5 Reasons Why Automakers Shouldn’t Fear Google’s Autonomous Car

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Today, Forbes.com published an article by Chunka Mui entitled “5 Reasons Why Automakers Should Fear Google’s Driverless Car.” There’s plenty of fear to go around when discussing autonomous vehicles, but it’s not automakers that should be concerned. However, plenty of other industries should.

“While automakers such as NissanFordVolvo andDaimler have also made high-profile statements about their autonomous vehicle efforts,” writes Mui in the Forbes.com piece, “none have embraced the audacious, fully autonomous approach being pursued by Google.”

Mui makes some interesting points about intellectual property, which the automakers need to understand if and when they jump headlong into the production of autonomous vehicles. The industry wouldn’t want to be as hamstrung as it was in the early days when it had to pay a license fee to George Selden for every vehicle it produced.

But almost every case Mui makes after that shouldn’t necessarily be concerning to automakers, but many other industries instead.

Mui suggests that automakers would no longer have the advantage of a captive supplier network. “Imagine how the balance of power in the industry might flip to the sole supplier of fully autonomous vehicle technology,” he writes.

This assumes, of course, that the technology to make autonomous vehicles work isn’t already being researched at the automotive OEM level. But it is. Every major auto manufacturer is already building autonomous vehicles of its own, with the assistance of its many suppliers. The idea that a supplier would sign exclusive agreements with Google, which — best case scenario early on — will produce one car, versus Ford Motor Company, which produces 30 in the United States alone, and dozens more worldwide, doesn’t take the incredible power of the automotive industry into consideration. Advantage: Automakers

“There are a number of plausible scenarios where Google might build, acquire or partner in order to go directly into the car business,” writes Mui, “much in the same way that Google has the audacity to bet more than $12B for Motorola Mobility to create an option to enter into the smartphone business.”

I’m not sure I understand how that’s bad for certain automakers. Consider Subaru’s position in the marketplace: Subaru has developed a reputation based on all-wheel drive, rally cars and horizontally opposed engines. In terms of technology, Subaru simply doesn’t have the resources to compete with a Ford Motor Company or a General Motors to research and develop autonomous cars. 

Simultaneously, Google doesn’t have the network to sell, deliver and service cars the way Subaru does. As Tesla is learning, skirting franchise laws to sell directly to the public isn’t the legal slam-dunk they thought it was going to be. Those franchise laws WILL change over time, but in the short term, the smarter money for Google — analogous to Mui’s example of Google’s $12B investment in Motorola Mobility — might be working with established dealer networks. Advantage: Tie

“Fully autonomous cars extend mobility to traditionally unserved and underserved market segments. Expanding into these adjacent markets for mobility is great—but only for those with the fully autonomous cars needed to serve them. It not possible to assume that there will be a driver-in-the-middle to whom to yield control if none of the passengers can ‘drive’ in the traditional sense.  The incremental strategy that automakers are pursuing might be the best way to serve existing markets. It precludes them, however, from serving these new adjacent markets,” says Mui in the Forbes.com piece.

It’s an interesting point, but the companies that should be most nervous about that prospect are the companies that provide conversions so that the disabled can drive, or the traditional livery services that provide transportation options for the disabled.  Companies like Vehicle Production Group — which produces the MV-1, a purpose-built vehicle for the disabled which is used as both a personal vehicle and a taxi — would seem to be at the greatest risk. Advantage: N/A

Finally, Mui posits that if Google decided to build and market an autonomous car, it would “create enormous disruption to current automaker business models… It would reduce overall car sales. It would shift demand towards small efficient electric vehicles, which would further reduce automaker revenue and profitability.”

If making a small, efficient car — autonomous or otherwise — had the ability to “create enormous disruption” to current business models, it would’ve happened already. The Nissan Leaf is a small, efficient electric vehicle. Nissan sold 22,000 of them in 2013. The size and efficiency of vehicles that Americans buy are directly linked to the relative health of the economy. There should be no surprise that during the economic booms of the 1990s and 2000s, we drove full-size SUVs at a breathtaking rate.

The only thing holding OEMs back from releasing autonomous cars to the general public right now is the inscrutably level playing field of legal hurdles that any manufacturer of driverless cars is going to face the minute they decide to put them into production. All of the technology required to make a fully autonomous vehicle work already exists. Google has no advantage with the legal system, nor does it have the vast experience shepherding new automobile technology through the morass of legal requirements.

Is Google’s car unique and newsworthy? Absolutely. But I direct you to another unique and newsworthy mode of transportation that Steve Jobs told us would be bigger and more important to our lives than the personal computer, and John Doerr, who backed Netscape and Amazon, said would be bigger than the Internet.

It was called the Segway. Last time we saw one of those, it was being rented to a tourist in Florida.

Craig Fitzgerald

Craig Fitzgerald

Writer, editor, lousy guitar player, dad. Content Marketing and Publication Manager at BestRide.com.

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