The Year Of Autonomous Cars

The introduction date for self-driving vehicles is less obvious than a year ago.


The move to fully autonomous vehicles is supposed to happen in 2021. Some carmakers say they will be ready by 2020.

But a growing number of engineers and scientists who develop technology for this market don’t believe those dates are realistic. Dozens of interviews conducted over the past several months point to a likely rollout of fully autonomous vehicles—steering wheel optional—somewhere in the 2030 to 2040 range.

There will be a progression of driver assistance features continually added into cars over the next couple decades, of course, but it will be at least a decade before a driver doesn’t have to be ready to take over the car. And it will be at least three decades before there are enough autonomous vehicles on the road that everything will work seamlessly.

Along the way, there are likely to be several major shifts. First, while the electronic content in cars will continue to rise in volume and sophistication, there also will be a huge shakeout as that technology evolves. The automotive industry, like the chip industry, is extremely good at squeezing every last partial penny out of the supply chain. This is business as usual in the automotive business.

For example, sensors are likely to be incorporated into sensor hubs. While not all of the sensors will be used for every car, or even every model, it allows these collections of chips to be designed once and manufactured in large quantities. Carmakers have been using this approach for years, where adding options may be as simple as connecting wires into pre-wired electronics and punching out plastic parts in the dashboard. Chipmakers have used a similar strategy, where all of the functions in a “superchip” may not be turned on for a particular device.

The second shift will occur once these electronics really begin taking control of the vehicle. At that point, there is expected to be a rather ugly fight for control of the brand. In the past the brand was associated with a car’s styling, the overall ride, and the performance—or increasingly, miles per gallon or miles per charge. But the real value in an autonomous vehicle is in the system logic. There will be minimal difference in performance between one autonomous vehicle and the next, and the difference in styling will matter far less when cars increasingly are used as a transportation service. The biggest differentiators likely will be about data throughput, system response time, natural language interaction, and the ability of a car to avoid any slowdown from point A to point B. Luxury appointments within the cabin will be a nice-to-have, but the differences between one vehicle and the next may not matter as much if people use cars as a service rather than purchasing them.

It’s not clear today whether the brand that matters will be the car or the electronics. And as autonomous vehicles move closer to reality, it’s also not a certainty that they will rush toward the self-driving finish line if they’re going to lose that brand to Apple, Google or Intel/Mobileye. And that leads to the third trend, and the source of a lot of discussions behind closed doors these days. What will it take for carmakers to keep control of their industry? Is the money just in designing and manufacturing cars? Or is it in such areas as financing and insuring and providing vehicles as a service?

With self-driving cars, the auto insurance industry could disappear because there will be no drivers to insure. And with cars as a service, the financing business becomes less of a long-term risk assessment and more of a micro-payment business, roughly equivalent to downloading music on iTunes. Plus, carmakers are in a better position to undersell Uber and Lyft because their overhead costs will go down—no more dealerships, excess inventory, or concerns about writing off inventory during slow sales cycles.

No matter how this ultimately gets sliced up, the ramifications of self-driving vehicles will be huge. It will affect multiple industries and reshape lifestyles for years to come, transforming an industry that has been on a linear path for the past century. So even if the technology moves faster than current predictions, it will take a lot longer to sort out all of the surrounding pieces that make up the automotive business.


realjjj says:

With car as a service monthly payments are most likely but it can go from per ride to the equivalent with today’s leasing , the vehicle stays with the customer but there is a single payment for the entire TCO.

And it’s not just insurance and service that gets swallowed,it’s fuel too and practically the entire TCO.
And then there is the scale. You have, just a guess , some 1.2 billion people in OECD nations. If you get a 250$ per month ASP there (including deliveries) , that’s 3k per year per customer. Just 25% penetration would be 900 billion. Double that from the rest of the world and that’s just the start.
Miles traveled will increase even in OECD nations but outside those, the opportunity is huge as costs decrease. The customer in the most developed markets will pay for nicer and nicer vehicles and the service providers will keep trying to push ARPU higher., just like mobile carriers do. But the miles traveled by the remaining almost 7 billion people will quintuple quickly.
So as penetration grows in the most developed markets, the other markets will start to count more and more.
It’s a storm worth more than a few trillions and selling cars will be pennies.

CaaS is just too much of an opportunity for car ownership to survive. And due to higher utilization CaaS is much cheaper than ownership.
The day autonomy is legal, selling cars becomes the worst business decision anyone has ever made so the folks worried about point 2, have much bigger problems.

Ed Sperling says:

To make that work there would have to be a tiered system in place, where you pay more for a service that will pick you up within 5 minutes than one that will pick you up in 30 minutes. And if you want a clean vehicle–one without gum stuck on the seat–it will cost you more.

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