Earlier today, Recode and several other outlets reported that Tesla is now worth more than Ford after delivering a record number of cars for the quarter. This news will no doubt lead to some celebration in Silicon Valley, which has sought to portray itself as the logical successor to Detroit as the capital of American innovation. But new research released today shows that the upstarts on the sunny West Coast — Uber, Google, and Tesla — still have a lot of catching up to do when it comes to outpacing their rivals in chilly Michigan.
That’s the assessment of Navigant Research, which scored 18 companies working on self-driving technology on 10 different criteria related to strategy, manufacturing, and execution. The report then combined all that into an overall score to get a sense of who’s ahead and who’s not. General Motors and Ford are currently leading the pack, with Daimler and Renault-Nissan close behind. Those four companies make up Navigant’s “leader” category. In other words, when you climb into your first self-driving car in 2021, it will almost certainly be built by one of those four companies.
Most everyone else is in the “contender” category. This includes car companies like BMW, PSA, Hyundai, Toyota, Tesla, and Volkswagen; suppliers like Delphi and ZF; and tech firms like Alphabet’s Waymo. Further down the list, in the “challengers” category, are companies like Honda, nuTonomy, Baidu, and Uber.
So why is Detroit beating Silicon Valley so badly in this all-too-crucial race to get autonomous vehicles on the road? According to Sam Abuelsamid, a senior research analyst at Navigant and one of the authors of the report, the short answer is experience.
“Waymo has what is arguably the best technology right now, although they probably aren’t that far ahead of the leading [original equipment manufacturers] but they will have to do deals with someone to get actual vehicles,” Abuelsamid said via email. “There is also the issue of all the edge cases, bad weather, poor infrastructure, etc. All the little [Silicon Valley] startups may have some interesting ideas, but they don’t have the resources to produce something sufficiently robust to be commercially viable. If they have something good to offer, their best bet is an acquisition.”
We’ve seen a lot of this type of maneuvering already, with GM buying Cruise Automation, Intel acquiring Mobileye, and Ford giving $1 billion to some AI company that no one has ever heard of. Big companies are buying little startups and then leveraging their technology and expertise to round out the much larger-scale enterprise of developing, testing, validating, producing, and distributing self-driving cars.
Early on, most highly automated vehicles will be available through mobility services like ride-sharing and car-sharing, Abuelsamid predicts. In other words, you probably won’t be buying a self-driving car at a dealership, but rather riding in one that you hail through an app-based service like Uber or Lyft. These vehicles will be part of a fleet owned by a manufacturer, like Ford or GM. Fleet ownership will help manufacturers manage the issues self-driving vehicles are likely to encounter early on, like accidents. And there will be accidents.
“With all of that in mind, it’s far easier for a manufacturer to replicate the sort of logistics platform that Uber or Lyft have than it is for those companies to invest in and create the development, manufacturing, and service infrastructure that [original equipment manufacturers] have,” Abuelsamid said. “That’s exactly what’s already happening as all the leading OEMs already invested in or developing their own services.”
Abuelsamid noted that Tesla was ranked pretty far down the “contender” because Elon Musk’s company is “lacking in quality, distribution, financial stability and their [Autopilot] 2.0 hardware will never be more than limited Level 4-capable at best.” In other words, Musk would be advised not to start gloating about his company being valued higher than Ford quite yet.
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