Expert Blog

How tech companies became car manufacturers

20170712_How tech companies became car manufacturers

If you want to see where the automotive industry is heading, simply follow the job adverts. In September 2015, Google hired John Krafcik to work at their Silicon Valley headquarters. Krafcik was previously president and chief executive of Hyundai, and before that he’d spent more than 20 years at the Ford Motor Company. If you cut this man, he’d probably bleed motor oil.

Why would someone like Krafcik leave the car manufacturing plants for a company based around a search engine? The answer is simple: companies like Google are building cars now. Krafcik was brought in to head up Google’s autonomous car programme, which has since been spun out into its own company, called ‘Waymo’. He wasn’t the first automotive veteran to make the move to Silicon Valley, and he won’t be the last.

Last year, companies in the area posted hundreds of job adverts for people who might know how to put a self-driving car together. According to figures from Paysa, Google had the largest recruitment operation, but many other tech firms are also hiring engineers to help them get ahead in the race towards autonomous vehicles. Most notable among these are Tesla – which entered the car market with its fully-electric Roadster in 2008 – and Uber, which began life as an app-based taxi company in 2009.

Tesla is already taking on the established manufacturers – and prevailing. The Model S is now the best-selling plug-in car on the market, with 50,000 sales worldwide in each of the past two years. The company recently launched its first mass-market car – the Model 3 – and it has already taken pre-orders for around 400,000 of them. Earlier this year, Tesla overtook Ford and General Motors to become the most valuable car manufacturer in the United States, in terms of market capitalisation.

Having established Tesla as the world-leader in electric cars, CEO Elon Musk is aiming to do the same when it comes to autonomous cars. All new Teslas carry the array of cameras and sensors they will need to drive themselves. The firm is taking a phased approach to developing its self-driving software, with incremental updates to its ‘Enhanced Autopilot’ delivered over the internet. In recent months, its cars have gained the ability to steer themselves, change lanes automatically and self-park, as well as emergency braking and adaptive cruise control features. Musk has set Tesla the bold target of making its cars fully-autonomous by 2018.

Meanwhile, Uber has been trialling self-driving taxis on the roads of Pittsburgh since September last year. The company opened its ‘Advanced Technologies Center’ in the city in 2015, and have recruited numerous experts from the Robotics Institute at nearby Carnegie Mellon University. Earlier this year, it expanded to Canada, with a new team in Toronto led by a leading academic in the field of self-driving cars: Professor Raquel Urtasun.

Despite their rapid growth in recent years, Tesla and Uber are still relatively small compared to the giants of Silicon Valley, including Alphabet (the parent company of Google and Waymo) and Apple – both of whom want a piece of the autonomous car action. Google began developing self-driving technology in 2009, and its cars had clocked up 2.3 million autonomous miles on public roads before the project became Waymo in December 2016. In the months since then, Waymo has already taken that total to more than 3 million miles.

For its part, Apple has shrouded its self-driving car programme in secrecy. Only in recent weeks has CEO Tim Cook publicly admitted that it even exists. He didn’t elaborate much on Apple’s plans or the progress it has made so far, simply saying that ‘we’re focusing on autonomous systems’.

Bloomberg reported last year that Apple had ‘drastically scaled back its automotive ambitions’, shelving plans to build its own car to focus on developing the self-driving technology. It seems that becoming a fully-fledged car manufacturer may be a challenge too great – even for a company as large as Apple.

Mass-producing and distributing cars are enormous tasks, and not ones that these Silicon Valley firms are currently equipped to perform. We’ve already seen Tesla struggling to produce enough vehicles to meet demand, leading to long delays for its customers. The automotive industry also requires a different business model to the one Apple and Google are used to, given that someone might keep their car for a decade – much longer than the few years they hold onto a laptop or smartphone for.

That forces these companies into a choice: press ahead with building their own cars, as Tesla is doing, or focus on autonomous technology while partnering with existing manufacturers. Waymo, for example, joined up with Fiat Chrysler to take 100 Pacifica Hybrid minivans, fit them with self-driving technology, and deploy them as part of a ride-sharing service. The autonomous Ubers offering rides in Pittsburgh are actually Volvo XC90s.

It may well be, then, that the future turns out not to be one of competition between Detroit and Silicon Valley – but of cooperation.

Join our mailing list

Sign up to receive news and offers from us via email. You can unsubscribe at any time and we will never share your data with third parties.

Getty Images Epic Carousel 2.jpg