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Gearheads or Geeks: Who Owns Tomorrow's Car-Industry?

Self-driving could overturn the world of motoring. Autonomous automobiles could change how we buy, drive and ride; they also might rearrange control of car-making.

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If you're at the wheel, that is. Texting while driving is notorious, which makes the prospect of self-driving cars that much more appealing. Wouldn't it be nice to read, eat or even sleep on the move by handing over the controls to a robot? That erstwhile dream is becoming reality, one that could completely change road transport – both how we use it and who controls it.

Self-Driving Is Here Already – Sort of

Cruise control, anti-skid braking, satellite navigation, automatic transmission: in cars, computers now do many things that humans used to. In fact, says Roland Berger Strategy Consultants, today's automobiles are halfway up a 5-rung development ladder that starts at 'no automation' and ends at 'full self-driving automation'. Just as the family vacuum cleaner and lawnmower can go autopilot (think Roomba or Robomow), surely so too can the family wheels. Think RoboRide – you heard it here first – which doesn't actually exist, but the wait shouldn't be long. Already in 2015, Google says it will put "the world's first fully self-driving vehicle" out on Silicon Valley's streets. With its so-called Google-x, life even imitates art (well, pop culture at least). The bug-like two-seater uncannily resembles a famous fictional auto-auto: not the muscle-car KITT of 1980s TV-series 'Knight Rider', but cute little Herbie, star of 'The Love Bug' and its many sequels.

My Car the Robot, Brought to You by

Google is not the only automaker-outsider in the game. Nearby in northern California, Apple reportedly is testing the streets. Social-taxi operator Uber has been trialling prototypes in America's Pittsburgh, close to its partner in self-driving know-how, Carnegie Mellon University's Robotics Center. Non-traditional suppliers are piling in, too. Circuit-designer NVidia is looking to leap from piloting cars in video games to doing so in real life. Mobileye, as its name suggests, makes electronics that 'see' obstacles and potential crashes. Such suppliers are partnering with conventional automakers as well. Daimler, General Motors, Toyota and other motor giants are joining the self-driving fray.

Softly Softly Come the Changes

For most of us, says Credit Suisse analyst Uwe Neumann, the morph from human to android driving will be gradual. One such step underway is self-parking. After debuting about a decade ago in high-end cars, it has worked its way down to the masses and is now found in economy rides such as Ford's Focus, the world's top-selling car. Another 3-5 years could see the entry of self-steering. Probably this will be available first only on select stretches – say, well-known areas with one-way traffic and few obstructions. Finally by around 2030-35, say both Neumann and Roland Berger Strategy, the transformation should be complete. 'Level 4' fully-automated driving should be possible. As Roland Berger puts it: "The driver acts as a passenger – he or she needs just to input the destination."

Auto-Auto Nirvana?

This could be wonderful. Self-driving conjures a Jetsons-like future that General Motors first imagined 60 years ago in a film ("GM Motorama Exhibit 1956") for the Motorama trade show. Corny, yes, but what's not to like? Android cars promise many pluses. Endless hours now spent driving (Roland Berger estimates 300-600 per annum on average) could be applied more desirably. Accidents should decline. After more than a million kilometres, Google cars have had a few fender benders, but an order-of-magnitude lower than the US average, and all of these were actually caused by humans, not the robots. Truly big savings kick in, if all these robotic vehicles were integrated into an 'Internet-of-cars'. If auto-autos were shared for local transport, estimates a 2013 study from Columbia University's Earth Institute, full costs per distance-driven could fall 5-10 fold. Knock-on gains in efficiency would trigger similar cuts in pollutant emissions and traffic jams.

The Biggest Re-Engineering Challenge: Human Behavior

So what's holding us back? Well, for one thing, auto-autos are not legal. One of the biggest nuts to crack, insiders say, is liability. "It's one thing if your iPhone malfunctions," observes Credit Suisse analyst Reto Hess. "You just buy another. But if a self-driving car malfunctions, it could kill people." Not only regulators will insist on super-stringent safety and restrictions, but vendors, too. "A bad accident," says Hess, "could set this industry back by years." Another brake is the matter of short-term cost. Until they become integrated and shared, says Roland Berger, android's sticker prices are about 3,000-6,000 USD higher than for non-robo cars. And then there are softer issues. Realising the cost, pollution and congestion savings of self-drive will require a lot of sharing and coordination. People would be using each other's cars interchangeably. In time they might buy 'car services' rather than cars. If this really happens, the number of cars needed could decline dramatically. Good for consumers – not so appealing to carmakers. An even softer, but still real barrier to androids is the potential loss of 'car identity'. For many, driving a Chevy to the levee is an expression of personal freedom that won't be matched by riding a Google-x, wherever it's headed. 

Tech Takes Over the Car Industry, or Vice Versa

Precisely these behavioural barriers are why some analysts foresee a potential tech conquest of the auto industry. Smart cars might look infeasible, but not long ago so did smart phones. Who knew that Apple would become a music company? Automaking could join the list of 'disrupted' industries, as Harvard Business School Professor Clayton Christensen calls them, right behind classified adverts (eBay or Craigslist), long distance calls (Skype), record stores (iTunes), travel agents (Orbitz) or bookstores (Amazon). For the techs, says Neumann, "cars are just another mobile device to be mastered." At the same time, both he and his colleague Hess note that traditional carmakers still have a lot of clout. They dominate the critical disciplines of mass production and distribution, they rule the supply chain, and some are pedalling as fast as they can towards self-drive. Volkswagen has devoted 1,200 staff at its Wolfsburg headquarters to it. In January, VW unveiled its Golf R Touch, which auto-enthusiasts likened to a 'smartphone on wheels'. Who knows? Maybe this time a tech revolution might work in reverse, with automakers leading the charge. Whichever, it looks like we're in for an auto-auto future.