Alongside electromobility, self-driving cars are seen as the future of the industry and tech companies are setting the pace.
When Herbie, everyone’s favorite VW Beetle , drove itself in the 1968 classic "The Love Bug", many cinema-goers still thought that autonomous driving was a crazy utopia. But in the meantime, science fiction has almost become reality and we do not have to rely on Disney magic anymore.
In Phoenix, completely driverless "ghost vehicles" from the Google subsidiary Waymo drive through the streets, shuttling passengers back and forth. Autonomous robot taxis are also on the road in the metropolis of Shenzhen, where the Chinese start-up AutoX recently was granted operational approval.
In Germany the number of major breakthroughs is still very limited
In Germany, safety concerns and unresolved liability issues are blocking the breakthrough of autonomous driving. Therefore, self-driving cars are limited to isolated test routes and specially designated areas, such as company or university grounds.
Traditional car manufacturers have been working on self-driving cars for years and constantly unveil new concept studies at trade fairs, marketing events and car launches. They constantly incorporate more efficient and innovative assistance systems for semi-autonomous driving into their current models, but can they compete with the large US tech companies from Silicon Valley, which are driving forward their visions of the "car of the future" with billions of dollars in investment?
Digital companies are leading the self-driving car race
- The Google subsidiary Waymo is considered a pioneer in autonomous driving. They launched a Level 4 self-driving taxi service in Phoenix (October 2020) and San Francisco (September 2021), where they had been testing driverless cars for millions of miles on public roads and billions more in simulations.
- The US chip giant Intel has bought the Israeli company Mobileye, which equips vehicles with radar sensors and optical systems, for several billion dollars.
- Asian tech companies such as Tencent, Alibaba, Baidu, Didi and Sony have also developed sophisticated software and systems for autonomous driving.
- Apple also has plans for the car market. Under the project name "Titan", the engineers of the iPhone company are working on an autonomous driving system that is to be launched on the market in 2024. Only one thing seems to be missing for Apple: the ideal partner.
Software by subscription
Software is becoming the new criterion for success in the industry and will decide who will be the winners and losers of tomorrow. Tesla for example is working on a "robotaxi" feature. The e-car pioneer wants to sell customers self-driving software as a subscription future - directly via the Tesla app on mobile devices. VW also wants to offer such additional functions as autonomous driving - but only in a few years.
- There is an enormous business at stake: according to a forecast by the bank UBS, almost two trillion dollars could be generated with car software in 2030. That would be more than the entire turnover of petrol and diesel cars today.
German carmakers are following suit and expanding strategic cooperations
VW, Daimler, BMW & Co. have recognized the issue and started to develop their own operating system in order to avoid becoming dependent on Google, Apple and other tech giants. This explains why they are investing billions in digitalisation, cooperations and increasingly hiring software developers.
- Mercedes-Benz is the first automotive company in the world to meet the demanding legal requirements for a Level 3 system (Source)
- Volkswagen alone wants to invest around 27 billion euros in digitalisation and autonomous driving by 2025 (Source). The Wolfsburg company is already cooperating with tech giants such as Amazon, Microsoft and also the Ford subsidiary Argo AI. VW has founded its own subsidiary in Ingolstadt for software development, (CSO), which could become the second largest German software company behind SAP in a few years.
- Daimler is also repositioning itself, splitting the business into a commercial vehicle division Daimler Trucks and a passenger car division Mercedes-Benz (Source) to drive digitalisation. Daimler plans to have its own operating system by 2024. In addition, the Stuttgart-based company has brought in a strong partner for the development of software for autonomous driving: the chip giant Nvidia. As recently as 2019, Daimler had partnered with BMW on autonomous driving, but the cooperation between the two arch-rivals did not work out and has since been terminated.
What does this mean for the automotive industry?
In any case, the plans for an autonomous future are extremely expensive for traditional car companies and success is not assured. McKinsey consultants estimate the cost of autonomous driving at 10 to 15 billion dollars per manufacturer by 2035 and setbacks cannot be ruled out, because in the race for the future of mobility, tech companies are clearly ahead.
Written by: Lorenzo Federici