This has been an interesting week for makers of autonomous cars and their supply chains, as well as for the ride-sharing market. Not only is the development of self-driving cars accelerating, the technology also seems poised to alter the ride-sharing business model.
For starters, Ford announced this week that it intends to have a fully autonomous vehicle for ride sharing in 2021. The company explains that—building on more than a decade of autonomous vehicle research and development—its first fully autonomous vehicle will be a Society of Automotive Engineers-rated level 4-capable vehicle without a steering wheel or gas and brake pedals. The vehicle is being specifically designed for commercial mobility services, such as ride sharing and ride hailing, and will be available in high volumes.
Key steps in the initiative are Ford’s investments and collaborations with several high-tech companies that produce technology such as light detection and ranging (LiDAR) sensors, and technology to create high-resolution 3D maps of autonomous vehicle environments. However, it also is aggressively expanding its Silicon Valley operations to create a dedicated campus in Palo Alto by building near its current Research and Innovation Center.
Sweden-based Volvo Cars also announced this week it’s teaming up with ride-sharing service Uber in a $300 million (265 million euro) joint venture to develop driverless automobiles.
“Both Uber and Volvo will use the same base vehicle for the next stage of their own autonomous car strategies,” Volvo, owned by China’s Geely, said in a statement. “This will involve Uber adding its own self-developed autonomous driving systems to the Volvo base vehicle.”
This, frankly, is where I think the nature of testing autonomous cars gets interesting because Uber announced this week that, starting later this month, it will allow customers in downtown Pittsburgh to opt into a test program and summon autonomous Ford Fusions and Volvo XC90 SUVs. But since the technology is still being tested, the cars will come with human backup drivers to handle any unexpected situations. As an enticement, the autonomous rides will be free, Uber announced.
The use of human backup drivers essentially means Uber is testing the technology and taking people along for the ride, Bryant Walker Smith, a University of South Carolina professor who studies self-driving technology, says in an Associated Press story.
“Part of this is marketing in the sense that they’re going to be doing continued research and development of these systems,” Walker Smith says.
Timothy Carone, a Notre Dame professor and author of “Future Automation: Changes to Lives and to Businesses,” says in the article that Uber is trying to gain an advantage by putting its cars on the road before competitors. But unlike Tesla, Uber is mitigating the risk with its own drivers.
“This is a way to get autonomous cars out there and accepted and increase the adoption rate,” Carone says.
Uber rival Lyft has not been ignored either. Earlier this year, the company announced that General Motors had invested $500 million in Lyft. There are now reports that GM recently made an offer to buy Lyft but was rebuffed.
The shift to autonomous vehicles marks a sea change for Uber and Lyft. Until now, they have had no substantial capital investment beyond the servers that run their ride-hailing software. Uber in particular has been very adamant in multiple lawsuits that drivers aren’t employees, but instead, are independent contractors and all Uber does is provide the platform that connects drivers and passengers. The vehicles used until now (except for autonomous test vehicles) have been owned by drivers who are responsible for their purchase, maintenance, insurance and fuel.
I am interested to see how the Uber program develops. What are your thoughts? Do you think the initiative will be received well? Would you ride in an autonomous Uber vehicle with a human back-up driver?