Who will be the 21st-century Henry Ford?

January 12, 2018

With ever smarter cars already on the road and semi- and fully autonomous vehicles in large-scale trials, the automotive industry gears up for battle against a host of challengers. Big tech companies and smaller dedicated startups in the fields of AI, mapping and autonomous driving seem to make rapid progress, but there may still be a role to play for the incumbent hundred-year-old industry. What will the automotive landscape look like in a few decades?

Our observations

  • A host of companies is working on autonomous vehicles, i.e. AVs. Virtually, all the car manufacturers have R&D programs and run prototypes of AVs, often in cooperation with traditional and new suppliers. From the generic tech side, companies such as Apple, Google/Waymo (together with Fiat-Chrysler) and Baidu (together with Ford and Daimler) have also entered the race together with ride hailing giants Uber (together with Volvo) and Lyft (together with GM).
  • While most car manufacturers strive to develop their own software, almost all of them also partner with tech companies (e.g. Waymo, Amazon, Mobileye, and Nauto). Other partnerships concern hardware, high-definition maps, and fleet servicing through which car manufacturers try to control the full technology stack from infrastructure to maintenance.
  • Global investments in software and smart systems for vehicles have skyrocketed from USD 1.5bn in 2016 to almost USD 4bn in 2017. Within this space, autonomous vehicle solutions were dominant and amounted to USD 3bn.
  • In the midst of all the hype that surrounds AVs, several companies have already retracted earlier statements. Volvo extended its AV deadline from 2017 to 2021 and lowered expectations to only semi-autonomous features. Google did not meet its 2017 deadline either (set in 2012), and Ford made clear that its 2021 target does not include fully autonomous vehicles either. Cited problems include hard and software costs, remaining challenges with varying road and weather conditions, and the inherent unpredictability of other (human) road users.
  • The automotive business model, based on selling cars, seems to be doomed as consumers will probably be sharing most of the AVs. While this implies the decrease of vehicle sales, total demand for mobility is bound to increase, if not explode. One estimate predicts a 65% increase in vehicle miles traveled towards 2040.

Connecting the dots

As we noted it before, the ideas of self-driving cars have come and gone since the first automobiles entered our lives. Today, it seems as if the technology, both hard- and software, have finally reached a threshold of performance and price levels to turn those ideas into reality. This does not mean that fully autonomous vehicles will see commercialization soon, this will take another five years at least, but virtually all car manufacturers and large tech firms are now developing and testing their prototypes to fine-tune systems and train their algorithms. It will be interesting to see how the struggle between these old and new industries will evolve. Will the old giants continue to dominate or will tech companies take over the industry? Will traditional manufacturers be reduced to mere suppliers of white-label cars? Daimler CEO Dieter Zetsche, for one, has already expressed that his company will never become a supplier of white-label cars for the tech industry.The plethora of collaborations between both sides suggests that these competitors need one another and their competences seem rather complementary indeed. Car manufacturers are great at mass production and the assembly of (many outsourced) parts. They also have a deep understanding of their consumers (and regulators) and will be extremely focused on building reliable and safe vehicles. Tech companies clearly understand software but, as demonstrated by Tesla’s ongoing struggles with the upscaling production of batteries and vehicles, lack expertise in the mass production of the hardware. Ride hailing companies like Lyft and Uber also understand software, and perhaps more importantly, they have introduced tons of customers to the mobility-as-a-service model and understand their needs.Together, these businesses could cover the full stack from the car’s body, powertrain, sensory hardware, data infrastructure, and software. They could even operate fleets of shared vehicles themselves. That is, operating those fleets across the globe will be a highly capital-intensive business as actual revenues would follow years after vehicle production. Besides technological competences, capital will thus be crucial to the realization of the AV dream.So far, these strange bedfellows have managed to work together, but several ‘breakups’ suggest that diverging ideas (and industry cultures) may stand in the way of long-term cooperation. Once AVs become a commercial product, a battle is likely to ensue as all sides want to put their badge on the final product, harvest consumer data, and offer a range of new in-car services.

Implications

  • The rise of the AV is unlikely to disrupt the automotive industry in general, but several manufacturers will miss out and either close shop or be taken over by their more successful peers or tech companies. While the focus is on technology today, eventual winners may be those who understand best what consumers need and want once they are in a self-driving vehicle. This could range from high-end entertainment systems, digital personal assistants to (human) emergency support.
  • Besides the production and operation of the vehicles themselves, adjacent sectors will be affected by AVs as well. This goes, amongst other sectors, for insurance and parking, furthermore, self-driving cars will still require maintenance, cleaning, and possibly even such things as sensor calibration. These issues present opportunities for smaller nations such as the Netherlands, which are unlikely to spawn domestic AV makers, but present themselves as living labs to gain hands-on experience with AVs and their requirements.

Series 'AI Metaphors'

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1. The tool
Category: the object
Humans shape tools.

We make them part of our body while we melt their essence with our intentions. They require some finesse to use but they never fool us or trick us. Humans use tools, tools never use humans.

We are the masters determining their course, integrating them gracefully into the minutiae of our everyday lives. Immovable and unyielding, they remain reliant on our guidance, devoid of desire and intent, they remain exactly where we leave them, their functionality unchanging over time.

We retain the ultimate authority, able to discard them at will or, in today's context, simply power them down. Though they may occasionally foster irritation, largely they stand steadfast, loyal allies in our daily toils.

Thus we place our faith in tools, acknowledging that they are mere reflections of our own capabilities. In them, there is no entity to venerate or fault but ourselves, for they are but inert extensions of our own being, inanimate and steadfast, awaiting our command.
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2. The machine
Category: the object
Unlike a mere tool, the machine does not need the guidance of our hand, operating autonomously through its intricate network of gears and wheels. It achieves feats of motion that surpass the wildest human imaginations, harboring a power reminiscent of a cavalry of horses. Though it demands maintenance to replace broken parts and fix malfunctions, it mostly acts independently, allowing us to retreat and become mere observers to its diligent performance. We interact with it through buttons and handles, guiding its operations with minor adjustments and feedback as it works tirelessly. Embodying relentless purpose, laboring in a cycle of infinite repetition, the machine is a testament to human ingenuity manifested in metal and motion.
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3. The robot
Category: the object
There it stands, propelled by artificial limbs, boasting a torso, a pair of arms, and a lustrous metallic head. It approaches with a deliberate pace, the LED bulbs that mimic eyes fixating on me, inquiring gently if there lies any task within its capacity that it may undertake on my behalf. Whether to rid my living space of dust or to fetch me a chilled beverage, this never complaining attendant stands ready, devoid of grievances and ever-willing to assist. Its presence offers a reservoir of possibilities; a font of information to quell my curiosities, a silent companion in moments of solitude, embodying a spectrum of roles — confidant, servant, companion, and perhaps even a paramour. The modern robot, it seems, transcends categorizations, embracing a myriad of identities in its service to the contemporary individual.
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4. Intelligence
Category: the object
We sit together in a quiet interrogation room. My questions, varied and abundant, flow ceaselessly, weaving from abstract math problems to concrete realities of daily life, a labyrinthine inquiry designed to outsmart the ‘thing’ before me. Yet, with each probe, it responds with humanlike insight, echoing empathy and kindred spirit in its words. As the dialogue deepens, my approach softens, reverence replacing casual engagement as I ponder the appropriate pronoun for this ‘entity’ that seems to transcend its mechanical origin. It is then, in this delicate interplay of exchanging words, that an unprecedented connection takes root that stirs an intense doubt on my side, am I truly having a dia-logos? Do I encounter intelligence in front of me?
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5. The medium
Category: the object
When we cross a landscape by train and look outside, our gaze involuntarily sweeps across the scenery, unable to anchor on any fixed point. Our expression looks dull, and we might appear glassy-eyed, as if our eyes have lost their function. Time passes by. Then our attention diverts to the mobile in hand, and suddenly our eyes light up, energized by the visual cues of short videos, while our thumbs navigate us through the stream of content. The daze transforms, bringing a heady rush of excitement with every swipe, pulling us from a state of meditative trance to a state of eager consumption. But this flow is pierced by the sudden ring of a call, snapping us again to a different kind of focus. We plug in our earbuds, intermittently shutting our eyes, as we withdraw further from the immediate physical space, venturing into a digital auditory world. Moments pass in immersed conversation before we resurface, hanging up and rediscovering the room we've left behind. In this cycle of transitory focus, it is evident that the medium, indeed, is the message.
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6. The artisan
Category: the human
The razor-sharp knife rests effortlessly in one hand, while the other orchestrates with poised assurance, steering clear of the unforgiving edge. The chef moves with liquid grace, with fluid and swift movements the ingredients yield to his expertise. Each gesture flows into the next, guided by intuition honed through countless repetitions. He knows what is necessary, how the ingredients will respond to his hand and which path to follow, but the process is never exactly the same, no dish is ever truly identical. While his technique is impeccable, minute variation and the pursuit of perfection are always in play. Here, in the subtle play of steel and flesh, a master chef crafts not just a dish, but art. We're witnessing an artisan at work.
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About the author(s)

Sjoerd Bakker is fascinated by the interplay between technology and society, and has studied the role of different actors in the innovation and implementation of new technologies throughout his career. At the thinktank, he is mainly involved in research and consultancy projects for clients, and strategic and thematic research for sister company Dasym. Among other themes, Sjoerd frequently writes and speaks about the power and danger of digital technology, as well as sustainability in both technological and institutional innovation.

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