Friday, August 25, 2017

(The Big Disrupt) Apple: Why Apple Are Scaling Back Their Driverless Car Plans

With the news of Apple joining Google in scaling back its driverless car plans and focusing on developing driverless car OS software, it's clear that the future of the driverless car won't be lead exclusively by Silicon Valley.     

Silicon Valley is littered with companies that considers its vision of the future before plain economics but when you have two of the most highly capitalized companies in the world take a step back as far as their self-driving car ambitions are concerned, it's quite clear the reality of how capital-intensive designing and manufacturing self-driving cars at scale has would be has hit home for Silicon Valley giants Google and now Apple. 

The only reason why Google and Apple are so interested in driverless cars in the first place has very little to do with changing the way we get around or making roads safer and more to do with expanding their already large and formidable ecosystems. However, it seems (wisely) that neither Google or Apple are willing to waste their considerable resources on designing and producing self-driving cars at scale to expand their ad inventory or head off increasing concerns about their dependence on iPhone sales. 

Add to that the legal, regulatory and even philosophical roadblocks that stand in the way of driverless cars seeing the light of day even if they're road ready at level 4 or 5 capacity in the next five to ten years is enough to give pause to any company managed by executives with their heads screwed on straight. However, what may have been the deciding factor in Apple limiting the scale of their driverless car plans is the muddy economics of making money from the final product. 

It could well take Apple years to make money on billions invested in R&D, acquisitions and political arm twisting in Washington and Brussels just to get a small fleet of driverless cars they would most likely would have subsidise at great cost. Apple would then have to reckon with the rarely addressed fact reflected in just about every car consumer poll that not everybody is dying to get from A to B in a car without a steering wheel or brake.  

Even automakers are realizing the economic viability of driverless cars are murky at best which is why Ford recently announced that they plan to have a driverless fleet ready by 2021 which would put it in direct competition with rideshare companies Lyft and Uber. However, such an announcement only highlights the questions surrounding the potential profitability of getting driverless cars to market. Both Uber and Lyft are losing money with Uber reported to have made an eye watering $3 billion loss last year. While much of Uber losses have been driven by the cost of paying human drivers a larger cut of fares collected from customers, it's still no guarantee Apple could see a return on what would be a sizeable investment.              

While Apple have pockets deep enough to eat large losses to expand their ecosystem, it's no surprise Apple are taking a step back as it would be cheaper to simply buy an automaker, most likely General Motors or Tesla, to mass produce driverless cars in the future. A big acquisition in the driverless car space looks almost inevitable as automakers don't have the cash or reach to take Apple or Google on directly and neither Google or Apple seem keen on becoming car manufacturers which is why automakers and tech companies have been partnering up left and right. 

What this all means is that we may have to wait a little for our first ride down the block in a driverless car.

No comments:

Post a Comment


Related Posts Plugin for WordPress, Blogger...