The narrative about Silicon Valley disrupting the motor industry has a flaw: The likes of Google probably aren’t going to build their own vehicles, self-driving or otherwise.
Traditional car companies will do it for them, just as outside manufacturers make cellphones for top Silicon Valley brands.
Oh, and the cars probably will have steering wheels.
At the annual Automotive News conference in Detroit this week, John Krafcik, who runs Google’s self-driving car project, explained that the tech company was going to “need a lot of help in the next stage of our project” and would be “partnering more and more”.
That was because “automakers have a track record of producing cars at scale” and Google didn’t have experience with mass production.
The Silicon Valley giant apparently was overambitious when it decided to build its own self-driving vehicles in 2014.
Google’s car initiative probably will resemble its Nexus programme for mobile devices: phones and tablets that are made and branded by established manufacturers.
They are only Google devices because they come with an unadulterated version of the company’s Android operating system, free from any manufacturer-introduced flavourings.
“The reason we build hardware with our ecosystem partners,” Google chief executive Sundar Pichai said last year, was “so we can guide the ecosystem forward”.
Google, however, doesn’t really build anything: The latest Nexus devices, the 5X and 6P smartphones, are made by LG and Huawei, respectively.
Now, 18 months after Google presented its toaster-like test vehicles to the public, it should be clear that car makers are not going to let Silicon Valley companies monopolise the software that is becoming increasingly important to the companys’ business.
Last year, German manufacturers pooled resources to buy the Here navigation map business from Nokia.
Ford has developed an open-source alternative to Android Auto and Apple CarPlay – the software products that link mobile devices to cars’ computer systems – and Toyota has signed up to use it. It turned out that vehicle makers can produce or source cutting-edge software.
They are working on their own self-driving technology, too.
With car manufacturers wary of letting Google and Apple take over an important part of their product, the Silicon Valley companies have a choice of two strategies: one is to build their own car-manufacturing operation, which is an enormously expensive and risky proposition.
The other approach is to outsource, which can be done two ways: The Apple-Foxconn model, in which the Chinese contractor builds devices to Apple’s specifications and under Apple’s brand, and Google’s Nexus model.
I suspect only the second is feasible, even for Apple, which has its own secretive motor programme.
No major car manufacturer, and probably no major parts maker, will build white-label cars for the tech companies: They have their own strong brands, and they know Apple suppliers would be forced to take huge risks.
One reason Google desperately needs a partner is that it’s finding it hard to reinvent the four-wheeled vehicle.
It has just made public a report on the 272 cases in 15 months when its test cars’ software told human drivers to take over and the 69 when the drivers grabbed the wheel because they sensed danger.
Google said the events were increasingly rare, but even if their number was cut down drastically, it’s unlikely Google would be able to fulfil its ambition of producing cars without the old-fashioned steering wheel, accelerator or brake pedal anytime soon.
The self-driving car will be, well, a car – except that it will be able to drive itself most of the time.
Compared with today’s vehicles, it will be enhanced, not reinvented.
Therefore, it makes little sense for tech companies to compete with traditional car manufacturers and lots of sense to partner with them.
Incumbent car makers don’t have to be passive victims as “software eats the world”.
Manufacturing prowess still counts, especially when coupled with open-mindedness and flexibility. – Bloomberg