Analysis: Watch out for the robot car!

Analysis: Watch out for the robot car!

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By eeNews Europe

The Google car, as presented, targets a small segment of the mobility market: Short-distance commuting, taxi services in cities and similar services. No high speed, driving range probably not more than what is needed to drive up and down in the city for a day, though Google did not lose any word about this aspect. And it does not even have a steering wheel or pedals. It does not look like it is going to compete with the full-fledged cars most of us have in their garages. No competitor, thus, for the existing automotive industry?

The fact is that with its robot vehicle, Google opens the perspective to a new type of mobility: It takes the steering wheel out of our hands – in exchange for time. The time we spend on the search for a free parking space, or commuting in traffic stalls is wasted time. The average German spends fifty hours per year in traffic congestions, incapable of doing something useful because he is obliged to steer this vehicle and keep his hands at the wheel. Autonomous driving can free up this time for doing something more agreeable or useful, at least to some extend.

Another aspect is that the Google car apparently does not target a clientele that would scrap their conventional car for the Google vehicle. It looks more like Google rather targets an additional market of service providers – providers whose ‘product’ is mobility.

Though at the first sight it looks like taxi drivers should fear the Google car more than the traditional automotive industry, it reflects a customer trend that is highly relevant for the automotive industry as a whole: Among the younger generation, the ownership of a car has lost significance. This translates into lower interest in buying a car – instead, usage models like car sharing are booming. This trend already affects the strategy of traditional carmakers. At public appearances on trade fairs and industry meetings, BMW, for example, does no longer position itself as a manufacturer of cars. Instead, BMW defines itself as a "vendor of mobility".

Technological building blocks of this new type of mobility are, among others, the connected car and automated driving. In both of these areas, the European automotive industry has reached a similar level of technological maturity as Google. Past year, Daimler sent an automated car over the same route as Berta Benz took in the year 1888 during her historical first-ever cross-country trip with an automobile a distance of some 100 kilometres. In Gothenburg, Volvo is currently tests automated driving with about 100 vehicles – on public roads and among normal traffic.

When it comes to automated driving, technology today is much less a roadblock than the legal and insurance situation. The Vienna Convention on Road Traffic (not signed by the U.S., by the way) as well as liability aspects currently prevent carmakers from offering such vehicles. But in the light of the current development it is expected that the discussions and processes among lawmakers gain speed.

But there is another aspect why Google scares the traditional automotive industry with its seemingly harmless two-seater: It highlights the fact that it is possible to build a car without having any experience in this business. Who ever feels inclined to participate in this market can have built a vehicle by engineering service providers and contract manufacturers. Given the highly fragmented value chain in today’s automotive industry, a large percentage of the intellectual property, experience and expertise associated to making automobiles is no longer in the hands of traditional carmakers but of other members of the value chain – and as such, it can be purchased by anybody with deep enough pockets (we believe that Google’s pockets meet this requirement). The advent of electromobility already confronts the illustrious and elitist circle of traditional carmakers with the prospect of new contenders stepping into the ring and increasing the heat of competition. As an example, Siemens (not exactly a company with great expertise in car building) recently announced a joint venture with large Chinese car company BAIC that aims at mass production of electric powertrains. And there is certainly more in the offing.

All these aspects press the traditional automotive industry into a defensive situation. After all, designing and building cars is all they can do. In contrast, companies such Google have a broader set of options. Could, for instance, Audi build and run an internet search engine? Rather not. But could Google build – or better: have built – cars? Apparently yes. And we should not think that Google’s capabilities just suffice to create such an endearing two-seater.

It looks like the world is becoming a tougher place for traditional carmakers.

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Google robot car targets urban services

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