Driverless Tech’s Ups and Downs Post Virus

The pandemic has hit almost all economic sectors globally but it has had an especially harsh effect on automotive.

It has been called the single biggest risk factor facing the autos industry for many years, with global light vehicle sales forecast to decline 22%, to 70.3 million units, in 2020. Given the uncertainty surrounding the long-term effects of the pandemic, it remains difficult to say when global economies will return to their pre-virus levels.

The crisis has had a withering effect on AV development. For example, the Ford postponed for a year the commercial deployment of its AVs; Waymo, the self-driving unit of Google parent Alphabet, suspended its on-road testing in Arizona; and Uber Advanced Technologies Group announced layoffs of 3,500 workers because of the pandemic.

More generally, the potential damage to the sector is daunting:

  • A global recession resulting from the epidemic may greatly undermine consumer confidence, which will impact carmaker revenues and profits long-term;
  • Auto manufacturers may be forced to use capital to support ongoing operations, taking much-needed funds from R&D;
  • Suppliers facing liquidity issues may succumb to rapidly deteriorating market conditions, causing widespread disruption and possibly catastrophic across the entire global automotive manufacturing ecosystem.

If that last item sounds overly alarmist, it should be noted that suppliers were already enduring hard times before the epidemic. Nearly all of them suffered year-on-year declines in operating profit in 2019 and many appear to lack the cash and assets on hand to cover financial obligations for far beyond the summer.

The inventory of companies, projects and timelines disrupted by the pandemic is extensive, and we can only speculate how many years the launch of fully autonomous vehicles has been set back. Yet the deployment of AVs above SAE Level 3 will certainly be delayed as a result of the decreased investment in R&D and that almost all AV manufacturers have had to reset and recalculate their projects.

Fortunately for AV development, some carmakers, such as General Motors, undertook cost-cutting initiatives as early as in 2018 to ensure they would have enough money to sustainably fund innovative, forward-looking programs, such as electric and AV technology, in case of an economic downturn. However, surely no one anticipated a slowdown of this magnitude.

One problem for carmakers, once the pandemic has ended, will be to decide how to allocate their investments. The epidemic has made consumers and authorities, especially in Europe, more environmentally aware. As a result, manufacturers may find it more profitable, for the short term, at least, to concentrate investment on EVs, increasing battery range, reducing their cost and building out the infrastructure and, as a result, push back AV timelines.

Yet not all the news is bad. In fact, the epidemic has opened up unforeseen opportunities for companies developing AV technology. It has made the need to move goods with as little human interaction as possible a much higher priority. Home delivery of meals and products purchased online as well as the shipment of goods from warehouse to store all have the potential to promote AV technology innovation and adoption.

The autonomous delivery company Nuro, in partnership with a national grocery chain, saw adoption of its driverless delivery vehicles grow in Houston as the pandemic accelerated. Nuro also adapted its vehicle system to deliver medical supplies to temporary COVID-19 hospitals in Sacramento and a temporary medical facility in San Mateo County.

In addition, Pony.ai has employed its AVs to deliver groceries in Irvine, California, and also works with the city of Fremont to deliver meals to a local emergency shelter program. GM partner Cruise has been using its AVs to deliver food from a San Francisco food bank to seniors around the Bay Area.

One country did not delay its AV development programs: China. That’s because the epidemic was largely localized in the country and Draconian lockdown measures contained the spread early on. Hence, domestic self-driving companies not only did not suspend testing but many accelerated their programs. More than 30 Chinese companies rolled out pilot projects, accelerating testing and raising funds. For example, the start-up AutoX opened a large data center for autonomous cars in Shanghai and closed a deal to launch a fleet of 100 robo-taxis in the city.

Chinese companies have also been very active in exploiting the epidemic to roll out AVs. Baidu released 104 driverless vehicles in 17 cities across the country to help carry out frontline anti-epidemic work such as cleaning, disinfecting, logistics, and transportation. Its AV platform Apollo partnered with self-driving start-up Neolix to deliver food and supplies to the Beijing Haidian Hospital. They also deployed unmanned vehicles every day to disinfect the roads on Shanghai’s Zhangjiang Artificial Intelligence Island.

Apollo also partnered with iDriverPlus to provide autonomous vehicles to 16 hospitals across the country. Every hospital was provided with one or two disinfectant and delivery vehicles, to minimize person-to-person transmission and alleviate the shortage of medical staff. So, it may be that the epidemic will lead to a contingent repurposing of AV innovation, focusing on commercial use, with lessons learned later implemented on consumer AVs.


Leave a comment

Your email address will not be published. Required fields are marked *