How time marches on for the driverless car – Part I

The driverless car is only five-to-ten-years away. The technology is already here. Numerous driverless test vehicles have clocked hundreds of thousands of miles on the nation's highways and roads. There have been accidents but nearly all were not the vehicle's fault. In the very few cases where they were, the accidents were extremely minor and a subsequent examination of the vehicle's decision-architecture indicated the choices it made had been correct. There is plenty of tweaking that still needs to be done before driverless vehicles are ready. Driverless cars will be heavily dependent on sensor fusion, which is still not sufficiently matured.

What we don't know

While nobody can predict the future, from what we know now, there's still a lot we can guess about what the car of the future, circa 2026, will be like. To begin with, we've already got a pretty good clue what the situation will be like but it might be better to start with what we don't know. Naturally, a lot will be dependent on what steps the US government makes about implementing uniform regulations for driverless cars, vehicle-to-vehicle and vehicle-to-infrastructure communications, as well as setting up the as-yet unestablished internet-of-things. But if the right, rational, choices are made, and the promised funding profiles adhered to, by 2026, the nation's interstate highways will all be connected. Presumably, so also will be all or most state roads. Most cities and suburban areas will also be but it will be patchy.

By 2026, according to estimates, about 85% of all new cars coming off the assembly line will have at least basic telematics rigs. It is possible that by then it will be mandated that all new cars will be equipped with dedicated short-range communications (DSRC). These will allow the cars to communicate, not just with their owners, but also with their surrounding environment, other cars and the infrastructure. Since most cars on the road will still be from before the 2020s, for V2V and V2I to have any effectiveness at this point, it will be critical that the government also mandates that all older vehicles have aftermarket DSRC systems retrofitted into them. Unless this is done, the rate of penetration of V2V- and V2I-equipped vehicles onto the connected highway will be a very long, drawn-out affair. 

Automotive designer Jason Hill, of the 11 design consultancy, agrees that this step is critical. “If you have a closed system, you can do driverless, 100% right now. The technology is there. You could totally do it. But at the same time,” he says, “you've got this enthusiast person saying, 'I'm never going to give up control of my car!' And I think at that ten-year mark, some things will be automated, others will still be controlled by a driver. The connectivity has to reach forward but it also has to backward into retrofitting. So maybe it's not a driverless car but that car is connected so everybody else knows that it's there. When you talk about connectivity, that's where your growth is.”

Another thing we don't about is how far the government will go in its support of driverless cars. As this article was being written, Chris Urmson, director of Google's self-driving programme, was on Capitol Hill, testifying before Congress and among other things, telling them that the idea of requiring steering wheels on driverless cars made about as much sense as having to provide a steering wheel and a brake to the passenger in a taxi cab. Urmson, not being from the automotive industry, favours a revolutionary approach to developing driverless cars, while the industry, not surprisingly, prefers a more incremental, evolutionary one. Most reports of the questions which members of Congress asked Urmson showed a general cluelessness on the whole subject. However, if somehow they would suddenly ‘see the light’ and go with approach, it would probably have a very great effect on what the car of 2026 will look like.

What we do know

Forcing a change in the automotive industry will be the rise of two things; the Millennial generation and the rollout of driverless cars.

The Millennials don't seem to be much like the generations that preceded them, but then, the Millennials didn't grow up in an era of prosperity. They came of age during a long economic downturn, a time of unending wars and poor future economic prospects. Jobs are difficult to get and what they end up with, often as not 'gigs' that only last for a while, come without benefits and often end abruptly, leaving them to scramble to generate a new revenue stream to replace it. Not surprisingly, many Millennials consider themselves permanently blocked out of home ownership. Many continue living with their parents or in shared housing with friends throughout their twenties. At an age when their counterparts in earlier generations were buying new cars, Millennials are still driving used vehicles. Even more importantly, each year, fewer Millennials bother getting drivers licenses. A visit to nearly any high school that's not in the suburbs will reveal student parking lots that are mostly empty.  Owning your own car was always a cornerstone of the ‘American Dream’. It represented freedom but Millennials are perhaps seeing it another way and are increasingly rejecting it. 

“Cars are expensive, and they spend most of their time parked or in a garage. Millenials realise that buying a car, is a very poor capital allocation,” says Stefan Burgstaller, an automotive industry analyst at Goldman Sachs. “That's why they're choosing sharing instead of owning.”

Millennials realize they don't need a car as much as they need the mobility that comes with them. If they're living in cities, they can made do perfectly well using a mix of public transportation and ride sharing. Ride sharing can come in the form of summoning a ride from Uber or Lyft or engaging a vehicle on an as-needed basis, often for a matter of minutes, using services such as Zip Car or Rides2Go. Together they make up a key segment of what is called “the Sharing Economy,” which by 2026 it is estimated will be worth $335Bn (£232Bn).  

On the surface, the move away from ownership represents a loss for the OEMs since it means fewer people will be buying cars. On the other hand, the vehicles that do get bought are going to be in use constantly and may have to be replaced in just a couple years. This represents an opportunity for the OEMS and will also drive a great deal of change by them.

Over the next ten years, more of the automotive industry will be devoted to meeting the needs of the sharing economy. A number of OEMs, most notably Ford, are beginning to refashion themselves as “mobility companies” rather than merely auto manufacturers. Many have set up car-share subsidiaries or are investing in ride share companies, such as GM is doing with Lyft.

Ford Motor Company executive chairman, Bill Ford, put it this way: “We're transforming our business from just being a traditional car and truck manufacturer to that plus being a mobility company in whatever form that takes. In ten years, our business is going to look completely different from what it is today. We're having disruptions in the power train, we're having disruptions in the ownership model with either access to vehicles or fractional ownership and with autonomous driving suddenly coming.  There'll be lots of different revenue streams coming out of this whole new world of mobility!”

In many ways, it is very fortunate for the future of the self-driving car's real world debut coincides with the rise of the Millennials and the sharing economy because they constitute a large willing, natural market for it. They may not be looking to own a car, but they are very willing to pay for use of its capability. At the moment, they're happy to buy it from someone willing to drive them or provide them with a car to drive. As the sharing economy grows it should be easy transition it over to driverless cars.

This in turn frees the OEMs from much of the burden of having to convince car buyers to buy a driverless car instead of one they can drive. Their real market is going to be people who are used to using vehicles they don't own and just want to get somewhere without having to bother with driving. They may be coming out of a bar or they may be leaving an airport or going to work and they're happy to let the car drive itself because they already know it’s going to be safer. Twenty five years from now, car sharing will be the norm and car ownership an anomaly,” says futurologist Jeremy Rifkin. James McQuivey, automotive industry analyst at Forrester Research puts it another way, “The real game changer isn't going to be getting people to buy self-driving cars as much as using self-driving cars they don't own.”

Continued in Part II

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