No, the tech giants from California won’t revolutionise transportation

The action in automobile industry has long shifted from Detroit but you can’t change the fact that some of the most iconic car brands on this planet were born there. Abbott, Buick, Cadillac, Chevrolet, Ford, Chrysler, practically every American manufacturer you would have heard of was born there. However, over the past few years, the headlines talking about the developments in automobiles haven’t been talking about these companies. Neither were they talking about the Germans or Japanese who are often considered to be leading from the front when it comes to innovation in automobiles. Instead, they have been talking about big names from tech industry like Google, Apple and Uber.

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Lately the region has been at the centre of conversations where you won’t be able to use the word ‘tech’ five years ago. Food tech, fin tech, edu tech sound all too mainstream now and it is becoming the case with automobiles too. Google, Tesla, Uber, Lyft, Didi, Baidu are just some of the bigger names finding room in those headlines. We have somehow collectively concluded that the automobile industry is fighting a losing battle and that the ‘app’ companies will be ruling the roads four years from now. It is often said that the automobile industry is slow to move and lack the agility that we often associate with the tech companies.

But is that really the case? Since earlier this month, a study by Chicago based Navigant Consulting has been doing rounds of the internet. The study ranks 18 big name companies on the progress they are making with driverless vehicles and surprisingly (or unsurprisingly, depending on your view), Ford, GM, Renault-Nissan and Daimler have topped the list leaving behind the buzzmakers like Waymo and Tesla. While I am having bit of a ‘knew it’ moment here, why is that the case?

Well, you keep talking about the tech and the tech companies will continue to appear on top. However, once you move past the ‘Medium’ posts and tech media reports to take a closer look at how the real world works, you will realise that you haven’t been looking at the whole picture. Google for instance is relying on cars made by other manufacturers, Lexus mostly. Tesla is making its own cars but is counting on radars and ultrasonic wizardry instead of Lidar systems. Uber hasn’t got much of its own in terms of self-driving hardware and is testing on Volvo vehicles.

But beyond all of this, when we talk about cars, it really is a different game altogether. The major car companies carry experience that is counted in decades and not years and yet, it is usual for them to spend 5-7 years working on a product before finally giving it out to the masses. While they could have clearly improved a bit upon the agility front, they really can’t move things like they do in tech companies. With vehicles that move in the real world, you can’t skimp because real lives are at stake. Plus technology allows you to push out a new software to millions overnight, it doesn’t allow you to build and put thousands of cars on the road. The objective is not just to make a car drive itself. The objective is to build an army of these cars and turn the world around with them.

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Tesla has clearly set the tone for bringing the two industries together but the automakers haven’t been lagging significantly either. The auto companies have moved quickly to make up for their lagging points on the tech front. They have either acquired or invested in companies that could help them strengthen that front and are already stronger on other fronts. And it is not like they have exactly been left behind with technological innovations either.

Last year, Baidu and BMW decided to part ways and for that, Baidu claimed that there was difference in the pace at which the two companies were operating. That is basically PR phrase for “We are better than those guys and will build something in half the time”. Guess what, BMW showcased their early versions of working driverless cars even before Baidu jumped onto the mobile revolution. The likes of Volvo, Merc and Audi have long been saving lives with all their electronics. And almost all these companies are also looking at the distribution front by either creating or acquiring sharing businesses. My bet for the future of transportation is on Detroit (or Germany maybe?). What do you think?

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Akshay Sharma

  • Doug

    I’m not sure but I think tech giants are revolutionizing the transportation industry. Successfully removing the combustion engine combined with autonomous driving also revolutionizes a number of industries: insurance, taxi, OTR truck driving, city parking, vehicle repair/service, vehicle financing, etc. Amazing.
    However, I would agree with your closing statement, “My bet for the future of transportation is on Detroit”…they’ve got the money, facilities, income, etc to outrun all but possibly Tesla (It’s very tough to bet against a guy (Elon Musk) that’s certainly has change at least the trajectory of the auto and space travel).

    • Akshay Sharma

      Yes the tech companies have nudged the car companies without a doubt. They have given the car makers a sense that they might be displaced if they don’t keep up. But at the end of the day, it will come down to who has the scale to deliver the solution.
      Speaking of Tesla, like I said, that company is probably the best example of what a hybrid of the two kind of companies is like. However, look outside the western hemisphere and they are nowhere at this point.

      • Doug

        Regardless, it’s great to see the stepped up innovation & competition and how this will play out. We will all end up further ahead.

        • Akshay Sharma

          Absolutely. No doubt about that.