The Fuse

The Autonomous Transportation Economy: Putting the “auto” into “automobile”

June 17, 2015

Guest Post by Michael J. Granoff | @mikejgr

Granoff is the founder and president of Maniv Energy Capital, which invests in early-stage transportation and energy companies.

The life-changing technological innovations of recent decades have conditioned us to expect a world of rapid change. But one universal element of daily life has remained stubbornly stagnant: Revolutionary advances in transportation are few and far between.

It has been 200 years since the introduction of mechanized rail, and roughly 100 years since personal cars became mainstream. However, we are on the threshold of another great change, one that will make travel so simple, convenient, and cheap, that time spent in transit will be almost as flexible as time in the stationary world. If horses and trains drove the nineteenth century, and human-operated, internal combustion cars drove the twentieth, the twenty-first will drive itself—and massively transform our lives in the process.

Call it the autonomous transportation economy.

Among the many unforeseen consequences of the information revolution has been the confluence of industries that, until recently, were neatly siloed. Consider phones, computers, newspapers, music players, music distributors, software, maps, compasses and handheld video games: In 1990, it was inconceivable that a single device would not only replace them all, but also do much more.

This steady convergence is beginning to reach the peripheries of the marquee product of the industrial economy: Automobiles. Many scoffed when rumors recently surfaced that Apple was developing a car, but in reality, the reverse is true. The car business is rapidly becoming more dependent on data, software and connectivity—dynamics that present a major opportunity for Silicon Valley.

Four incumbents, each from its own entry point, give us a window into understanding how new technologies and business model innovations are rapidly encroaching on the vehicle industry, and helping to define the contours of the emerging autonomous transportation economy in the process.

Google

Maps were the first bridge Google built between the digital world and the physical world. In recent years the search and online services giant has recruited some of the best talent available to build driverless cars. The program began by retrofitting Priuses and Lexuses, but last year Google unveiled a vehicle all its own that lacked a steering wheel or pedals. Google’s ambition for transformation, its treasure trove of data, and its large war chest make it a flagship entrant into the autonomous vehicle space.

Tesla

A Tesla Model S shares more of its DNA with an iPad than a pickup truck—a promising sign of things to come.

The first all-electric car company (and the first American vehicular startup to get traction in nearly a century), Tesla and its charismatic CEO Elon Musk have made a habit of silencing skeptics. In addition to constructing a vehicle that has won near-universal acclaim for its aesthetics and performance, Tesla has done more than prove the appeal of electric drive. It has become the first automaker to look at user interface through the eyes of a software company, the first to enable over-the-air updates (sometimes replacing costly recalls), and now, the first to provide an “autopilot” function for autonomous highway driving. The automobile trifecta of electric, connected, and autonomous will characterize the vehicles of the future—as Tesla is ably previewing for us all. A Tesla Model S shares more of its DNA with an iPad than a pickup truck—a promising sign of things to come.

Uber

Many have called Uber a taxi killer. In fact, what Uber is really killing is the under-utilization of cars. Uber may have initially replaced cab rides, but at this point the service is replacing driving—by some calculations, transportation through Uber is less expensive than car-ownership altogether.

Uber is introducing a world in which cars are transportation-as-a-service (TaaS), and consumers are understanding that the gains can be manifold. Financier Jeffrey Gundlach recently discovered he could save “days a week” by getting work done while someone else did the driving. Uber is demonstrating that, as with most disruptions, future transportation won’t rely just on new products, but on new business models. The creation of the Uber Advanced Technologies Center at Carnegie Mellon’s National Robotics Engineering Center is a clear indication that the company has set its sights on a future business where robots do the driving.

Apple

The recent rumors about Apple’s Project Titan—a team of several hundred engineers secretly working on a special automotive mission—can only be understood in the context of the new world of transportation. Some have questioned why Apple would want to enter an industry with such tight margins and complex supply chains. Of course, Apple has no intention of competing with an established market, unless it’s on their own terms. From operating systems to music players to tablets, the company’s strategy is to wait until technologies are mature enough that it can step in, create a user interface and integration makeover, and release a category-killer.

Cars of the future, or whatever they might be called, will be defined less on driving performance and more on user experience.

Rather than buying your next car at an Apple Store, you might expect that your iPhone will be capable of summoning an Apple-enabled “office on wheels” to ferry you to your next meeting. Cars of the future, or whatever they might be called, will be defined less on driving performance and more on user experience. Inspiring design and intuitive user interface are the company’s hallmarks, and they are precisely the characteristics that will matter in this new world.

Within reach is the following: The end of automobile accidents, the end of traffic, the end of impaired driving, the end of looking for parking, and the beginning of a world in which transit seamlessly integrates into our lives. With all the life-saving, planet-saving, and time-saving gains, one might even describe the autonomous transportation economy as a moral imperative. The combined efforts of these four companies, legacy automakers with visionary leadership, and new companies that have yet to emerge, will collaboratively make this vision a reality. And that would put quite a dent in the universe.

ADD A COMMENT

  1. Michael Rabkin says:

    I was expecting a prediction about the impact of these developments on public transportation. The technology you envision seems to deemphasize (eventually eliminate?) the need for private automobile ownership. What do you think?