Several events from the last months provide a strong signal that autonomous vehicle technology has led the auto industry to a pivotal point: The first auto makers are adapting their business model for fully self-driving cars and are providing explicit time frames!
Earlier this year GM invested 500 million USD in Lyft, purchased self-driving technology startup Cruise Automation for more than 1 billion USD and announced in July that GM will build its first self-driving cars for use within the Lyft fleet as self-driving taxi. In May BMW announced that they would have a self-driving car on the market within 5 years. Next came Uber, which acquired autonomous truck startup Otto for 680 Million USD and is now beginning field trials of fully self-driving taxis in Pittsburgh. But the key change at Uber is the way that its CEO Kalanick frames the issue. He makes it clear that Uber’s survival depends on being first (or tied for first) in rolling out a self-driving taxi network.
The latest announcement comes from Ford which plans to provide mobility services with fully autonomous self-driving Fords by 2021. This is a major effort: Ford is doubling its development staff in Silicon Valley, aims to have the largest fleet of self-driving car prototypes by the end of this year and will triple the size of this fleet again next year. It has also purchased 3 companies related to autonomous driving technology and has purchased a stake in Velodyne, the leading manufacturer of LIDARs for autonomous driving.
When we started to monitor the development of self-driving car technology in 2009 we expected that this technology would turn into an avalanche that sweeps through the auto industry. There have been many signs over the past years that the avalanche is picking up speed but until now we have been reluctant to claim that it is in full swing because even though the auto industry was continually increasing their activity around self-driving car technology all players had been very reluctant to openly call this a race and to publicly position fully self-driving cars as a key element of their strategy. There was a lot of posturing, many eye-catching public demonstrations of self-driving car prototypes but very little tangible action aimed at turning fully self-driving car prototypes into a real product.
After these recent signals, this situation has changed. It is now clear that auto makers have begun competing in earnest to adapt their business models to the coming wave of fully self-driving cars. No longer is Google the only company which is stepping on the gas; auto industry executives (and Uber) are now openly competing to bring the first self-driving cars on the market. It will come as no surprise to the readers of this blog that the initial business models are not concerned with selling cars but to provide mobility services.
These signals are important in themselves. They heat up the competition and force the rest of the auto industry to decide how to adapt their business model to fully self-driving cars and to explain this strategy to their investors, journalists and analysts. They increase the value of companies in the space and increase the competition for human capital (Google has probably lost between 500 million and 1 billion USD in human capital from the exodus of key members of their self-driving car group in this year (680 mio USD Uber paid for the Otto startup founded early 2016 by 4 Googlers (including Anthony Levandowski), plus Chris Urmson.). They also increase the effort of all parties involved (auto industry, suppliers, regulators, journalists, related industries such as transport & logistics, insurance, health care etc.) to understand the implications of fully self-driving cars which gradually drives away the many misconceptions and more clearly shows risks and opportunities. We are in the middle of a global, distributed innovation process around self-driving cars and driverless mobility where all parties are learning, refining their thinking, changing their vision of the future and adapting their actions accordingly. The avalanche is in full swing now and it will be a tough ride for those who fail to adapt while there is still time…