Is the Market Ready for Autonomous Cars? Autonomous vehicle tech is the buzz everywhere, but when it comes to long term investment you need to look beneath the surface.
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In investing and stock trading it is hard not to get caught up in the Wall Street buzz. What the analysts rave about and what investors talk about everywhere eventually influence your decisions. But when you’re making any kind of long term investment, it’s always important to think long and hard before making the move. Autonomous vehicle (AV) technology is a market with great potential that is quite talked about, as if it is going to be here, soon. So if you’re looking at long term investment in this area, you might be thinking of investing in companies that have already announced concrete plans and proceeded with the development. Self-driving car tech seems to be the buzz everywhere, but is there still a market for it? Are our cities and roads smart enough to safely accommodate cars driving by themselves? Ford ($F) doesn’t think so, which is why its autonomous vehicle plans are less aggressive than those of rival $GM or Tesla ($TSLA). And Ford’s philosophy could be the right one, since only when there is a market for some technology, is investing considerable money and resources in it worthwhile.
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Autonomous Vehicles Will Be Here, But How Soon? Self-driving cars are touted as the future, and they are indeed. But the media buzz surrounding it seems to indicate that autonomous cars would be plying the roads in just a few years. Indeed, autonomous cars could potentially reduce road deaths and injuries caused by accidents, but analyst Martin Tillier reminds that the regulations need to be framed before these vehicles can be sold to the consumer. The insurance industry also needs to come up with the terms for covering incidents involving autonomous cars. Ford Is Taking Its Time In an article on Fortune.com, Daniel Bentley quotes Ford’s Executive Chairman Bill Ford as having indicated that he isn’t in any rush to launch an autonomous vehicle. That’s because without the infrastructure in place it wouldn’t make sense to invest in driverless vehicles and launch them. Ford claims there isn’t a market yet for them. And without the regulation and infrastructural framework in place, it could be more dangerous to have cars operating on their own.
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But Ford isn’t being ambiguous about autonomous cars. Bentley quotes Ford’s Dr. Ken Washington, vice president for research and advanced engineering as having said back in April that the company will have an AV in place by 2021 that will be able to handle almost any condition. But that would be a development vehicle. Customers would only be able to get their hands on an autonomous car from Ford around 5 to 10 years after that. GM and Tesla Are Already Into Semi-Autonomous Tech That may seem a long time, but perhaps that’s the right time. Ford has differed here from the strategy of General Motors and Tesla. Both have launched semi-autonomous systems. Tesla has its Autopilot, and GM’s recently launched Super Cruise system has been reviewed too as being a great feature. Ford is bypassing these and going on to launch a full-on autonomous vehicle just in time when the market has evolved enough. But without the experience in launching semi-autonomous vehicles as Tesla and GM have done, is Ford actually missing out on development?
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Ford Is Saving Precious Resources for the Right Time Analyst Martin Tillier believes that Ford is actually saving the costs and investment, to launch an autonomous vehicle when the market is actually ready. Otherwise it runs the risk of bringing out a product and letting all that investment go waste, because frankly the practical scenario isn’t quite ready for it. We need smarter cities – let’s not forget that the technological quest of making cities smarter with intelligent street lamps and traffic lights is ongoing – and appropriate regulations in place. That’s why Ford’s strategy seems the right one for Tillier. And it makes GM’s strategy questionable. Both Ford and GM are in the taxi or ride-sharing market too but it is GM, via subsidiary Cruise Automation, which is planning to use its AVs for providing ride-sharing services, and thereby have its say in the already competitive ride-sharing market. That could probably not turn out well for GM, according to Tillier, since the market is already overcrowded. Ford, though, only wishes to provide its fleet vehicles to ride-share companies already in existence, such as Lyft and Uber.
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Tillier also finds GM’s claims that it could be producing autonomous vehicles in just a few quarters as questionable. With the market not quite ready for it, GM could be investing its precious resources into something that could turn out to be “a white elephant”. All that money spent to rush autonomous vehicles would prove to be an unnecessary burden. Ford’s cautious approach to AVs and its strategy in the ridesharing market seem more sensible for Tillier, who believes Ford to be a better long term autonomous vehicle investment, as a result.
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