TDS N. America 2016

October 2016, Las Vegas

A reality check on driverless cars

Driverless cars may be the future but the revolution everybody is talking about is further off than talk this summer would have us believe. Sally White reports

The last few weeks have seen a flurry of announcements. Enthusiasts are talking as though the driverless revolution is already upon us. Regulators, robot makers and taxi firms are heralding this as a chance to turn cars not just autonomous but fully electric (cars consume 45% of oil sold). So the new technology is being presented as a boon to mankind (not just their businesses). Yet, as Uber’s latest accounts show, disruption has a high price.

Uber had to break to its investors last month that it lost at least $1.2 billion in the first half of 2016. There was not even the comfort of seeing it as all the result of technological advances. Bloomberg reports that it seems, the “lion’s share of Uber’s losses stemmed from the company’s expensive and protracted battle with Didi Chuxing in China...”

Of course, the Chinese business was sold in July, and losses are diminishing. Uber has abandoned its territory-grabbing approach to Southeast Asia and has said it is focusing now on products and services where it begins to see profits. However, while it is making profits in most western markets, it made a $100 million loss in the US in Q2 as it again sparred for market share, this time with US rival Lyft.

Economic realities

The economic realities have set in for a number of ride-hauling companies. Uber’s moves have upset Lyft’s strategies and it is reported by the New York Times to have been looking for a buyer. Ironically, a problem could be that Lyft’s January investment round successfully raised $1billion, but valued it at around $5.5 billion. The New York Times names a figure of $400 million as a likely ballpark for Lyft’s annual revenue, which it calculates could be wiped out by marketing costs. So, deep pockets would be needed to run the company.

Lyft, however, according to Vox Media online publication The Verge last week valued itself at $8-10 billion. This, says The Verge, is the sum it sought from General Motors (GM), an existing shareholder and co-developer of its autonomous car fleet. The Verge’s informant believes the best GM offer valued Lyft at around $6 billion. (Lyft has denied that it has been looking for a buyer.)

Yet, according to the New York Times, Lyft has tested out interest with Apple, Google, Amazon, Uber and Didi Chuxing.  However, no sign of interest or comment has come from any of these companies.  

As Joe Grundfest, professor of law and business at top US research institution Stanford, commented to Bloomberg with regard to Uber, as businesses break new ground “...it is hardly rare for companies to lose large sums of money…”

Something to show

Yet Uber has something tangible on technology to show, if not right now on the bottom line. Cars described as ‘self-driving’ were being given to some of its drivers in Pittsburgh last month. Around 100 modified Volvo XC90s have been kitted out with the equipment. Prudently, Uber seems to be taking no risks! Each car is being staffed by engineer who will take the wheel if necessary, and a co-pilot.

Good regional performances have shown that Uber can make money and have helped it raise over $4 billion privately so far this year. (That has brought it a $63-billion valuation.) It is a question of how much Uber needs to spend to achieve its targeted share of the driverless revolution. As it is not quoted on any stock market, these are not numbers it needs to announce.

McKinsey, the consultancy group, forecasts that 15% of new cars could be fully autonomous within the next 15 years. Regulators in Japan seem well up with this as the country plans to have robot-taxis in operation for the 2020 Olympics. Singapore is vying in this space, signing a deal back in March to try out a small fleet of automated taxis around a business park.

McKinsey, the consultancy group, forecasts that 15% of new cars could be fully autonomous within the next 15 years

Among recent car companies’ announcements, Audi says it has been demonstrating an autonomous RS7 on both racetracks and roads; Jaguar and Land Rover are also testing, as are Volvo and Peugeot Citron. Renault plans to launch its first semi-autonomous car this year. Tesla cars are already capable of semi-autonomous driving on motorways.

What about the roll-out of full autonomy? The New York Times read on that was to take a look at Google, the key Silicon Valley visionary in the revolution. Its story says: “Google, while never explicitly saying so, has long intimated that self-driving cars would be available by the end of the decade.

“In February, though, a Google car caused its first accident; a bus collision with no injuries. A few weeks later, Google made a significant, if little-noted, schedule adjustment. Chris Urmson, the project director, said in a presentation that the fully featured, truly go-anywhere self-driving car that Google has promised might not be available for 30 years, though other much less capable models might arrive sooner.”

Join us at TDS North America for a session on ground transportation with Fraser Campbell, CEO, Wcities, Armin Jose Cruz, VP Parking Business Unit, DFW International Airport, Emre Mangir, COO,Mozio

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