Race to self-driv­ing fu­ture yet to start

The Detroit News - - FRONT PAGE - BY DANIEL HOWES The De­troit News

GM Cruise LLC CEO Dan Am­mann has seen the au­tonomous fu­ture and he likes to say it boils down to this: “We’re in a race to the start­ing line.”

Mean­ing the days of elec­tric driver­less ve­hi­cles ply­ing pub­lic streets, shar­ing the road with un­washed masses steer­ing 20th-cen­tury metal pow­ered by gaso­line, are not com­ing as quickly as the hype sug­gests.

The re­al­ity check is here. Manag­ing ex­pec­ta­tions down and ed­u­cat­ing the pub­lic are the new­est new things for ma­jor play­ers in the space be­cause get­ting the tech­nol­ogy right and mak­ing it safe are more im­por­tant than be­ing first.

At last week’s CES elec­tron­ics show in Las Ve­gas, a new coali­tion of au­tomak­ers and non-profit or­ga­ni­za­tions an­nounced for­ma­tion of the Part­ner­ship for Au­to­mated Ve­hi­cle Ed­u­ca­tion: “Its mem­bers be­lieve that in or­der to fully re­al­ize the ben­e­fits of driver­less tech­nol­ogy,” ac­cord­ing to its web­site, “pol­i­cy­mak­ers and the pub­lic need fac­tual in­for­ma­tion about the present and fu­ture state of tech­nol­ogy and its po­ten­tial ben­e­fits.”

As au­tomak­ers and tech com­pa­nies part­ner and po­si­tion them­selves to com­pete in the Auto 2.0 space of mo­bil­ity, au­ton­omy and elec­tri­fi­ca­tion, they’re also com­ing to terms with just how chal­leng­ing the road ahead is — and how eco­nomic con­di­tions not so far ahead could af­fect the jour­ney.

In a note in ad­vance of the open­ing this week of the North Amer­i­can In­ter­na­tional Auto Show, Mor­gan Stan­ley pre­dicts in­vestors will “place greater em­pha­sis on Auto 1.0/Macro vs. Auto 2.0 in 2019.” That’s be­cause au­tomak­ers’ abil­ity to gen­er­ate rev­enue and profit in a plateau­ing car and truck mar­ket is crit­i­cal to their abil­ity to in­vest in ex­pen­sive tech­nol­ogy.

And in­vest­ing in a still-evolv­ing fu­ture can be fraught. Ideas don’t ma­te­ri­al­ize, and oth­ers flop. En­gi­neer­ing con­cepts fail val­i­da­tion and miss reg­u­la­tory hur­dles. Ac­ci­dents or spotty safety records un­der­mine pub­lic con­fi­dence and raise skep­ti­cism. Over­sim­pli­fied me­dia ac­counts in­formed only by short, con­trolled de­mon­stra­tions make the vi­sion seem much closer to re­al­iza­tion than it ac­tu­ally is.

“We con­sis­tently tend to over­es­ti­mate the tech­nol­ogy for the short term and un­der­es­ti­mate what the tech­nol­ogy and its dis­rup­tion can do in the long term,” said Asu­tosh Padhi, se­nior part­ner and global co-leader for the ad­vanced in­dus­tries and au­to­mo­tive & assem­bly prac­tices for McKin­sey & Co. “Au­tonomous ve­hi­cle tech­nol­ogy is no ex­cep­tion.”

Tech com­pa­nies ac­cus­tomed to an ag­ile, risk-tak­ing cul­ture vir­tu­ally free of gov­ern­ment reg­u­la­tion are learn­ing how reg­u­lated the Amer­i­can auto busi­ness is, how pre­cise the en­gi­neer­ing must be, that build­ing cars and trucks is a low­mar­gin busi­ness that ain’t easy.

Au­tomak­ers ac­cus­tomed to en­gi­neer­ing process and long cy­cle times are wrestling with their old econ­omy his­tory and the bur­dens slow­ing their com­pet­i­tive me­tab­o­lism. That’s a key rea­son the likes of Gen­eral Mo­tors Co. and Ford Mo­tor Co. are plan­ning to win­now their salaried ranks even as they move to hire new kinds of tal­ent.

The auto in­dus­try tends to move in se­quen­tial steps, each re­quir­ing val­i­da­tion that will in­evitably re­quire some form of reg­u­la­tion. Sil­i­con Val­ley is the op­po­site: it prizes in­no­va­tion, speed, get­ting the prod­uct out into users’ hands quickly to see how it’s re­ceived and then make ad­just­ments on the fly.

The ar­rival of Auto 2.0 in any mean­ing­ful way is a process mea­sured in years, Pradhi said, per­haps even a decade or more. Au­tonomous “robo-taxis” op­er­at­ing in care­fully de­fined, or “geo-fenced,” ar­eas could be re­al­ized in as lit­tle as three or four years. A fully au­tonomous taxi could be at least a decade away — and then only op­er­at­ing in spe­cific ar­eas.

“We will be in a pro­gres­sive jour­ney over the next 10 years or so,” he said. “And like any jour­ney, the first steps will be­gin mod­estly.”

And then ac­cel­er­ate, quickly. Dis­rup­tion is min­i­mal, but signs are grow­ing: de­mands for cash are forc­ing au­tomak­ers like GM and Ford to drop money-los­ing models and re­de­ploy the cap­i­tal into higher-mar­gin prod­ucts; re­struc­tur­ing ef­forts are skew­ing to find­ing tal­ent for next-gen­er­a­tion projects; more com­peti­tors from new dis­ci­plines are crowd­ing the space.

Semi­con­duc­tor mak­ers drive data com­pu­ta­tion and the cost of data goes down. Ri­vals like Tesla Inc. push tra­di­tional au­tomak­ers to adopt over-the-air soft­ware up­dates. Au­tomak­ers in­te­grate ad­vanced tech­nol­ogy into rolling hard­ware that can pass muster with reg­u­la­tors be­cause that’s what they do.

Mas­sive change is com­ing be­cause if the tech­nol­ogy ex­ists it can’t be stopped. But it’s not here just yet.

Noah Berger for Gen­eral Mo­tors

GM Cruise LLC CEO Dan Am­mann, right, is fond of say­ing com­peti­tors in the au­tonomous-ve­hi­cle space are “in a race to the start­ing line.”

DANIEL HOWES

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