A revolution is under way in the relationships between carmakers and technology companies, as vehicle manufacturers begin to shift gears to invest in the future of personal transportation. That means cleaner technology and software-enhanced safety systems, for a start.
At a time when tech giant Google and Apple see the autonomous, electric or shared car as their next startup, even the most conservative carmakers have no choice but to advance cautiously toward the future.
The U.S. automotive industry has a combined annual revenue of around $280 billion and accounts for around 3% to 3.5% of gross domestic product. As a major user of steel, rubber, glass and other components, the sector’s impact on American industry and the economy is even greater. This is an industry that is so important, slow-moving and strongly rooted, that nobody in it is interested in swift changes that will rock the boat.
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The manufacturers are therefore progressing one step at a time. On the one hand, they aren’t interested in upheavals that are likely to pull out the rug from under them, like the trend toward shared cars, which will adversely affect their sales, or transferring power in the industry to the new technology firms.
On the other hand, they want to be in the forefront of the market’s future and are afraid of missing the boat and losing out to competitors. They have understood that the only way to attain a certain amount of control and monitoring of the pace and intensity of the changes is by means of the new and threatening generation of trailblazing entrepreneurs.
This year there have been several huge deals between automotive and tech firms, and Israeli companies have been at the forefront. These tie-ups are a window into carmakers’ vision of the future: driverless cars on one hand, and on the other accelerated urbanization, and its attendant traffic jams and that makes shared vehicles and smart transportation software absolute necessities.
The announcement in May by Volkswagen, Europe’s biggest carmaker, that it was investing $300 million in Israel’s Gett (formerly Gett Taxi) taxi-hailing app could be seen as the industry’s imprimatur for its vision of the future.
Volkswagen CEO Matthias Muller attributed the decision to the company’s goal of becoming a leading international provider of transportation services within 10 years. “As part of the future strategy for 2025, the partnership with Gett signals the first milestone of the Volkswagen Group on the way to proving mobility solutions that center around our customers and their mobility needs,” Muller said.
Just four hours later, Toyota announced an alliance with Uber. In addition to buying a stake in the ride-hailing service, the Japanese auto giant will allow Uber drivers to lease Toyota cars and pay for them from their Uber account.
In January Lyft, Uber’s main global rival, announced that General Motors had invested $500 million in the company and that the two companies planned a network of hubs in the United States where Lyft drivers could rent GM vehicles.
Maven, brought to you by GM
Farther down the road, Lyft and GM will cooperate on developing a fleet of autonomous cars that urban residents could order up using the Lyft app. In addition, Lyft drivers will get first dibs on access to GM’s all-electric Chevrolet Bolt, which is scheduled to go into regular production later this year.
Also in January, GM acquired the technology and other assets of the defunct Uber and Lyft competitor Sidecar. Both the Lyft and Sidecar deals are part of the U.S. automaker’s new “personal mobility” brand, called Maven.
In March, GM announced the acquisition of the San Francisco-based self-driving startup Cruise Automation, for which it reportedly paid over $1 billion. Earlier this year the automaker announced it was tripling, to 300, the number of employees at its Advanced Technical Center in Herzliya Pituah, which developing self-driving vehicle technologies.
Herzliya Pituah is also where the Mercedes-Benz of the future is being created. Last week the German-based luxury automaker announced the establishment of a research and development center in the tech hub outside of Tel Aviv that will focus on advanced technologies for electric-powered self-driving cars that can communicate with other vehicles and with infrastructure.
BMW, Mercedes-Benz’ perpetual rival, is developing its own self-driving technologies. It launched a division for “smart transportation” startups as well as a sharing service for its cars. BMW has invested in the Israeli public transportation app Moovit and says it wants to invest in additional Israeli companies.
The inevitable question these developments raise is this: If privately owned cars become obsolete, and if cameras and sensors replace steering wheels — eliminating on one hand the status of owning a luxury car and on the other hand the driving experience offered by a Mercedes or a BMW, how can these and other top-end carmakers retain their competitive advantage?
Luxury automakers aren’t simply sitting back in their leather seats; each is trying fiercely to position itself at the leading edge of the technological revolution in the industry. Perhaps each assumes that its reputation for solid engineering will give it the ultimate edge when it comes to choosing which driverless car to trust.
Mercedes-Benz, for example, recently launched the new generation of its E-class cars, calling it the leading line of self-driving vehicles. Its Drive Pilot autopilot includes an adaptive cruise control that can accelerate and brake automatically, while Active Lane Change Assist makes semiautonomous lane changes. Additional technologies, each with its own name, promise to help the driver avoid rear-ending the car in front, steer around stray pedestrians and recover afterward, and to warn of impending collisions with vehicles in your car’s blind spot.
Volvo and other manufacturers have similar technologies, but some avoid the self-drive or autonomous label. Instead, they call the features advanced safety systems that are not designed to replace the human brain. In part, this is out of fear the language could be interpreted to mean that the car takes full responsibility for the welfare of the passengers in the event that something goes wrong. Most experts judge that the genuine self-driving car will take another decade or so to develop.
In late June the owner of a Tesla Model S who was driving with Autopilot activated was killed when the car crashed into a tractor-trailer on a Florida highway. Autopilot apparently failed to detect the truck turning in front of the car, and the Tesla’s automatic braking system failed to engage.
Tesla has said in response that this was the first accident reported with the car, adding that the driving monitor is improving over time and is still not perfect.
The company has said it will launch a completely self-driving car in 2018. The manufacture of electric cars simplifies the process of developing and assembling the car, since because it is activated by electricity it requires only one-third the mechanical components installed in standard cars with an internal combustion engine. That makes it easier for new players to compete with the manufacturers with seniority of 100 years and more.
In that connection the eyes of the auto world were on Google headquarters, in the expectation of discovering with which manufacturer it would decide to cooperate in concocting the autonomous car. In May the decision was made: Fiat-Chrysler.
Mobileye — much more than beeps
During the first stage, Google will transform 100 units of its hybrid version of the Chrysler Pacifica minivan into driverless cars. Until then, the most important player in the world of autonomous cars is likely to be Israel’s Mobileye.
The algorithms developed by Mobileye for processing a situation assessment on the road in real time are capable of providing the cars with far more than a beeping safety warning to keep a distance from the car in front. Mobileye is working with many manufacturers to integrate advanced safety systems for automatic braking and steering adjustments for staying in the driving lane. Some of them, like General Motors, Volkswagen-Audi and Nissan have announced that they will use Mobileye chips as a basis for their autonomous cars.
A prototype of Mobileye’s autonomous driving system has been installed for months in the Audi Q7, which is used as the private car of the company’s CEO and co-founder Ziv Aviram, and enables him to travel on public roads in Israel without human intervention.
Early this month Mobileye announced a three-way agreement with BMW and Intel. The three companies will cooperate in the race to develop a car that replaces the driver. “Until now we worked on a gradual approach for launching the autonomous car. But the agreement marks the first commitment on the part of a large auto manufacturer for a completely autonomous car within only five years — when the experience of traveling without a driver, with the push of a button, will be activated,” said Amnon Shashua, chairman and co-founder of Mobileye.
Another surprising transaction between an auto manufacturer and technology firms took place last week, also in Israel. Elbit Systems, better known for developing advanced weapons systems, reported the establishment of a new company in the field of energy for transportation. An international strategic investor from the auto industry will invest 16 million euros in exchange for 20% of the shares of the new company, valued at 80 million euros, and will transfer rights to several of its technologies in the energy field to Elbit’s transportation company. The identity of the investor remains classified, but industry sources say it’s Toyota.
Company headquarters will be in Israel, and the employees of the business unit, which deals with Elbit’s energy operations, will be employed there. At the moment it is not known whether Elbit, one of the leaders in the manufacture of drones, will be involved in the development of driverless cars.
What will the final product look like, the result of cooperation among traditional auto manufacturers, self-driving technologies for autonomous and car-sharing models? “The most likely scenario is that all the ends will come together into one process, a kind of system of autonomous taxis that will be operated by the manufacturers themselves or by a third party, like Tel Aviv’s planned alliance with Car To Go,” says Aviad Oren, a sustainability adviser and former research fellow in a European Union project for shared transportation.
“The manufacturers are now investing substantially in shared-car solutions, whether by purchasing companies or starting companies of their own, like the BMW carsharing system,” he added. “On the face of it, the auto manufacturers are bringing about their own downfall, because already in the days of Henry Ford their model has been ‘A car for every worker,’ so that as many people as possible would buy cars.”