Innovating in Car-Tech? The Upcoming Ice Age for Cars and the Driverless Future

By Shahin Farshchi, PhD

Our reptilian ancestors had much in common with the relics on display at the 2015 Los Angeles Auto Show. Big, heavy, complex, and ill-suited for a certain future, the machines showed off fierce headlights and gaping grilles that scared small children. Though these machines operate on the same principals as their ancestors dating before the Great Depression, millions of talented man-hours have poured into making them extremely reliable, safe, efficient, clean, entertaining, and recyclable. Unfortunately for these reptiles, an ice age is coming. Ironically, this ice age is not catalyzed not by the carbon dioxide they emit, but the driverless cars that are coming right around the corner.

The vibe at the LA Auto Show couldn’t hide automakers’ struggle for survival as they fight to differentiate their nearly identical offerings with clever marketing and badge engineering.

Into the Jungle

I began my tour in Porsche’s lair, which has been in a distinct exhibit space at the LA Convention Center for the past few years. A perfectly-restored 1988 Porsche Targa sat in front of a wild 2016 Carrera GT3 RS. The latter packing over double the engine output, quadruple the braking force, and a rear wing that can create enough downforce to crush concrete at speed. The GT3 RS is likely to put out less emissions over several hundred laps around a track at its redline that the Targa would, parked. However, as any die-hard Porschephile can attest, the weight and nimbleness of the classic Targa could be preferable to the expensive punch in the face served up by the wild GT3 RS.

The timeless Targa4S focuses more on delivering a touring experience vs. outright grunt.

The coveted GT3RS is guaranteed to abuse its drive’s spleen with g-forces while serving as a daily driver.

These marvels of engineering and art will motor on into the future, but only the very best works of craftsmanship will survive into the driverless age.

Old Wine, New Bottle

As I toured the floor, I challenged myself to find something novel and exciting enough to convince me to part ways with tens of thousands of dollars and my 2001 Honda Accord, a workhorse that motored me through college, graduate school, and professional career while only asking for gas, oil changes, and a new battery.

The eighties and nineties brought new experiences to classic motoring with significant advances in power, handling, safety and emissions. This is in dramatic contrast to the awful cars of the seventies and early eighties due to ever-tightening emissions rules in lieu of the requisite technological advancements to maintain comfort and performance. Technology did catch up in the nineties, but diminishing returns also crept in. For example, the advanced materials, suspension, and engine in the 1991 Acura NSX presented a new benchmark for luxury sports cars. The NSX’s technology trickled into the mid-luxury Acura Legend that was introduced simultaneously. The Legend and the NSX ushered a level of performance and luxury at price points the North American market hadn’t seen — while Lexus dominated the V8-powered large-sedan category. With all of the marketing might from parent Honda, Acura has seen a precipitous drop in popularity over the decades. The LED headlights, navigation systems (instantly made obsolete by smartphone updates), and corporate grilles simply can’t win over customers, while Lexus’ outstanding customer service won over even the most die-hard Acura customers.

The pre-production Acura NSX sat on display failed to create any nostalgia whatsoever. In the cut-throat high-performance category littered with extremely capable machines from prestigious brands, it is difficult to envision Acura replicating the success enjoyed by the original 1991 NSX without delivering a fundamentally new motoring experience.

The Giulia is Alfa Romeo’s reattempt at the US Market since it’s virtually unnoticed departure in the early 90s. Despite being a former die-hard Alfisti and former owner of a 1976 Alfa Spider 2000, I experienced zero emotion observing this attempt to lure buyers away from BMW. I would ask Alfa Romeo’s design and marketing departments how they plan to challenge the excellent BMW M3, ferocious Lexus IS-F, iron-fisted Mercedes C63 AMG, and versatile Audi RS4 with a brand that most will not recognize and a design that doesn’t resonate with enthusiasts. Good luck Alfa.

Necessity vs. Seduction

Today, a new car purchase is driven more by necessity than seduction. Mercedes took a page from the American playbook in the late 2000s and created the modern American muscle car with its AMG brand. However, the brand-new 2016 C63 AMG exhaust note isn’t significantly more baritone than that of the 2010 in replaces, can chew through rubber just as effectively, and is just as likely to earn it’s driver a speeding ticket. On the practical side, cars have been exceptionally safe for over a decade. The cabin space and fuel economy of a 2016 Prius aren’t noticeably different relative to that of its 2006 great grandfather. It comes to no surprise that the new car-advertising and incentive blitz is on full force. Unfortunately, the days that buyers head to showrooms out of necessity is numbered.

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The fancy LED-lit nameplates on this 2016 Toyota Prius cutaway try to convince show-goers that a MacPherson Strut and lead-acid battery are technology innovations — while they have been around for many decades. The use of thermoelectrics for capturing waste heat in exhaust gases is certainly novel, but it’s impact on fuel economy is likely to be minimal at best.

The Driverless Future

Ride sharing organized by Uber, Lyft, and others have been a Godsend for urban dwellers — slashing the number of DUIs and drunk-driving related accidents. Suburbanites are also starting to carpool on Uber and Lyft to turn the arduous rush hour commute into productive work time. As driverless cars inevitably obviate the need for a driver, and as a result, introduce more compelling economics to customers, it will no longer be necessary to purchase or lease a vehicle. In fact, the notion of owning a vehicle will be analogous to owning artwork: only limited to collectors with the interest and the means. Otherwise, it will make no practical sense to make a large capital investment in a rapidly-depreciating machine that is utilized only a fraction of the time. Though skeptics dismiss driverless cars in grounds of safety and liability, they overlook the history of other seemingly-risky technologies that became mainstream, and the reality that automobiles kill more people than weapons worldwide.

Will the driverless future be brought to us by today’s mainstream auto brands, whose core competence is integrating technology, product design, and marketing to consumers? It is hard to imagine how these companies will be able to fundamentally reorganize to transition from capital goods to services, while their core consumer-focused competencies are no longer relevant. However, companies in the automotive supply chain that provide sensors, drivetrain and chassis components, manufacturing equipment, and electronics will likely thrive by supplying the new startup companies designed to built robots that they will operate or provide to other operators of driverless fleets. Consumers will be as likely to go to a “driverless car” show as they would the Paris Air Show to see the new offerings from Airbus and Boeing. This begs the question: what will become of today’s big automotive brands?

I advise talented engineers with an interest in car-tech, or currently any of these companies, to put serious thought into joining or starting a company designed to be part of the driverless future, as opposed to motoring forward on a road that is likely to end as it did for the coach builders during the introduction of the automobile.

Are you a passionate engineer interested in learning more about driverless car startups? Drop me a line at sf@lux.vc