Obsolete Business Model? |

So, we talked yesterday about driverless trucks and planes. And, while I doubt we’ll be getting driverless cars soon, I am sure that we will benefit from a slew of driver assist components that are part and parcel of this new concept.

Part of the reason behind this is was what I mentioned yesterday. Insurance regulations will have to be developed that discerns who is at fault in accidents- the human in the car (who could be underage, given true driverless capabilities), the producer of the software, or the car manufacturer.

It should be clear to most of you that the code requirements for a driverless car will far exceed those of 787 Dreamliner. (Oh, now you understand how aviation can be automated already and not cars. Not the least of which is that a qualified pilot is on the yoke.) There are some 100 million lines of code in a driverless Tesla and about 7 million for that Dreamliner.

And all that code is a dream target for hackers. We’ve already seen folks can hack into car systems (overriding the crash control, parking, etc.) and even into airplanes. The hackers gain access via Bluetooth, WiFi, or even the fancy radios some of these vehicles have. And, controlling the cruise control , collision prevention, and lane-keeping of the cars is then a breeze.

But, that is not stopping the car manufacturers from proceeding with these “improvements”. They are worried that they will be presented with an outdated business model, just like the railroad industry was a century ago. So, the manufacturers are desperately examining car sharing, driverless cars, among other technologies to ensure they can survive the change in economic landscape. The driving force is that cars are the second most expensive item purchased by a household. Yet, that car is only used 4% of the day. (A home, of course, is the most expensive household purchase.)

And, as I’ve already discussed, millennials are not buying cars. And, folks my age are abandoning their love affair with cars. (No, dear readers, they will have to pry the steering wheel of my customized vehicles out of my hands with great force.) which clearly means auto manufacturers need to consider new business models.

Google is already partnered with Fiat-Chrysler. And, the project goal is to have 100 Chrysler Van (Pacifica Hybrid) enabled with the Google technology. Chrysler will redesign the vans so the computers and sensors will be easily installed. This project is a win-win, since Fiat knows cars and what consumers want in a car; Google knows the driverless technology.

GM is testing different ideas. For example, they’ve invested in Lyft (the Uber competitor). GM is to supply Chevy Equinox (and soon the all-electric Bolts) to Lyft drivers in the Chicago area. But, GM’s ultimate goal is to offer autonomous electric taxis- based on the Chevy Bolt. This $500 million investment in Lyft followed up the $ 1 billion GM invested to acquire driverless technology itself (San Francisco’s Cruise Automation, Inc.). The initial venture will be in one (undisclosed) city- and consumers will have the ability to opt into autonomous or driverless rides. The rider will interface with OnStar (the GM automotive app) for questions or for assistance; telling the car to go when s/he is ready and when the ride is finished. (How’s that for science fiction come to life?)

GM is also venturing into car sharing services (a la Zipcar- which entity is now owned by Avis). Called Maven, the service is expanding from its test phases in Ann Arbor (Go Blue), Chicago, and New York to include DC and Boston. Using the Chevy Volt (plug-in cars) and Chevy Malibus, the cars rent for about $ 6 an hour (higher in New York, of course). In Chicago, the service is cahoots with Zirs, a parking venture, which actually delivers the vehicles to customers.

Ford is also worried about their business model. They have developed FordPass, which affords folks the ability to reserve and pay for parking; the service even lets car owners rent their vehicles to other drivers. Clearly, this will divorce the one-to-one relationship people have with their cars. But, so far, no driverless cars for Ford.

Volvo plans to introduce about 100 driverless cars on Chinese highways. Chang’an Automobile has two driverless cars on Chinese roads now. (Chinese firms have been raiding American and Western firms to acquire the technology, such as from Google and Daimler Benz.)

Recently announced liaisons for Toyota and Volkswagen just crossed our transoms. Toyota has an Uber partnership (including a direct investment in the firm). Besides the investment, Toyota will be providing special finance rates to Uber drivers, enabling them to pay down the cars as they drive for Uber. So, the drivers will be (in my opinion) indentured servants to both Uber and Toyota, as has been the case for some trucking firms that provide financing to their truck drivers. (I do not consider, however, that Toyota will be as nefarious as the trucking firms have been.)

Volkswagen is investing $ 300 million in Gett, the Israeli firm. This taxi and black car provider (they do not provide individual vehicles masquerading as public conveyances) has strong positions in Europe and Asia, and is now expanding to New York City. Given the mix of their offerings, it is not surprising that Gett is on the business – more than the consumer- side of these ridesharing enterprises.

And, to make sure they are not locked out of the business, even Apple is investing in driverless cars. They just dropped $ 1 billion to acquire a Chinese “taxi” firm, Did Chuxing, a Uber-like entity. And, why China? Because Apple is betting that China will let driverless cars come into being long before they are routine on US roads. China has regulations to let autonomous cars operate on highways within 4 years- and on city streets in less than 10. Not to mention the fact that China operates as a national transportation system, not like the US where there are more than 50 different systems to navigate.

It’s going to be a very interesting automotive industry change.