July 17—According to reports from The New Yorker, Tesla's Model 3 has rolled off the production line, priced at just $35,000, with a range of 215 miles on a single charge. These figures have generated significant interest among consumers.
However, what really caught the attention of other automakers was the Model 3’s advanced autopilot technology. Tesla has equipped the Model 3 with its renowned Autopilot system, which uses onboard cameras, radar, and ultrasonic sensors to monitor the vehicle’s surroundings. This allows the car to adjust its speed based on traffic conditions, follow routes autonomously, park itself, or even merge onto and exit highways without any manual intervention from the driver. Elon Musk, Tesla's CEO, predicts that within two years, passengers could sleep in a self-driving Tesla and wake up at their destination.
For years, traditional automakers have been gradually exploring autonomous driving technology, but they didn’t feel much urgency. Recently, however, their stance has shifted dramatically. It seems that the rapid advancement of self-driving technology has become a genuine threat to conventional vehicles. Consequently, traditional automakers are now racing to catch up with the latest developments in autopilot technology, fearing they might fall behind.
This sense of urgency is reflected in the recent activities of major automakers. Last year, General Motors acquired Cruise Automation, a company specializing in autonomous software, for $1 billion and invested $500 million in ride-sharing company Lyft to develop self-driving vehicles and establish a network of autonomous cars. According to recent reports, GM has already manufactured nearly 200 self-driving electric vehicles.
Nissan has partnered with NASA’s Ames Research Center to co-develop an autonomous all-terrain vehicle designed for space exploration. They aim to produce a fully autonomous vehicle by 2020. Other major players like Fiat Chrysler, BMW, Honda, Mercedes-Benz, and Ford also plan to begin mass production of self-driving cars in the same year.
Ford, under its former CEO Mark Fields, established an R&D center in Palo Alto in 2015 and later created Smart Mobility, a division dedicated to advancing autonomous driving technology. Fields’ dismissal in May was partly attributed to Bill Ford’s frustration with the slow pace of the company’s self-driving car initiative. Jim Hackett, the new CEO, previously led Ford’s Smart Mobility unit.
What exactly changed? Silicon Valley has reignited interest in Detroit. Tech giants like Google, Apple, Uber, and venture capital firms have poured hundreds of billions of dollars into developing the hardware and software needed for self-driving cars. Companies like Apple are investing billions in urban road traffic data, while Uber has stakes in Didi Chuxing. Google has invested in Lyft, and Nvidia collaborated with Here, the German mapping service provider, to develop an AI-based GPS system for autonomous vehicles. Just months ago, Intel acquired Mobileye, an Israeli company specializing in computer vision processing, for $1.5 billion.
Overall, over the last few years, dozens of startups and tech companies have entered the autonomous driving sector, sending shockwaves through the traditional auto industry. As Doug Newcomb, a senior automotive media expert and CEO of automotive website C3, notes, “Traditional automakers are quite conservative and not yet prepared to handle external disruptions. For the entire industry, this is uncharted territory.â€
By prioritizing long-term investment over short-term profits, many Silicon Valley tech companies are vying for dominance in the automotive sector. Boston Consulting Group predicts that by 2035, 25% of new car sales will be autonomous. Uber’s self-driving truck division, Otto, recently completed a 120-mile test run, transporting 2,000 cases of Budweiser beer from Fort Collins to Colorado Springs. Google has built around 700 self-driving cars, including modified Lexus SUVs and Chrysler minivans. Since launching its autonomous vehicle program in 2009, Google’s self-driving fleet has logged 3 million miles across California, Texas, Arizona, and Washington.
These massive investments by tech companies have created challenges for traditional automakers. They risk losing substantial profits in car manufacturing to Silicon Valley firms that add sensors to traditional vehicles or build their own branded cars. This trend threatens to erode traditional automakers' profit margins, diminish after-sales services, and weaken customer relationships. Alternatively, traditional automakers can leverage tech companies as suppliers to develop their own self-driving cars. Most have opted for the latter approach.
Despite these efforts, traditional automakers face the possibility that autonomous vehicles could eventually eliminate car ownership entirely. In this scenario, urban areas would see the disappearance of conventional cars, replaced by self-driving vehicles roaming freely. People would summon these cars via cloud-based services, with fleets available at shopping centers, airports, and schools.
If this vision becomes reality, the economic rationale for purchasing a car today will vanish. A report from the Rocky Mountain Institute suggests that self-driving car services, similar to current ride-hailing platforms like Lyft or Uber, could cost consumers as little as $1 per mile, eliminating maintenance, parking, and congestion concerns. Similarly, RethinkX, a technology analysis firm, predicts that self-driving cars will disrupt personal vehicle ownership. Their study indicates that by 2030, 95% of U.S. passenger transport will be handled by autonomous vehicles, saving American families $5,600 annually on transportation costs. This implies that traditional automakers’ current research and development budgets may soon become obsolete.
Of course, achieving this future remains challenging. Automakers continue to fight to preserve the vast car sales market. Additionally, several technical hurdles remain unresolved in self-driving technology. Currently, fully autonomous vehicles that require no human intervention are still beyond reach.
From a safety perspective, the ideal outcome would be to eliminate human drivers entirely. Over the past few years, vehicle-related fatalities have risen steadily, with one million deaths globally, 96% attributable to driver error. In September last year, the U.S. National Highway Traffic Safety Administration issued detailed guidelines for testing and deploying self-driving cars. Human-operated vehicles with advanced autonomous features could significantly reduce accidents caused by driver behavior. However, trusting humans fully in driving scenarios remains questionable. Studies show that humans struggle to respond effectively in emergencies when required to take control of self-driving cars. Therefore, relying on machine intelligence appears to be the wiser choice. This explains why Silicon Valley tech firms have invested heavily in autonomous driving technology.
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