Autonomous vehicles (AVs) capture the public imagination. And while there are concerns with the ever-increasing complexity of self-driving systems and uncertainty over how long it will actually take for these vehicles to become commercially available, in many ways, the technology, or perhaps more accurately, bundle of technologies, seems to have something for everyone–complex software and programming challenges, security and big data issues, and unavoidable ethical dilemmas.
In reflecting on what angle I’d like to take on exploring AVs, I wanted to make sure I was not rehashing any previous work posted on this Tech Trek page. There’s been a couple good posts out there, and to briefly highlight three: this blog by Ashley Hwang (from last year) provides a solid general overview on self-driving cars and the five stages of AV development; this post by Katie Gold (last year as well) features a comprehensive list of every major player working on AV development; this piece by Jordan Vining from two weeks ago (if y’all didn’t see it already) delves into some of the safety issues around self-driving, as well as LIDAR technology.
To cover some new ground, in my post I want to explore how AVs might fit into the future of mobility as a whole. The ‘future of mobility’ might feel like some needless buzzword I’m creating, but I think it will make sense in the next couple of paragraphs as I take a deeper dive into the strategic plan of one of the most well-known American companies: General Motors.
That’s right, GM. Detroit GM. The company that went bankrupt just under 10 years ago and was the recipient of a $13 Billion taxpayer bailout. But, contrary to expectations, GM, an automaker that is typically thought of as 20th century, old-school, and pipeline-oriented, is potentially a key player in the future of mobility. Studying GM’s strategy will provide important clues to the thinking about the mobility market’s trajectory.
In the broadest of strokes, the future of mobility will be built around three interlocking pieces: AVs, electrification, and ride sharing. Counterintuitively, this future is not solely about mastering AVs, as GM’s recent moves will illustrate. I’d like to go through what GM has been up to recently in these three strategic areas, and then summarize a few takeaways at the end.
In 2016, GM acquired Cruise Automation, a company that focuses on building software and hardware kits for AVs. At the time Cruise marketed its kits to owners of certain conventional vehicles, and their technology, once installed, would allow cars to be autonomous for certain types of highway driving.
The Chevy Bolt, outfitted with Cruise AV tech.
Working with GM over the past three years, Cruise has shifted, and instead of selling technology designed to retroactively make cars self-driving, the company is working directly with GM engineers to embed autonomous capabilities in the manufacturing process from the start. More recently, in October of 2018 Honda joined forces with Cruse and GM, committing $2 Billion over 12 years (in addition to GM’s investments) to the joint effort of developing an AV that can be produced at high volume.
“This is the logical next step in General Motors and Honda’s relationship, given our joint work on electric vehicles, and our close integration with Cruise,” General Motors CEO Mary Barra said. “Together, we can provide Cruise with the world’s best design, engineering and manufacturing expertise, and global reach to establish them as the leader in Autonomous Vehicle technology – while they move to deploy self-driving vehicles at scale.”
GM is not necessarily the industry leader in the software and hardware for AVs–numerous small startups are seeking to perfect certain niche components (think LIDAR, cameras, data sharing, etc) and tech behemoths such as Alphabet’s Waymo and even Apple under its secretive Project Titan (which as an interesting side note laid off 200 employees recently) are working on bringing their own software-hardware packages to market.
Waymo, an autonomous software-hardware leader, actually has no desire to build cars itself. In contrast, GM’s bet is that it can do it all–combining its traditional auto manufacturing business with its own software-hardware platform. Essentially, GM wants to build an entire AV on its own from scratch–and its 2017 acquisition of of LIDAR developer Strobe in an example of how GM is attempting to develop all necessary self-driving capabilities in-house.
“We now have every capability— from simulation and mapping software to safety validation and autonomous vehicle-specific design—under one roof. And we’ve moved quickly, developing three generations of self-driving vehicle technology in just 14 months” CEO Mary Barra said in her 2017 annual report.
In addition to autonomous technology, GM has made a continued commitment to developing electric vehicles (EVs). While EVs have made enormous strides, they have not yet captured a significant percentage of the consumer market. There has been solid recent growth in worldwide sales, but as the International Energy Agency (IEA) reports, this is from a low base, as there are only around 3 million EVs on the road. However, this has not stopped rosy projections, and the IEA believes 125 million EVs will be on the road by 2030.
Whether or not this projection is accurate, the development of EVs is another core component of the future of mobility. Obviously these vehicles are more environmentally friendly, but they are also mechanically better cars–the lack of an internal combustion engine means less weight and less mechanical breakdown. GM, like other Detroit automakers, is fully invested in electric vehicles. In 2018, this commitment took an interesting twist when GM made an announcement that it would discontinuing the Chevy Volt (as well as several other models) and closing 5 plants in North America.
GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures,” CEO Mary Barra said in her announcement of her company’s pivot.
As CEO Barra is hinting at, this massive restructuring will free up capital to continue AV and EV investment. Paradoxically, the end of the Chevy Volt, essentially a hybrid vehicle, is more of an acceleration towards electrification than a warning signal for EVs. The Volt is a bridge between the old and new, and its demise is a good sign. Basically, as battery prices continue to fall and range mileage improves, hybrids should become irrelevant. In discontinuing investment in the Volt, GM is trying to anticipate this. GM thinks its resources are better spent fully investing in purely in electric vehicles rather than just hybrids.
But just like the autonomous sector, GM is not without stiff competition–and as Tesla has shown, the capital expenditures to bring an electric vehicle to market (as well as making it affordable) are significant to say the least. Further, GM faces the additional challenge of pivoting its entire operations from gas to electric, whereas Tesla was built ground up as an EV company. GM needs to manage this transition carefully, for it goes too fast it will lose all its current cash flow derived from gas-powered vehicles and will have nothing to invest in its autonomous and electric units. If GM moves too slow on its investment efforts, it risks being left behind as Tesla and other automakers continue to improve their EV (and AV) engineering.
Ride sharing is the third component of the future of mobility, and contrary to AVs or even EVs, ride-sharing is already ‘here.’ As we know Uber and Lyft dominate the ride-sharing industry in the United States (68.8 vs 28.9 percent market share).
In early 2016, GM invested $500 million in Lyft. Originally, the vision for this partnership was that the two companies would launch an autonomous taxi service, but recent reports signal that this plan may have fizzled out. GM still maintains its stake in Lyft, but it is not quite clear what, if any projects the two are being pursued. It will be interesting to see how Lyft’s planned IPO affects GM’s investment and strategic options.
More on its own initiative, GM launched its own car-sharing program in 2016, called Maven. Maven is sort of like a rental car company, but one can pick up a car at various points around a city, and there’s the added convenience of not having to make arrangements with the rental company. Plus, one can rent a Maven car (only GM models of course) by the hour, which is an advantage to traditional car rentals, which are usually by the day. Maven is a bit similar to ZipCar, but one does not have to pay a monthly subscription.
Thinking ahead, a company like Maven will probably be rendered irrelevant by an autonomous fleet that provides enough coverage to make car-renting obsolete. However, Maven is an interesting bridge for now, and connects GM to the sharing economy.
The Vision: Zero Crashes, Zero Emissions, Zero Congestion
In a 2017 sustainability report addressed to its stakeholders (yes, not just stockholders), CEO Mary Barra articulated GM’s vision: Zero crashes, Zero emissions, Zero congestion. Crashes is a reference to AVS, emissions to EVs, and congestion to ride-sharing.
AAWhat’s the goal of this vision? While there will probably be a market for personal AVs, ultimately GM would like to offer its autonomous, electric vehicles on some sort of ride-sharing platform. That is GM’s vision for the future of mobility. Such a strategy integrates AVs, EVs, and ride-sharing.
GM’s framework suggests that they believe the most dominant player in the future of mobility will be the company (or partnership of companies) that can most successfully integrate these three components into one comprehensive system. GM’s perspective is that one cannot just focus on AV technology (although it is essential), because there is a risk of missing the bigger picture, for AVs on their own will not define the future of mobility.
To a certain extent, I think this vision is borne out in how companies involved in these three areas may only have one area of expertise, yet are racing to invest or acquire a second or third component of the future of mobility.
For example, look at Uber and Tesla. One is an expert in ride-sharing, the other in EVs. Yet both are interested in an area they haven’t yet mastered: autonomous technology.
Of course, at the end of the day GM could be outcompeted in the race to develop EVs and AVs. Maybe their hopes for an integration of AVs, EVs, and ride-sharing gets bogged down, and is too much for one company to handle. Perhaps GM will be partially successful, only manufacturing electric AVs, and Uber will maintain its dominant position in the ride-sharing industry by owning a GM-fleet.
The specifics of how the future of mobility will shake out are not yet clear, but I think keeping an eye on these three fronts and how they interlock is a critical lens to take, for no technology exists in a vacuum, and it is often the interplay of different innovations that is most interesting. I think that’s the case for the future of mobility.