– Updated 03-30-2018 – Business Insider reports that Silicon Valley darling Tesla shares have collapsed almost 6% since January 1 on a string of critical reports about the company’s ability to keep up healthy production levels and meet delivery expectations for its new mass-market Model 3 sedan.
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Back in April, the tech sector was leaping for joy when Tesla’s stock market valuation passed Ford and GM. Rumors abound in Silicon Valley that Tesla is the future of transportation and Elon Musk is the king of cars because they took more orders for cars that did not burn up or crash out of control. In 2016 Tesla delivered only 76,000 vehicles. Ford sold nearly 1 million F-Series trucks in 2016.
Despite the happy dances in Silicon Valley, which fancy itself as the logical successor to Detroit as the capital of American innovation new research says not so fast. The west coast upstarts — Uber, Google (GOOG), and Tesla (TLSA) — still have a lot of catching up to do when it comes to outpacing Michigan manufacturers. The Verge points us to Navigant Research, whose newly released “leaderboard” report ranks autonomous vehicle players not just on their ability to make a car drive itself, but on their ability to bring that car to the mass market.
Navigant Research scored 18 companies working on self-driving technology on 10 different criteria related to strategy, manufacturing, and execution. The report combined all that into an overall score to get a sense of who’s ahead and who’s not. General Motors (GM) and Ford (F) 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.
Detroit is beating Silicon Valley
Sam Abuelsamid, a senior research analyst at Navigant and one of the authors of the report, told the Verge the reason Detroit beating Silicon Valley so badly in this all-too-crucial race to get autonomous vehicles on the road is because of experience. He says, Silicon Valley, “ …. will have to do deals with someone to get actual vehicles.”
Alphabet’s Waymo, scores top marks for technology but drags in the production strategy and sales, marketing, and distribution buckets. The company plans to work with legacy automakers to put its tech in cars, but has not yet struck any major deals. Mr. Abuelsamid detailed on an email with the Verge that Waymo is in the best position of the contenders.
They have almost every piece of this—except the product strategy … 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”
Despite Uber’s high profile, a recent study showed that only 15% of U.S. consumers have tried a ride-hailing app like Uber. Uber also has a safety problem – Uber drivers have been charged with murder and violent crimes against their customers. In the Navigant research, Uber wallows near last place thanks to low grades for distribution, product portfolio, and staying power—and because makes Uber makes neither cars nor money. In fact, its key strength—that it already operates a global fleet of shared vehicles—may not be enough here. “It’s a lot easier for the company that actually has the infrastructure to create vehicles to recreate what Uber’s done, than the other way around,” Mr. Abuelsamid says.
Scale matters in the auto industry.
The Navigant analyst explained scale matters in the auto industry.
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
The “legacy automakers” have engaged in mergers and acquisitions and early maneuvering in the autonomous vehicle arena as Mr. Abuelsamid stated. The report predicts that big companies will buy little startups to leverage their technology and expertise to round out the much larger-scale enterprise of developing, testing, validating, producing, and distributing self-driving cars.
Wired says Ford and GM both score in the low to mid 80s on the technology front; it’s their old-school skills that float them to first and second place. They’ve each spent more than a century developing, testing, producing, marketing, distributing, and selling cars. Plus, each has made strategic moves to bolster weak points.
GM recently acquired Cruise Automation, a San Francisco-based autonomous vehicle technology maker in a deal valued at more than $1 billion. GM said the acquisition will allow it to “accelerate” its autonomous vehicle development efforts.
Ford has announced an investment of $1 billion over the next five years in Argo AI, a startup run by Carnegie Mellon roboticists and engineers who really know their artificial intelligence stuff.
Fiat Chrysler has partnered with Alphabet to jointly test autonomous technology in Pacifica minivans, and Alphabet is opening a 53,000 square foot self-driving car development center near Detroit in Novi, MI.
GM has invested $500 million in ride-sharing provider Lyft to beef up its ridesharing service. In the “long-term strategic alliance,” the companies will work on what they call “on-demand autonomous vehicles.” For now, the deal means GM cars will be the “preferred” vehicle used by Lyft drivers who rent their cars in various U.S. cities. Those vehicles will tap into GM’s OnStar service, while GM and Lyft promised “personalized mobility services and experiences,” but did not elaborate.
Ford, meanwhile, recently announced a $75 million investment in LiDAR maker Velodyne, to “quickly mass-produce a more affordable automotive LiDAR sensor” so the company can launch a fleet of self-driving ride-sharing cars by 2021
Ford has also acquired SAIPS, an Israeli machine learning firm to further strengthen its ability in artificial intelligence and computer vision. SAIPS has developed algorithmic solutions in image and video processing, deep learning, signal processing and classification. This expertise will help Ford autonomous vehicles learn and adapt to the surroundings of their environment
Ford announced that it would take part in a $6.6 million seed funding round for Civil Maps to further develop high-resolution 3D mapping capabilities. This provides Ford another way to develop high-resolution 3D maps of autonomous vehicle environments. Ford has also agreed to acquire Chariot, an on-demand shuttle service based in San Francisco.
Mr. Abuelsamid predicts that early on, 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 insurance for the inevitable accidents. Navigant’s Abuelsamid says
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
Mr. Abuelsamid noted that Tesla 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 (PDF) at best.” In other words, Musk would be advised not to start gloating about his company being valued higher than the OG’s Ford and GM quite yet.
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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.
Redmond’s Terrible, Horrible, No Good, Very Bad month continues. The WannaCry ransomware hit mostly Windows 7 machines, and now researchers from the Russian information security company Aladdin RD recently discovered a new bug that will slow down and crash Microsoft (MSFT) Windows Vista, Windows 7, and Windows 8 PCs, but does not seem to impact Windows 10 so far.
In a throwback to the Windows 95 and 98 era, Ars Technica reports that certain specially crafted filenames could make the operating system lock up or occasionally crash with a blue screen of death. Ars reports that the bug allows a malicious website to try to load an image file with the “$MFT” name in the directory path. Windows uses “$MFT” for special metadata files that are used by the NTFS file system. The effected systems do not handle this directory name correctly.
The Verge has successfully tested the bug on a Windows 7 PC with the default Internet Explorer browser. Using a filename with “c:\$MFT\123” in a website image, their test caused a machine to slow down to the point they had to reboot to get the PC working again.
