Who will provide autonomous vehicles?

In autonomous vehicle is a basic vehicle with no intelligence that then has the autonomous driving capabilities added to it. The autonomous driving capabilities include the sensors, computers, and autonomous software. Services such as autonomous ride services will provide autonomous vehicles, and AVs will also be sold at retail to individuals for private ownership. There are many questions about how this will emerge and what companies will be involved.

What companies are investing in autonomous vehicles in the U.S.?

In the U.S., Google through its autonomous vehicle subsidiary, Waymo, has been developing AVs for some time. The ridesharing companies, Uber and Lyft, have been investing to varying degrees. Uber put its program on hold for eight months after a fatal accident, and Lyft isn’t investing that much because it plans to use partners. Some of the traditional car manufacturers are investing heavily in AVs. There are also many startups and smaller companies involved in the various aspects of AVs. Finally, Apple is developing and testing AVs, but it has not yet stated a commitment to enter the market.

Is it a significant expense to develop AVs?

Yes, it requires an investment of hundreds of millions or billions of dollars to develop the software, create an AV platform for the sensor package, build detailed maps, and test the vehicles. It is one of the most significant technology investments of this century.

How much has been invested so far?

I estimate that more than $100 billion has been invested or committed so far to develop AVs.

That’s a lot; why have companies invested so much?

The AV market is expected to be perhaps the most significant market opportunity in this century. Estimates of the market range from $500 billion to several trillion dollars.

Who is the leader in bringing AVs to market?

So far, most experts believe that Waymo (Google) is the leader and will be the first to market.

When did Google start developing AVs?

Google is the pioneer AVs, starting its self-driving car project in 2009. Google’s massive cash flows and scattered innovation “strategy” enabled it to invest heavily in what was a speculative initiative at the time. Many believe that Waymo (Google’s AV subsidiary) took advantage of this lead to develop the best AV technology.

Will Waymo sell its AVs?

No, its stated intention is to provide autonomous ride services (ARS) and not to sell AVs. It also is interested in licensing its technology for appropriate opportunities. 

Is Waymo developing its own vehicles?

Waymo initially will retrofit vehicles produced by two major car manufacturers. Waymo used 600 Fiat Chrysler (FCA) Pacifica Hybrid minivans to pilot test its autonomous ride services. In June 2018, it announced that it would acquire up to 62,000 more, most likely between 2019-2021. Waymo also announced its intention to purchase up to 20,000 Jaguar I-Pace electric vehicles. If Waymo acquires these vehicles, it would have an ARS fleet of more than 80,000 vehicles by 2021.

How is Waymo retrofitting these vehicles?

Waymo will retrofit these vehicles by adding its own AV platform, including its sensor package, computing platform, and software. It has not indicated where or how it will do this retrofitting.

What is Uber’s AV strategy?

Uber's primary strategy is clear: it intends to build an extensive, possible unprofitable, ridesharing business and then convert its loyal customer base to a very profitable ARS business model.

Will Uber develop its own AV?

That’s not clear yet. Uber has invested approximately $2 billion in developing autonomous vehicles so far, but it appears to be losing ground to several other companies. Some of its investors have called on Uber to divest its autonomous vehicle development to save money and reduce losses. It continues to invest more than $500 million per year developing autonomous vehicles. In 2018, Uber put its AV program on hold for eight months following a tragic accident that killed a pedestrian in Arizona. It also closed its autonomous vehicle testing in Arizona but has resumed testing in Pittsburg. 

Is Uber at risk with the introduction of autonomous ride services?

Yes, it is. ARS will eventually replace driver-based ridesharing, so Uber needs to be a leader in ARS.

What is Lyft’s strategy?

Its strategy appears to rely on the AV technology development of others. Lyft is taking a collaborative approach by building a network of partnerships. It plans to provide its autonomous ride services platform as an open platform for use by AVs developed by others.  It's unclear who will finance, own, and manage the fleets of vehicles. Lyft's general strategic could work well if its partners let it control the customer. It will control the entry point and brand for its riders and may be able to extract high profit margins. It would also continue to have the future flexibility to become more vertically integrated if it wants. Lyft could be a prime acquisition candidate.

What about Tesla?

Tesla was one of the early pioneers in AVs. Tesla’s stated objective is to be the leader in selling autonomous (Level 4-5) cars to the end customer by progressively building autonomous capabilities into the software for cars that it is selling primarily as electric vehicles.  With continuous software releases, it believes that it can upgrade cars previously sold to Level 4 and then to Level 5. To do this, it must get its sensor and computing requirements correct in the first place – but there is a significant risk that it won't.  

Will Tesla participate in ARS?

This is unlikely. Tesla plans to launch a ridesharing service, Tesla Network, using a Tesla ridesharing app to dispatch AVs provided by its customers. It currently places restrictions on its customers, requiring them to use only the Tesla Network for ridesharing. The theory is that customers will want to have their Tesla AVs go off on their own and do some work to earn money for the owners when they aren’t using their cars. However, this is still a long way away and not a very good model for ARS.

Will Tesla be successful in AVs?

Tesla could be a leader in selling vehicles with autonomous capabilities to individuals. It will still take time for these vehicles to be sufficiently autonomous, and other companies are beginning to catch up with it. So, its success is still uncertain.

Is GM serious about autonomous vehicles?

GM is very serious. It knows that ARS will be the first market and primary battleground for AVs. In its boldest AV move and an indication of a significant ARS strategy, GM spun-off Cruise Automation as an ARS business with the investment of $2.25 billion by SoftBank. GM will also invest an additional $1.1 billion with SoftBank owning almost 20% of the Cruise business. It also emphasized its commitment to launch its ARS business starting with pilot tests in 2019. Some have predicted that initially GM will provide 33,000 AVs for its ARS launch, generating $3-$5 billion in revenue.  

How will AVs GM's primary business of manufacturing and selling cars?

GM recognizes that the traditional auto business is threatened by AVs particularly ARS, and is moving as fast as possible to position itself to replace this business. 

What about Ford?

Ford executive chairman, Bill Ford, summed up the importance of AVs to Ford saying that, "The advent of autonomous vehicles will have a huge impact on our everyday lives due to the centrality of transportation to both society and business." Ford intends to be a leader in autonomy, connectivity, mobility, customer experience, and analytics. To accomplish this, it plans to release a new line of AVs designed for autonomous ride services and autonomous home delivery. Its target date is 2021 with the intention of doing it in large-scale production. Currently, it appears that Ford intends to offer its own ARS and manage its own fleet of ARS vehicles.

Has Apple been developing an autonomous vehicle?

In 2014, Apple reportedly was working on "Project Titan," with upwards of 1,000 employees developing an electric AV at a secret location near its Cupertino headquarters. A few years later, Apple refocused the project under new leadership, laying off hundreds of employees who were working on the project. Apple transitioned to building an autonomous driving system rather than a full car. 

In early 2017, Apple was granted a permit from the California DMV to test AVS on public roads using Lexus RX450h SUVs. In the spring of 2018, Apple increased the number of authorized test vehicles in California to 62, along with 83 permitted AV drivers. In June 2018, Apple was reported to have a deal with Volkswagen to customize its T6 Transporter vans to test a shuttle for its employees in early 2019. Apple also has filed many patents for autonomous vehicle technologies.

Will Apple sell AVs or provide ARS?

The most attractive new AV market for Apple is autonomous ride services (ARS). It is a brand-new market with no entrenched competition. It will be the first significant new market for autonomous vehicles because the vehicles only need to be sufficiently autonomous to succeed. Technology companies such as Google and Apple have some essential advantages entering this market.  

On the other hand, Apple has many disadvantages and less opportunity to build and sell AVs at retail.

Is Apple a wildcard in the ARS market?

Yes, Apple has the technology, brand name, and capital to become a significant competitor in ARS, if it chooses to do so.

When is Apple expected to enter this market?

Traditionally, Apple has not been a leader in creating new markets. It prefers to let others pioneer early development and then enter with a premium version attractive to many customers. With autonomous vehicles, however, it will need to declare its intentions earlier because of the visibility of necessary testing. Apple will probably announce its intentions by 2020.