Automakers may mesh self-driving cars with ride-hailing – USA TODAY
As automakers pick up the pace of announcements when it comes to preparing for a future of ride-hailing services and self-driving cars, they may be looking at a new business model.
While for now they are hooking up with services like Uber and Lyft, they may end up providing ride-hailing or shared transportation services themselves as a matter of survival.
“All the major automakers can see that their business model based around simply building a vehicle and selling it for a profit may not sustain them in the second half of this century,” said Ian Riches, director of automotive practice at Strategy Analytics in London. “Unless they do something they’re almost guaranteed to fail.”
Big announcements from major automakers vowing advances when it comes to technology and self-driving cars are piling up.
Just recently, consider:
•Ford pledged to create a self-steering, self-accelerating, self-braking car by 2021.
•Volvo and Uber promise 100 autonomous XC90 crossovers on Pittsburgh streets by year’s end.
•General Motors has a handful of self-driving Chevrolet Bolts in San Francisco and Scottsdale, Ariz.
No sooner had Uber announced its Pittsburgh project than it acquired Otto, a 90-person start-up that has developed self-driving truck technology.
Volvo’s tie-up with Uber is just the latest example of a car manufacturer hooking up with the ride-sharing giant. Toyota has made an unspecified investment in Uber. GM is committed to putting autonomous Chevrolet Bolts — its long-range, electric car — in Lyft fleets, but has not said when.
Besides technology, the hookups are being driven by changing demographics.
Lyft co-founder John Zimmer told Bloomberg News earlier this year that 80% to 90% of all shared rides occur in the 20 largest metro areas. Today, about half the world’s population lives in cities. By 2050, that will grow to three out of every four people. In the largest mega-cities, owning, operating and parking a privately owned vehicle will be prohibitively expensive and inconvenient in gridlocked traffic.
That makes ridesharing an obvious answer.
Traditional automakers have succeeded at service-based businesses — most notably their financing operations, and in GM’s case, the subscription-based OnStar driver assistance and infotainment system — but on-demand mobility will be new turf.
Uber and Lyft see self-driving cars as a way to reduce some of their biggest costs, including recruiting, screening and paying drivers. But when these driverless cars are street-legal, the ride-hailing firms will have to pay whomever makes them.
Sam Abuelsamid, a former engineer and now senior analyst with Navigant Research, said some automakers could decide to compete directly with Uber and Lyft.
How will they recoup their manufacturing costs? Will rates fall as more competitors enter the market? Will rides in autonomous cars cost more than those with a driver?
It’s too early to know.
“In the short term they may have to subsidize it from their traditional business, but their advantage is they won’t have to buy cars. Uber will,” Abuelsamid said.
There’s widespread uncertainty surrounding federal and state safety standards for self-driving vehicles.
The National Highway Traffic Safety Administration was expected to release an initial set of guidelines in July, but they have been delayed.
What does this technology race mean for the brands of automakers, which have been rooted in performance, excitement, emotion, consumers’ self-images? No one is sure.
“There’s no guarantee that any of this is going to work,” Abuelsamid said. “Everyone believes that autonomy is certainly the future. Nobody wants to be left out.”