As the future of transportation begins to unfold, driverless car ownership is a common theme.
When Tesla released their “auto pilot” software update to the Model S last October they weren’t just releasing it to their drivers. They were releasing it to roads, driveways, social networks and news feeds around the world. Overnight the promise of driverless cars became a sensation.
From Silicon Valley to Detroit, to China, Germany and beyond, analysts, technologists and auto industry leaders alike have been taking note and taking stock of what everyone’s driverless strategy is going to be. And the ripple effects have been obvious.
The invention of the self-driving car will affect all of us and what you’re reading today is just the beginning.
Since that time, the common public seems to believe Tesla has the biggest head start in autonomous driving–and understandably so—their autopilot is quite advanced. Not only is it built with software that can be updated and iterated on, but it learns on a greater network that connects every driverless Tesla on the road to build an advanced mapping system (think Waze+Google Maps+Apple maps on steroids), an imperative necessity for autonomous vehicles. Factor in their $5 billion battery factory (valued at $50 billion) and charging network plans, and it’s safe to say Tesla has been designed for the future since day one.
But was Tesla first? Not really. For many automakers driver assist or assisted cruise control, has been around for quite some time. No, it won’t let you take your hands off the wheel (yet), but that’s about to change in a big way. Most are already advanced enough to navigate bumper to bumper traffic, parallel park, and even switch lanes on highways. At CES 2014, Audi even made the longest single (highway only) drive in an autonomous A7, bringing a few employees from San Francisco to Vegas performing similarly to Tesla’s autopilot. And while the big conventional automakers seem to also have a clear vision of the driverless future, some familiar Silicon Valley companies have plans of their own.
But is car ownership still the answer?
Right now, there are two competing camps with self-driving cars. There’s Google, who is attempting to build a network of driverless cars that will “serve” the traveler. And there’s manufacturers and insurance companies, which largely support an ownership model. Fleet supporters maintain that when all of our cars are driving themselves, technically there’s really no reason to own your own hunk of metal. After all, they break. They get dinged in parking lots. They wear out. They get taxed. They depreciate. It’s a wonder any of us have them at all. Analysts agree that the automotive lifestyle of the future demands convenience and efficiency, and a transportation device that sits idle 90% of its lifetime is not efficient. Where do you see your behavior fit?
Why is it your car?
Just last week, GM, the country’s biggest automaker invested $500 million in Lyft (Uber’s top competitor) to develop a fleet of autonomous vehicles that can be summoned on demand; and meanwhile, GM will also set up national hubs where Lyft drivers can rent and operate cars without owning them. James McQuivey, an analyst with research outfit Forrester, spoke to WIRED recently on the subject. In McQuivey’s view, “Selling individuals a self-driving vehicle isn’t as game changing as getting people to use self-driving cars they don’t own,” “The former only adds a new technology while the latter changes the economics of one of the world’s biggest industries.” Sounds disruptive.
Morgan Stanley’s lead auto analyst, Adam Jonas seems to believe this is an opportunity for growth. Just a few weeks ago, he wrote “The No. 1 inefficiency in the current auto model is that cars are used for less than 1 hour a day, for a utilization rate of less than 4%.” Uber’s success as a $50 billion company is already a testament to this statement of the increasingly urban population. Just 50 years ago, approximately three out of ten people lived in a city. Now, it’s more than five out of ten and growing at ludicrous speed. Which means higher cost of parking and public transit as municipal infrastructure invests in accommodating the new population. The interesting thing, is how autonomous cars will not only disrupt the auto industry, but the Uber model itself that “employs” 160+k drivers in the US alone.
The usual suspects are waiting to jump in.
And if you think Google, Uber, Samsung, Apple aren’t looking to make (or snatch up) the best self driving car fleet, you haven’t noticed these companies proficiency for growth and optimization. It is not a question of if—but when—the driverless car from your local self-driving fleet will arrive and wait to pick someone up in a driveway near you.
In fact, the overall inevitability of robo-chauffeurs has already caused the US department of transportation to begin rethinking their position on the laws that govern the driven (autonomous) road. On top of that, Obama signed a $305 billion transportation deal that includes grants for self driving cars. It’s probably worth it too, considering McKinsey estimates that we could save $190 billion a year in accident related costs.
So where does Tesla, the semi-conventional car maker sit?
Well, they already make the one of the most technologically advanced automobiles on the road and they know they can’t disrupt the industry on their own. They simply can’t make enough cars at the rate of demand. From opening up their key patents, thus removing barriers for growth in the industry, to essentially building their cars to be platforms (for software and hardware to be easily replaced as it goes out of date). Tesla has demonstrated they know that they need other automakers to help and make the BEV market more valuable in order for themselves to become more valuable. In the API driven future of design, these are important foundations to have as the market grows. But being a leader and innovator, Tesla doesn’t keep all their eggs in one basket, after all, they do own a $50 billion battery company and one of the most advanced, living and breathing mapping systems.
Why can’t there be both?
The auto-auto (autonomous automobile) worlds are colliding. Everyone should be (and is) working together. Companies are making parts for each other, sharing patents, opening patents and it’s a beautiful thing in the name of innovation. Partnerships like GM + Lyft, and (speculatively) Google and Ford will continue, and with them the very near future is electric and shared.
Want your own glimpse at the future of automotive innovation? Put the names of the players in a box: Nvidia, Uber, Lyft, Apple, Tesla, Audi, Google, Samsung, Nissan, Volvo, Oculus, Microsoft.
Ok, now, pick two.
Congratulations. You’re a futurist.