The auto industry is no stranger to long-range planning, huge capital expenditures on new technology and making design choices years before a car is launched.
But now, the auto industry must grapple with what form of driverless technology it is going to develop and how soon to deploy it.
What’s more, automakers are going up against technology companies that sometimes have more cash at their disposal to spend on product development.
“There are more than 50 creditable companies that are trying to develop an autonomous vehicle system ... and a lot of them are wasting money right now,” said Mark Wakefield, a partner with AlixPartners, a global consulting firm based in Southfield. “When you have 50 credible competitors, some with huge war chests, you really have to step back and recognize they are not all going to be successful.”
Another challenge: A survey of 1,000 drivers in 10 key markets conducted by AlixPartners reveals that consumers are not yet aware of the work that companies like Ford and General Motors are doing to develop self-driving cars and might not trust them when they do launch new vehicles.
Consumers are more aware of self-driving car technology from Google and Tesla than any automaker.
In the survey, when drivers were asked to name a company with self-driving car technology, 55% of respondents named Tesla and 20% named Google, but only 12% could name a traditional automaker.
Equally troubling: Consumers trust Silicon Valley more on autonomous vehicle software than automakers. Among those surveyed, 41% said they would trust a Silicon Valley company the most for autonomous vehicle software while only 16% said they would trust a traditional Detroit manufacturer the most.
"That doesn’t mean you don’t participate" in the development of self-driving cars, Wakefield said. "You have to be humble in one sense about knowing what your capabilities are but also, at the same time, move fast."
Automakers and suppliers that move too slowly could be left out of one of the most fundamental changes in the auto industry in decades.
Wakefield said the smart automotive and technology companies will form partnerships to spread out both the costs and the risk of making the wrong choices.
“Things are changing so quickly that it’s risky to commit billions to technologies that lock you in or partnerships that lock you in,” Wakefield said.
The smartest strategy for automakers is to develop partnerships with suppliers and technology companies to spread out the risk and development cost.
And that's been happening. Troy-based Delphi has either acquired or invested in a number of companies over the past two years as it has expanded its autonomous vehicle technology.
Ford earlier this year acquired a majority interest in Argo AI, which is developing the software that will operate the Dearborn automaker's self-driving car.
And GM spent $581 million last year to acquire Cruise Automation, a Silicon Valley start-up that is developing self-driving software for the Detroit automaker.
©2017 the Detroit Free Press Distributed by Tribune Content Agency, LLC.
