is building an entire city around autonomous driving at the base of Mt. Fuji while South Korea’s Hyundai Motor Co. is committing $7.4 billion to make electric vehicles in the U.S. and develop unmanned flying taxis.
“In China, it’s the biggest tech companies throwing their hats in the ring. Giants such as Huawei Technologies Co. and Baidu Inc. have pledged to plow almost $19 billion into electric and self-driving vehicle ventures this year alone. Smartphone giant Xiaomi Corp. and even Apple’s Taiwanese manufacturing partner Foxconn have joined the fray, forging tie-ups and unveiling their own carmaking plans.
“Automakers defending their turf is understandable, but Takehito Sumikawa, a partner at McKinsey & Co.’s Tokyo office who advises on future mobility, says it’s a ‘natural extension’ for tech providers to enter the autonomous driving space. ‘They’re betting they can do a better job at disrupting the industry.’… The existing businesses of Amazon, Apple and Google already require them to become proficient at AI, handling massive amounts of data and designing complex systems.” Who is going to win this battle? Will consumers really benefit or lose more than they gain? Will these efforts seriously diminish global warming and make vastly better use of our infrastructure? How will people in driverless cars spend their newfound free time? What will happen to displaced professional drivers? Time will tell.
I’m Peter Dekom, and I wonder much pushback we will face from people who genuinely enjoy driving and customizing their vehicles.
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