Awakened giants: traditional car manufacturers and the tech

Much of the discussion of autonomous motoring focuses on the new entrants to the automotive industry: Google, Tesla, Uber, Apple, etc. – and there’s certainly an interesting story there, one which we told in a recent post. But traditional manufacturers aren’t just sitting back and letting Silicon Valley develop the cars of the future. Far from it.

Just as tech companies are hiring engineers who know their way around cars, car companies are hiring engineers who know their way around the tech. Back in 2015, Toyota hired Gill Pratt, a robotics expert who had spent five years as Program Manager at DARPA – the US Government’s Defense Advanced Research Projects Agency that works on everything from brain implants to high-energy lasers. Pratt was given control of the Silicon Valley-based Toyota Research Institute, which will spend $1 billion over the next five years developing robotics and artificial intelligence – including self-driving cars.

Just as significantly, when Ford chose a new CEO to replace Mark Fields last month, it picked the man who had been in charge of Ford Smart Mobility – the arm of the company based in Silicon Valley and responsible for its autonomous motoring programme. The announcement of Jim Hackett as Ford’s new CEO emphasised the importance of autonomous vehicles, as well as the Detroit giant’s determination not to fall behind in the race to develop them.

Rather than setting up its own autonomous vehicle outfit from scratch, General Motors decided to buy an existing one – Cruise Automation – for a reported $1 billion last year. Now GM and Cruise are setting up a new self-driving vehicle centre in San Francisco, and planning to hire 1,100 people to work there. They’ve already been testing 50 Chevrolet Bolts equipped with self-driving technology on public roads, and announced this month that they will be joined by 130 more built in its Michigan assembly plant – the first autonomous cars to be mass-produced anywhere.

This last development highlights one big advantage that the traditional car giants have over their new competitors. Once autonomous cars are available to the public, manufactures may well need to produce millions a year. The likes of GM and Ford already have the plants, people and processes needed to meet that demand. The likes of Uber and Tesla do not. As Navigant Research analyst Sam Abuelsamid puts it: ‘It’s a lot easier for the company that actually has the infrastructure to create vehicles to recreate what Uber’s done, than the other way around.’

Of course, one solution is cooperation. And there are plenty of manufacturers who have formed alliances with tech firms to put autonomous cars on the road. BMW has partnered with California-based Intel and Jerusalem-based Mobileye to develop its driverless offering. (In March, Intel announced that it is buying Mobileye for $15 billion.) Together, they plan to have a fleet of 40 test cars on the road by the end of the year, and are aiming to have the fully-autonomous BMW iNext ready for sale in 2021.

Given the manifold challenges involved in developing and building the self-driving cars of the future, this sort of cooperation between traditional car manufacturers and newer tech firms may well become the norm. In KPMG’s latest annual survey of automotive executives around the world, 45% said they expect companies from each world to cooperate in the future. 78% think that a traditional manufacturer will end up assembling a car designed by one the Silicon Valley firms.

In one form or another, then, car makers are reaching out for Silicon Valley expertise to help them master autonomous vehicle technology: hiring experts; setting up their own bases in the area; partnering with existing firms; or buying them outright. And Silicon Valley is reaching back.

The former head of Google’s autonomous car project has joined forces with the former head of Tesla’s Autopilot to form a new company: Aurora. Their aim? To develop the hardware and software necessary for cars to drive themselves, and partner with existing manufacturers to put them on the road. They’re not interested in being bought by a car giant, nor in entering into an exclusive deal with just one. Oh, and they’ve also snapped up the former head of autonomy at Uber as their Chief Technology Officer.

Aurora offers yet another model of collaboration between the automotive and tech industries – if the two can even still be considered distinct industries anymore. Different companies are taking different approaches, but their goals are very much the same: to put self-driving cars on the road, and to do it soon. Who will succeed?