Large auto players are competing with Google Inc (NASDAQ:GOOGL) in the commercial development of driverless cars. In the fray are Tesla Motors Inc (NASDAQ:TSLA), Delphi Automotive PLC (NYSE:DLPH), Volvo, Daimler, Audi, Nissan, General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F).
High stakes
At stake are trillions of dollars. The US boasts of a $2.5 trillion car related industry. But vehicle sales in the US make up just a modest 19% of global sales.
Where the car related trillions will go depends on whether or not driverless cars will need human drivers. The world’s leading scientists and engineers are divided on this issue. In one flank is big auto. They are focusing on driverless strategies that augment instead of replacing human drivers.
A Tesla spokesperson claimed that the firm’s objective is not to get rid of the driver. Rather the latter will be relieved from tedious tasks and can concentrate on other aspects of driving.
Google, however, is aiming at fully autonomous cars.
If human drivers need albeit for 1% of each trip, there will be quite less strategic disruptions. There will be an expanding repertoire of driverless capabilities and functionality. However, there need not be upheaval in industry structure or in how cars are produced, sold as well as operated.
The effects on peripheral players will be mixed. Insurance firms, car repair outlets, and emergency rooms will have to deal with considerably fewer accidents. Some players would need to adapt to new technology. However, their very existence will not be endangered.
If human drivers are completely done away with there will emerge a significantly new model of transportation. The latter will trigger new players and business models to rival or render obsolete the old business system.
Paradigm shift
The absence of human drivers alters the transportation economics. There would be fleets of 100% autonomous and driverless taxis. The latter would offer efficient door-to-door transportation. Operating costs will be slashed significantly, and service levels will experience a boost.
