Carmakers are shifting gears to become the first one to market in the Autonomous Vehicles race

Up until a decade ago, driverless cars seemed like a concept that would only be present in science fiction movies. With Google’s debut of Waymo in 2009, autonomous vehicles (AVs) are on the way to becoming a part of our daily lives soon. The Tech titan launched Waymo as a take on producing a totally autonomous car - with no steering wheel, gas or brake pedal. As of November 2018, Waymo has started a test phase commercial ride-hailing “robo-taxi” service at Arizona. The hardware and software needed for AVs are mostly readily available. The challenge that lies ahead is to combine all the resources in a safe and financially viable way. Currently, no company in the field has all the necessary combination of manufacturing, software, and customer relationship knowledge on their own. Car manufacturers have the design know-how and mass production capacity but lack the agility of the autonomous software; this is where the young start-ups complement the relationship. They are working together and benefiting from each member’s unique expertise to become the ultimate “mobility provider.” 

There has been some progress in the technology behind autonomous vehicles. Firms such as Nissan, Tesla, and Chrysler have launched an Autopilot function where the car keeps itself at a certain speed, away from surrounding cars at highways while still requiring the driver to intervene when needed. The technology behind fully autonomous vehicles requires a network of lasers, cameras, sensors, LIDARs, and an AI powered virtual driver. Machine Learning helps the complex network to train itself by feeding the Artificial Intelligence algorithm with tons of different real-life situations and helping them learn what to do in each one through millions of miles of test drives in public roads.  

The first fatal accident of self-driving cars happened in March 2018, when Uber’s vehicle struck into a pedestrian in Arizona. This event caused negative PR around self-driving cars and Uber suspended its tests within residential zones for a few months. A lot of people questioned the safety of the state of this technology; meanwhile, Washington remained relatively quiet on the incidence. There is a bipartisan consensus on keeping regulations loose as too much of it could do more harm than benefit for the industry. The AV industry is operating in low government oversight due to the deregulatory trend in US. Right now, there is no extra legislation on safety requirements for AV technologies, besides what is on the car itself. The Department of Transportation doesn’t require only promotes developers to share “voluntary safety self-assessments” with the public. 

The AV industry has been a hot spot for M&A activity. R&D from scratch of such a complicated software requires a lot of time and financial capital. So, car manufacturers have found it more efficient to jump start the process by acquiring or developing stakes at the start-ups focusing on the tech aspect in order to not fall behind in innovation and competition. Fierce competitors of the auto industry have decided to leave their competition on the side and partner with AV developments to gain economies of scale and share know-how. In 2016, General Motors bought the self-driving cars’ software development firm Cruise. Later on, GM went on to inject an extra $1.1 Billion in addition SoftBank Vision Fund’s $2.5 Billion investment to Cruise. Lagging behind its rivals in the automation game, Honda has steered $2 Billion to GM’s Cruise self-driving unit at the end of 2018. In 2017, Ford had invested $1 Billion in Argo AI – an artificial intelligence company developing a virtual driver system. Upon this investment, Ford has transitioned itself into a “mobility company” and has promised to launch its fully autonomous vehicle by 2021. 

This new technological advancement has the potential to disrupt the entire transportation industry. The industry’s last disruptor, Uber, who had created a massive change in the transportation industry as it connected drivers with riders without car ownership, is also getting ready for driver-less cars. They plan to eliminate drivers who demand higher compensation during busy hours and work as much as they want with virtual drivers who won’t have any complications like these. Toyota has invested $500 Million to Uber in order to use its cars in Uber’s future driver-less car fleets. Uber acquired driverless-truck startup Otto for $680 Million in 2016. The online shopping triumph Amazon invested in Aurora to utilize its technology in its delivery fleets in the near future. The world’s largest investment fund, SoftBank is also very bullish on the future of AV. On top of their $2.5 Billion investment in GM’s Cruise, they have invested nearly $1 Billion in Nuro, a start-up making driver-less cars for short-haul deliveries. Moreover, they are also in talks of acquiring a minority stake at Uber’s self-driving cars division in exchange of $1 Billion investment before ride-sharing giant’s highly anticipated IPO. 

Goldman Sachs estimates the AV market will reach around $100 Billion in 2025. The road to success lies on partnering with young Silicon Valley tech companies to gain more experience in AI, deep learning and robotics in order to save time and money brining self-driving cars to market. Global carmakers are racing with each to be the first one to deliver a fully autonomous car in a mass scale to get a slice out of this huge pie. The higher the autonomy level, the harder development gets. Rival carmakers are pooling their resources together instead of competing on their own, to get a better shot at developing the tech breakthrough even if this mean splitting the slice of the pie but a larger one on a space that is already very crowded. 

Only time will show us how these autonomous cars will interact safely with other surrounding autonomous cars, pedestrians, drivers, cyclists, and other complex elements of the modern traffic system. We still have a few years until everyone will be able to just sit back and enjoy the ride in a car controlled by a virtual driver.