Only a year ago many people were convinced that tech companies like Apple, Google, and Tesla — together with Chinese-backed upstarts like Faraday Future — were poised to decimate the business of traditional car manufacturers.
Apple CEO Tim Cook had green-lighted a secret project inside Apple to develop its own car, with rumors the first iCar would roll off production lines as early as 2019. Google had just completed its first ride in a driverless car. Faraday Future, backed by Chinese billionaire Jia Yueting, was about to unveil the future of mobility.
Just over 12 months later, the hype has disappeared. Apple has scaled back its car ambitions. Google has spun out its autonomous car project and says it won’t be building its own car. Faraday Future is in deep financial trouble, facing multiple lawsuits and seeing key personnel depart, according to a BuzzFeed report.
Even Tesla, the prime example of a tech company disrupting the car industry, has struggled to get cars off the production line, with the new Model X listed among Consumer Reports’ top 10 least reliable cars on the road.
“The complexity of the supply chain, as well as the need for durability and safety, make building a car one of the most difficult things in the world to do,” Michael Ramsey, research director at Gartner, told VICE News.
While tech companies are struggling, traditional car manufacturers are making smart investments, led by an icon of old Detroit: General Motors. This week it announced it would produce its next-generation driverless cars at its Orion Township assembly plant in Michigan — where lawmakers just introduced a series of bills permitting driverless-vehicle tests on public roads.
Earlier this year GM spent over $1 billion to buy San Francisco-based autonomous driving startup Cruise Automation, with the company planning to roll out some of that tech in its 2017 fleet of cars.
But GM isn’t just betting on driverless cars, it’s also actively looking at how car ownership and mobility will change in the future. In January, the company invested $500 million in ride-sharing company Lyft, and has said its first batch of driverless cars would become part of the Lyft fleet. It has also launched its own ride-sharing service, called Maven.
In this space it will compete with Uber, which this week rolled out its driverless car technology — in partnership with carmaker Volvo — in San Francisco. However, it was immediately ordered to stop testing by the California regulators as it didn’t have the right license.
While Apple and Google were assessing their ability to build a car, the companies that have been building cars for decades began to make their own investments in technology.
“Car companies have way more leverage than I think the technology companies thought – and maybe even [more than] the car companies thought,” Ramsey said. That leverage includes years of experience in the supply chain, production, safety requirements, and the sales channel.
In 2016 we have seen dozens of major car manufacturers announce their own autonomous driving efforts, including tests, acquisitions, and partnerships.
- Ford continues to test its driverless cars in all types of conditions, after announcing in August that it plans to have fully autonomous vehicles ready for ride-sharing in 2021.
- BMW has partnered with Intel and Israeli autonomous driving specialists MobileEye to create open standards for self-driving cars, with a view to having them on the road by 2021.
- A German consortium including BMW, Daimler, and Audi spent $3.1 billion to acquire Nokia’s precision mapping technology.
Regulation will be a major hurdle for every company looking to get driverless cars on the road, with a patchwork of laws across different states and countries limiting the speed at which testing and validation can take place.
Here, too, traditional car companies may have an advantage. “I think it’s fair to say the auto industry has a lot more experience dealing with the legislators and know some of the ways to interact with those organizations and make sure things are done smoothly,” Hayfield said.
Still, the big tech players like Google, Microsoft, and Apple will play a major role in how we travel in the future, powering the in-car experience in ways we can’t even imagine yet.
Technology analyst Tim Bajarin believes that, in the future, we’ll “think of a car as just a container for software and services, a node on the Internet of Things.” And as Apple looks to find something to eventually replace the iPhone as its main revenue driver, the millions of autonomous, connected cars predicted to hit our roads in the next decade could be just the answer — and it won’t matter who builds them.