Howes: Race for self-driving car supremacy is no sprint
Self-driving cars are just around the corner, right?
In an implicit rebuke to Silicon Valley, General Motors Co. used the run-up to the Detroit auto show to say its Cruise AV self-driving electric car will operate in select cities by the end of next year — long before Tesla Inc., the on-again, off-again investor darling.
Automakers and major suppliers are planning to spend billions developing technologies that enable cars and delivery trucks to drive themselves, to communicate with each other, bridges and roads, to revolutionize how people and goods move.
After members of Michigan’s congressional delegation this week toured the auto show floor, Dearborn Democrat Debbie Dingell declared “the future of mobility ... here” and said the show “makes clear that automated vehicle technologies are no longer theoretical.”
No, they’re not. But they’re also not ready to swarm America’s roads, to reorder the auto industry, to upend the trucking industry and issue pink slips to drivers paid to drive, either. Autonomous vehicles answer the burning transportation question a vast majority of consumers aren’t asking because the paradigm shift is too jarring for most mortals to contemplate — so far, anyway.
They call that common sense. Meaningfully wide use of autonomous vehicles powered by electric motors requires dramatic — and expensive — change to transportation infrastructure; wide expansion of common recharging systems; adoption of technologies that enable traditionally driven vehicles to communicate with driverless vehicles.
Oh, and customers need to join a journey industry types believe will be concentrated in major urban areas where the convenience of manned or unmanned ride-sharing easily outweighs congestion, pollution and the costs associated with car ownership.
“We do not believe the concept of AVs is overhyped,” Morgan Stanley said in a note Wednesday. “However, we do believe that some market expectations regarding the pace of both penetration and revenue generating models may be.
“We do not expect AVs to produce meaningful revenues before the 2035 or 2040 time horizon. That said, we would prepare to see AVs in a large number of cities in extremely low volumes over the next few years. AV development is much more of a marathon than a sprint.”
It’s way too early to predict who will end up at the AV finish line. How many customers will come along? How widely will the market adopt the electrified powertrains that GM, Ford Motor Co. and so many of their rivals are planning for their product lineups?
Skepticism is warranted. Government regulators in communist party-controlled China, the world’s largest vehicle market, wield the power to dictate adoption of electric vehicles. But their counterparts in major markets like the United States and western Europe have seen less success in fundamentally reshaping demand around preferred technologies.
“We need to be very realistic about what’s happening today,” Fiat Chrysler Automobiles NV CEO Sergio Marchionne said Monday. “The ultimate solution may not be what we see today. Is the preponderance” of new vehicles in the coming years “going to be electric? The answer is no. I don’t know the guy who’s making money selling electric vehicles.”
And yet automakers are pouring billions into the space. Ford is upping its investment on electrics to $11 billion from $4.5 billion to launch 40 electric vehicles by 2022. In China alone, GM has big plans to electrify its product offerings, including selling Chinese-branded electrics in a market manipulated by government fiat.
Nissan Motor Co.’s luxury Infiniti brand said it would start to retire gasoline engines in 2021 and make the switch to electrics — a radical shift that assumes the global regulatory arc to zero-emissions standards will be aligned with real consumer who actually buy real vehicles. Maybe.
This is uncharted territory, exciting and mildly terrifying at the same time. If major automakers are right and government regulators essentially drive gasoline and diesel engines out of existence, their bets on electrification will prove prescient and profitable.
If not, the leaders of auto companies in business to make money for their shareholders will have a lot of explaining to do. With the glaring exception of Marchionne, the quasi-consensus this week is that electrified (and, eventually, self-driving) vehicles aren’t part of the future. They are the future, some day.
“This $11 billion ... means we’re all in now,” Ford’s executive chairman, Bill Ford, said this week, according to Bloomberg. “The only question is will the customers be there with us, and we think they will.”
But they aren’t yet — not even close.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.