Waiting for the Robocars, Part III

Conflicted Incumbents

David Kerrigan
Jun 19 · 5 min read

After Part 1 looked at potential changes to speed the arrival of Robocars and Part 2 looked at the autonomous vehicles we’ll see before driverless cars, Part 3 continues the series by looking at how the incumbents are preparing.

Ford’s investment in Argo.ai, General Motors’ purchase of Cruise and FCA’s deals with both Waymo and Aurora are just some examples of the evolving landscape as traditional car manufacturers invest seriously in the self driving space through either partnerships with, or acquisitions of, tech companies developing autonomous solutions. After ignoring early efforts such as the DARPA Challenge in 2004 and Google’s subsequent Self Driving Car project, it’s clear that the traditional car manufacturing sector has woken up and is responding to the prospect of a driverless future.

A Jaguar I-Pace with Waymo— Shared, Electric and Autonomous — 3 trends challenging car manufacturers

But when your day to day business relies on selling cars to human drivers, incumbents face a tricky task, balancing investment in their existing steering wheel-equipped ranges, as opposed to the sensor-laden vehicles of the future. The lack of consensus as to when these high tech chauffeurs will be ready makes this all the more difficult.

Emissions Concern and Ownership Apathy

And as if that isn’t hard enough for financially-challenged car manufacturers who have recently survived their worst financial position in decades, they face another parallel existential threat — electrification.

Transforming a company that has spent decades honing its skills in producing better ICE-powered cars into one able to create viable, attractive electric ones is not fast, easy or cheap. European giant VW Group, has earmarked some €80 billion ($90bn) for its development of battery technology and new ranges of electric cars. And although they are happening at the same time, there’s no inextricable relationship between autonomy and electric cars — the two are separate engineering challenges.

“The period from now until 2030 is going to be chaos Not all the companies are going to be able to master the new technologies”

PSA Chief Executive Carlos Tavares, June 2019.

There is another big consideration as well: consumer interest in car ownership is possibly at its lowest point in history. While it’s too early to be sure if it’s a long term trend, there are indications that younger generations, especially in cities) are not as car-focused as their predecessors. Driving license applications are at an all time low as millennials turn to micro-mobility (Scooters & Bikes) and ride sharing over car ownership. The growth of companies like Uber, Lyft and Lime are not good news for car manufacturers. And it’s a very worrying question for them as to what driverless cars will eventually do to sales.

Costs

Coming on the back of some of the worst turbulence in their history, it is a tough time to ask for speculative investment of billions in autonomy — a technology that many surveys say customers don’t even want; the famous quote from Henry Ford at the time of the last great transportation transition that consumers would have wanted “faster horses”, echoes loudly as consumers questioned now think in similarly linear terms rather than embracing autonomous cars.

Given the complexity of developing Robocars, there’s no guarantee of success. A loss of billions, never mind the opportunity cost of the distraction from your core business, could be the end of even the largest car makers. On the other hand, while I’m not saying it wouldn’t be a disappointment and a painful loss to Alphabet, it has been fined more by the EU than it has invested in the entire self driving car programme. And while the investment has yielded little in the way of revenue thus far, it has created a valuation for Waymo of well over $100bn. In short, Alphabet could survive the commercial failure of Waymo — but I’m sure that not all the current car manufacturers will survive the onslaught of the shared, electric and autonomous transitions and this is a view shared by industry leaders.

“It’s not just an intellectual capital game but a financial capital game… I don’t think it’s winner take all but it’s a big boys’ game.”

Softbank Vision Fund Partner Michael Ronen

Interim Safety

The great promise of autonomous cars is improved safety. With human error a main factor in the vast majority of deaths and injuries from car crashes, the hope is that handing control to computers will dramatically reduce the human toll. But what can/should we do about safety as we wait for the Robocars? Robocars are not yet capable of recognising and responding to all the unpredictable situations drivers encounter all the time. Ironically, it is not our superior ability to respond to the unknown but our unwillingness to adhere to the rules of the road that is, in part, delaying the advent of driverless cars. If humans could be trusted to drive in compliance with the rules of the road, automating driving would be a significantly simpler task.

While Volvo has traded successfully on a strong consumer message of safety, manufacturers face surprisingly little pressure from customers when it comes to safety features. As a result, manufacturers have traditionally been slow to adopt or develop safety features until pressured by regulators. But consumers are accomplices in this — as a general rule, we don’t like to be told what to do; we don’t like our “freedoms” being taken away, even if it’s intended for our own well-being. Take the example of seat belt interlocks (a technology that prevented a vehicle from being started until the driver had put on their safety belt): introduced in 1974 but dropped based on consumer opposition. Consider also how deeply unpopular with drivers speed cameras and red light cameras have proven to be. Also, many jurisdictions suffer from unlicensed drivers but none has had the bravery to suggest a real-time license validation along the lines seen in sci-fi movie, The Fifth Element when a crash causes the ominous computer warning “You have one point left on your license”.

But, even ahead of the expected arrival of robocars, a growing regulatory emphasis on urgently reducing deaths and injuries is gaining strength. In the EU for example, the General Safety Regulation comes into force in 2022 with the stated aim of ensuring that “all Europeans benefit from the latest developments in technology”. How much effort should regulators and manufacturers put into driver assistance technology that can be delivered now versus the speculative benefits of driverless cars?

An Uncertain Era

Although ICE cars are near the top of the Innovation S-Curve, a technology at its peak with little scope for refinement left, the transition to autonomous cars will be a decades-long process. Incumbents juggling multiple challenges concurrently — massive investments in an unsure technology, increased regulatory pressure for safety, popular demand for emissions improvements and electrification — and all at a time when sales volumes are no longer growing — means there’s more than autonomy on their minds as they wait.

David Kerrigan

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Thoughts about technology and society. Author of three books: details at https://david-kerrigan.com