Why Automakers, Tech Giants are Investing Millions in Autonomous Vehicles


by | Nov 18, 2015

McitySelf-driving cars will cruise around a 32-acre “city” in Michigan over the next five years, speeding (or not) down roads, through intersections, obeying traffic signs and signals, while avoiding sidewalks, trees and construction obstacles.

That’s the goal of the $20 million University of Michigan Mcity — the world’s first controlled environment designed to test the potential of autonomous vehicle technologies that will lead the way to mass-market driverless cars, which, according to Navigant Research, could hit the road by 2025.

Ford, General Motors, Honda and Toyota are among the companies each investing $1 million over three years in Mcity, and testing new technologies before they are tried out on public streets and highways. Last week, Ford became the first automaker to test autonomous vehicles at Mcity.

Google in the Driver’s Seat

But in the race to put autonomous vehicles on read roads, technology companies may overtake automakers. According to a report from IHS Automotive, companies like Google and others are currently working toward solutions in the autonomous vehicle space and Google is in the lead. IHS Automotive estimates the technology company has invested nearly $60 million so far in autonomous vehicle research and development, at a run rate of nearly $30 million per year.

The appeal of autonomous vehicle technology goes beyond the Batmobile appeal of driverless cars. Analysts say autonomous vehicles will likely produce efficiency and environmental benefits, which may explain why everyone from Tesla to Apple and Google are jumping on this low-emission, driverless bandwagon.

“Right now, autonomous vehicles are all at the prototype or early product stage, so we don’t really know exactly what benefits there will be, if any. That said there are good reasons to believe that autonomous vehicles will have a lot of environmental benefits that we can try to estimate and model,” says Mark Bünger, Lux Research’s VP of research.

Fewer Cars, Fewer Emissions

One major benefit, Bünger says, would be fewer cars on the road, thus reducing transportation greenhouse gas emissions. Cars sit idle some 95 percent of the time, he says. “If the vehicles were autonomous, they could perform other tasks, such as driving other people to other places, or delivering goods, when they were not in use by their owner.”

This would also cut down on natural resources required to manufacture cars, as well as emissions produced during the manufacturing process.

“I’ve seen estimates that we would need as few as 20 percent of the vehicles we currently have in the world, if autonomous vehicles were the norm,” Bünger says. “I think that’s very optimistic, but a 10 or 20 percent reduction in the vehicle population would not be out of the question. That means less energy and materials deployed in the manufacture and maintenance of vehicles.”

Reduced Fuel Consumption

Another benefit of fewer vehicles on the road: less traffic jams and an improved traffic flow. Sitting idle in traffic and slamming on the breaks wastes fuel — not to mention the safety benefits of fewer collisions.

“Traffic jams are a major factor in air quality and overall emissions so anything that helps avoid them will benefit the environment,” says David Alexander, Navigant senior research analyst. “On long stretches of freeway, V2V communication can enable platooning, which has been shown to reduce overall fuel consumption by 5 percent to 10 percent.”

A byproduct of autonomous vehicles development, according to Bünger, is that it could lead to greater electrification of the fleet.

“In other words while autonomous vehicles are not necessarily electric vehicles, we are seeing in practice that electric vehicle makers like Tesla are more aggressively developing autonomous technology,” he explains. “For example, the Chinese carmakers SAIC and BAIC are investing both in electric vehicle technology and autonomy. BAIC invested about $100 million in a US battery startup Atieva, but is using it to hire in autonomous vehicle engineers, stealing them from Volkswagen among other companies.”

Will Technology Catch Up?

While completely driverless cars are still at least a decade out, bringing them to market depends on legislative changes and technology improvements.

“Sensors are improving all the time, but there is still more progress necessary to reduce cost and size and improve performance to the point where the technology is affordable in mainstream vehicles. In particular, obstacle detection in bad weather needs to get better,” Alexander says.

Additionally, processing power and speed needs to improve and software must become more capable, he adds.

“Accurate up-to-date maps are critical for today’s fully autonomous vehicle prototypes to operate, so a process for continuously updating and sharing detailed maps must be agreed and developed if the technology is to become widely available,” Alexander says.

Bünger says carmakers are rightfully concerned about autonomous vehicle technologies doing to the auto industry what the personal computer did to the computer industry in the late ’70s, “where startups decimate incumbent players in a matter of just a few years.” He says while it’s not the most likely scenario, it’s the no. 1 reason carmakers are spending billions on self-driving cars.

“Had it not been for Google shocking everyone with their pace of progress, carmakers would still be treating this like a long-term side project,” Bünger says. “So, in some, while there’s a lot we don’t know yet, we do know that this is an extremely exciting time with rapidfire changes for many years to come.”

Photo Credit: University of Michigan

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