IN RACE FOR SELF-DRIVING CARS, BEING FIRST REALLY MATTERS
Companies big and small want a piece of the multibillion-dollar action, but analysts say there will only be a handful of winners
In the race to start the world’s first driving business without human drivers, everyone is chasing Alphabet’s Waymo.
Goldman Sachs predicts robo-taxis will help the ride-hailing and sharing business grow from $5 billion (Dh18.37bn) in revenue today to $285bn by 2030. There are grand hopes for this business. Without drivers, operating margins could be in the 20 per cent range, more than twice what car makers generate right now. If that kind of growth and profit come to pass – very big ifs – it would be almost three times what GM makes in a year. And that doesn’t begin to count the money to be made in delivery.
Why does it matter who gets there first? To make a driverless business work takes a big fleet to establish service in major markets, as well as a brand name that becomes as synonymous with getting a ride as Uber is today. Observers expect the field to narrow. “There won’t be a ton of companies doing this,” says Brian Collie, head of Boston Consulting Group’s US automotive practice. “There will be a select few. Being there first establishes consumer trust. Brand value matters.”
Waymo has run self-driving cars over 8 million road kilometres in 25 cities and done billions of kilometres in computer simulation, which it uses to update its self-driving software on a weekly basis. The Google-launched company has a fleet of Chrysler Pacifica minivans that can navigate city streets in San Francisco and reach full speed on highways.
A pilot programme of driverless vans will begin commercial service later this year, picking up paying passengers in Phoenix and branching out from there. Waymo chief executive John Krafcik recently announced a deal to add 20,000 Jaguar I-Pace 4x4s to the fleet and signalled that an in-the-works alliance with Honda could focus on delivery and logistics. It also reported fewer accidents while testing in California last year: Waymo had three collisions over more than 560,000km, while GM had 22 over 212,000km.
GM’s Chevy Bolt can navigate the busy streets of San Francisco at speeds up to 40 kilometres per hour. The Detroit car maker is so confident that it plans to run a ride-hailing pilot next year in a car with no steering wheel or pedals, something only Waymo has done in road testing.
Where GM lags Waymo is speed. GM doesn’t test faster than 40kph, deeming that the safest top speed. Kyle Vogt, founder and chief executive of GM’s Cruise Automation unit, says his programme will soon be using new Lidar developed by Strobe, which the car maker acquired last year. Lidar sends out laser beams to map the road ahead and guide the car, and Strobe’s version is smaller, cheaper and can see further ahead than GM’s existing equipment. That will enable faster driving.
The new equipment will also cut costs. Lidar alone on the current generation of autonomous Bolts costs about $30,000 a car, Mr Vogt said in November. When GM starts using Strobe, Mr Vogt said, the cost will drop to “hundreds of dollars”.
GM plans to spend $1bn of its $8bn annual capital expenditure budget to develop self-driving cars and mobility services.
Mercedes-Benz models with Intelligent Drive get closer to real self-driving because the system can help steer clear of pedestrians and avoid other accidents. It’s one reason why Navigant Research, which studies auto technology, ranked parent company Daimler third behind Waymo and GM.
For the cars of tomorrow, Daimler works closely with Robert Bosch and will be using a system from Silicon Valley intelligent computing company Nvidia. The test cars can drive at Level 4 autonomy or even Level 5, which means the car doesn’t need a steering wheel or pedals to operate.
The company has been testing V-Class vans around the roads of Boeblingen, near Stuttgart, where Mercedes-Benz has a research centre.
The technology is already at Level 5, says Daimler’s head of development, Ola Kaellenius, although a recent report by Bloomberg New Energy Finance (BNEF) put the target date for the company after 2020.
Before those systems are on the road, Mr Kaellenius says Mercedes will offer Level 3 autonomy as an option in the cars it sells by 2021. This means that the car can handle most driving, while prompting the driver to take over in certain situations the computer can’t handle. Fully self-driving cars will be on the road at the same time, he says, but would be used for ride-sharing services, because they would be too expensive for retail customers to buy.
“The logical business case there is a mobility service, a robo-taxi type of thing,” Mr Kaellenius says.
“You amortise the cost through the saving on the driver.”
Aptiv, an electronics unit that split from Delphi Technologies last year, has emerged as a player to be watched, says Grayson Brulte, co-founder of Brulte & Co, a consulting company that specialises in autonomous strategy.
Aptiv has invested heavily in self-driving technology, buying software maker Ottomatika along with Lidar makers Innoviz, Leddertech and Quanergy Systems. Its biggest deal was buying NuTonomy, which has been running tests of driverless cars in Boston and Singapore at city speeds.
The company has been testing ride-hailing services in Singapore since 2016 and will have them operational in 2021, according to Navigant. Aptiv has been working with Audi and BMW cars to develop its technology.
Zoox’s self-driving Toyota Highlander 4x4s can also drive at highway speeds, says Bert Kaufman, head of regulatory affairs for Zoox. The company plans to have its car ready for passengers in 2020, Mr Kaufman says, and then will work on getting passengers in the car shortly after.
The challenge for Zoox is getting more funding to build its car. The company has raised more than $280m, but needs an additional $1bn to finish it, Mr Kaufman says. Established car makers have their own vehicles, and Waymo has partnerships with manufacturers.
Nissan is testing a fully-autonomous car in Palo Alto, California, and alliance stablemate Renault recently showed off a long, sleek, copper-coloured concept car called the Symbioz that can go 128kph in full self-drive mode. The car still requires a driver to turn on autonomous mode, at which point the steering wheel retracts.
In March, Nissan tested an electric Leaf in a ride-hailing pilot in Yokohama, and Renault will do the same later this year in suburban Paris and Rouen with the electric Renault Zoe. The French-Japanese will have fully autonomous cars in the road in four years, according to the Alliance 2022 plan.
Audi, which is working with Nvidia, is targeting a fully autonomous car in 2020 – the report from BNEF put the date to reach Level 4 at 2021. The company hasn’t said whether it will be tested in a service or by its own engineers.
Parent Volkswagen also has an agreement with Aurora, the start-up whose founders have serious credibility in the world of self-driving software. Its technical leaders are Chris Urmson, a founder of Google’s self-driving effort, Sterling Anderson, who ran Tesla’s Autopilot programme and Drew Bagnell, formerly a leader on Uber’s autonomy team. The company has kept mum as to how it will go to market
BMW is testing completely self-driving cars it developed with partner Intel, which acquired sensor maker Mobileye, and with German parts maker Continental. Fiat Chrysler Automobiles recently joined the partnership, which plans to have self-driving technology in production vehicles by 2021.
No one can count out Toyota. The company started developing self-parking technology in 1999 and installed it in the Prius in Japan in 2003. At CES in January, the company showed off a boxy shuttle concept called e-Palette.
The Japanese car maker can make the self-driving shuttle in three sizes and it will debut publicly at the Tokyo Olympics in 2020 as a ride-hailing shuttle, says Gill Pratt, who runs Toyota Research Institute.
Ford gets its technology from Argo AI, the artificial intelligence company in Pittsburgh that Ford paid $1bn to take a significant stake last year.
The Argo team has a strong lineage. The start-up is the brainchild of Bryan Salesky, who was director of hardware development of what is now Waymo, and Peter Rander, who was engineering lead at the Uber Advanced Technologies Group. Ford is now testing its third-generation Fusion sedan with Argo’s technology.
The plan is to have self-driving cars with Level 4 capability in 2021, says Sherif Markaby, Ford’s vice president of autonomous vehicles and electrification. The car will be purpose-built for autonomy, with no steering wheel or pedals.
Tesla’s Model S and X both have Autopilot, which can pass other cars and change lanes with no hands on the wheel. While it’s not a fully autonomous system, it has given Tesla a lot of data about how its cars perform when driver-assistance software is engaged. Analysts from BNEF project Tesla will be able to field Level 4 cars in 2020.
China’s largest search engine has been developing self-driving software for five years. Its Apollo software system for autonomous vehicles is opensource, and the company has invited all takers to work together to test cars and collect data. Baidu started testing the first version of the software in late 2017 on public roads and showed off version 2.0 at CES. The Chinese government in March gave Baidu permission to test cars on 33 public roads in the suburbs of Beijing. The company’s goal is to test the system in buses later this year and, by 2020, to have autonomous vehicles capable of Level 3. Baidu also has a 2021 target to produce Level 4 autonomous cars.
So the race to full autonomy on the roads is underway – whether the finish line is realistic for any competitors, only time will tell.
Waymo’s driverless vans will begin commercial service this year, while Toyota will publicly launch self-driving shuttles at the Tokyo Olympics