The auto industry is going crazy over self-driving vehicles

Oct 20, 2016

I am not sure where the clamor is coming from. But judging by the Paris motor show, the auto industry is going crazy about electric cars and self-driving vehicles.

The appeal of gasoline power, except for high-performance cars, seems to have faded. Volkswagen has done an effective job of killing any interest in diesel. Almost everybody is going to have an assortment of hybrids and pure electrics, and there will be a smattering of hydrogen power.

On top of that, car companies are racing to create many different versions of self-driving vehicles.

The motive for developing zero-emission vehicles is obvious. With a looming corporate average fuel economy mandate of 54.5 mpg in the U.S., one solution is to add some electric vehicles to help comply.

Self-driving vehicles, meanwhile, will need millions of miles of testing, and that will take many years. Before they are allowed on our public roads, autonomous cars are going to have to display an artificial intelligence that will go far beyond cameras and computers.

We don’t even know what the market for self-driving vehicles will be, yet companies are investing billions of dollars in this new and unproven technology.

I think the first market will be big commercial trucks. They spend a lot of time on long stretches of sparsely populated highways. A second large market will be senior citizens willing to pay a premium for extra years of freedom and mobility.

We will have to wait and see whether this massive investment will pay off short term or long term.

The challenge with electric vehicles will be to sell enough of them to help companies reach the 54.5 mpg mandate. That’s a tall order in any environment. To do it when gasoline costs are as low as they are now would be an even tougher challenge.

Decades ago, the industry was slow to adapt the computer to the automobile. Today, it seems, new technology is brought to vehicles every month. The advances have been rapid and amazing.

Automakers will now have to convince consumers that they need that technology and get them to pay for it. Easier said than done.

Even so, it will be fascinating to watch the evolution over the next decade.

Amid all the turmoil, one thing will be certain: The process will define a whole new generation of winners and losers.

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