Self-Driving Cars Attracting High Rollers – 4/14/16

Electric cars stole the spotlight with the recent unveiling of the Tesla Model 3, but self-driving cars are also set to drastically disrupt transportation. The two technologies, both set to hit mainstream markets in force over the next few years, complement each other in that a vehicle using a battery and motor is simpler system to program for than one also using a combustion engine, which is part of why Google’s test cars are all electric.

With regards to energy, if electric cars mean shifting to a different source of power, then self-driving cars mean changing actual demand. Vehicles giving mobility to groups otherwise barred from driving due to age or disability would certainly increase their driving time; however, traditional drivers could lose or gain hours depending on how cuts in time spent in traffic or looking for parking balance out with willingness to drive more in a day given the opportunity to actually get things done while in transit.

Companies from the old brand auto and part makers to the Silicon Valley tech giants are trying to tap the potential fortunes to be made from autonomous vehicles. To do so, many firms are dropping billions on acquisitions and development. General Motors Co.’s proposed purchase of Cruise Automation Inc. for more than $1 billion is only the most recent and high profile example. Carol Reiley, president of Bay Area startup Drive.ai, said her company just raised $12 million from venture-capital investors. Another firm, Zoox Inc., recently became the 12th company granted permission to test self-driving cars on public roads in the state of California for use in a ride-hailing service. Others include Google, Ford Motor Co., Tesla Motors Inc. and General Motors Co. Zoox faces competition from Uber and Lyft which have also been working on autonomous-vehicle projects.

“The Cruise purchase is making VCs notice,” she said, referencing the GM deal’s potential impact on future investment in similar startups.

Consultants at PricewaterhouseCoopers LLP estimate 2015 merger-and-acquisition activity by automotive suppliers reached nearly $50 billion as auto companies try to meet demand for more connected vehicles with autonomous-driving capabilities. Meanwhile, IHS Automotive sees annual sales of self-driving or driverless cars reaching 21 million within 20 years.

Auto makers aren’t only acquiring new technologies and teams to develop them, they’re also pushing regulators around the world for consistent rules to make sure autonomous vehicles are integrated as fast as possible.

“It’s very important that we…lobby in every single country with the regulatory authorities to take our eyes off the road and our hands off the wheel,” Carlos Ghosn said, noting that his companies are working with U.S. and Japanese regulators.

The Obama administration has proposed spending nearly $4 billion in 10 years helping along the roll-out of autonomous vehicles and the U.S. National Highway Traffic Safety Administration has already released a report this year highlighting possible legal issues facing driverless cars. In addition, the agency is developing standardized rule recommendations for states on autonomous vehicles in response to concerns over the current mishmash of state rules.

“It’s an auto maker’s biggest nightmare that you have one standard in California, a different standard in Wyoming and a different standard in Tennessee,” said Jim Lentz, Toyota Motor Corp.’s North American chief. “The standards need to be the same in all 50 states. Imagine in 2022 you have an autonomous vehicle that can be steering-wheel-less in Arizona and then you drive to California and California says you have to have a steering wheel.”

Still, few major US cities are factoring the impact of autonomous cars, according to a report released in the fall by the National League of Cities. “Even though driverless cars may be shoehorned to fit the traditional urban environment in the short term, it won’t be a long-term solution for maximizing potential benefits,” says Lili Du, an assistant professor of transportation engineering at Illinois Tech. Autonomous cars will change distribution of parking lots, fueling stations, and electric vehicle charger stations just name a few affected pieces of infrastructure.

Off roads, BMW AG hopes to use self-driving vehicle technology on factory floors  in robotic trolleys as part of an automation drive meant to cut costs by 5% per car annually. According to the company’s production chief, Oliver Zipse, the vehicles autonomously find the desired parts container, slide under it and transport it to the packing area. With assembly lines as efficient as they are, moving around parts is one of the few areas where productivity gains can still be made. Programs such as this one are meant to help the company fund the development of self-driving features and other technologies.

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