GM’s self-driving car business gives up going out on its own

  • October 4, 2018

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In the race to develop autonomous cars, winning does not necessarily mean coming first.

General Motors has bolstered its claim to be the leading carmaker developing self-driving systems after Honda invested $750m into its Cruise division, with the promise of a total of $2.75bn over 12 years. The agreement follows on the heels of SoftBank’s $2.25bn injection in May.

Yet of the many self-driving projects under way across carmakers, technology providers and start-ups, none have launched fully as public services — which means assessing who is “ahead” in developing self-driving cars is incredibly difficult.

“We see this as the race to the starting line,” Dan Ammann, GM president, said on Wednesday.

Almost every major manufacturer is working on autonomous vehicles, a technology that promises not only to cut road deaths but also to open up potential new business models such as robo-taxi ride-hailing.


The amount Honda has promised to invest in GM’s Cruise division over 12 years

The automotive calendar for the next five years is peppered with prospective launch dates.

GM has announced it plans to launch a service in 2019, while Toyota wants to have robo-taxis ready by the Tokyo Olympic Games in 2020. Ford plans a service by 2021, and Renault by 2022. Volvo pledges that a third of its cars sold will contain autonomous technology by 2025.

Waymo, the self-driving unit of Google’s parent company Alphabet, which is often seen as the clear field leader, has racked up more than 9m testing miles — far more than any other known player in the sector — and has already begun a trial service for potential customers.

It is testing in 25 cities in the US, but the single commercial operation is in Phoenix; sprawling trials in urban centres with worse road conditions, heavier congestion or poorer weather are therefore difficult. 

While somewhere like San Francisco, where GM is testing, offers more complicated driving scenarios, the cars on its streets often crawl along, not dealing with the highway speeds encountered over in Arizona.

“We think solving the hardest problems first is the way to really advance and develop this technology,” said Mary Barra, GM chief executive, on Wednesday.

Some companies, such as Aurora, a group started by former Waymo director Chris Urmson that is working with Volkswagen, Hyundai and the Chinese electric group Byton, test their cars in deliberately difficult conditions to help them “learn” faster.

There are other examples. 

BMW, Audi and Mercedes all began trials recently in China, in part in order to test their technologies on the country’s often-chaotic highways.

A specially built driverless car testing centre near Detroit, used by several carmakers, has features designed to explore the limits of self-driving cars, such as a bridge where cars are driving into bright sunlight, blinding the vehicles’ cameras.

Waymo’s head start is no guarantee of success

One of the most common benchmarks of who is “winning” is data from California, where autonomous testing is permitted, that shows how frequently human “safety drivers” behind the wheel of self-driving vehicles have to retake control.

The latest annual data from the California Department of Motor Vehicles, or DMV, shows Waymo clearly in the lead, with 63 engagements over 350,000 miles driven, or 0.18 per 1,000 miles. GM was second, with 105 engagements over 131,000 miles driven, 0.80 per 1,000 miles. Almost every other manufacturer racked up only a few thousand miles of testing, often with more disengagements.

But the data are released with a lag and the benchmark also reflects badly on companies whose testing is not especially focused on California, such as Ford, BMW or VW.

“It is tough to say who is ahead,” said George Galliers, analyst at Evercore. “It is difficult to know where they are on a relative basis until we see DMV stats next year, and even those are not necessarily comparing apples to apples.”

Waymo’s head start on the industry is no guarantee of its success. What it took several years to learn is now widely known across the plethora of start-ups competing in the world.

Promises by GM to launch next year, and by Waymo late last year to launch “in the coming months”, need to be seen in the context that any serious level of take-up will require much greater scale than a single city.

Analyst Adam Jonas at Morgan Stanley said rollout of the technology may be much slower than expected due to the “moral, legal, and regulatory factors, including public acceptance of the technology”.

It is likely that several different services could spring up in multiple locations, he added. It is “still early days” and there is “room for several winners in this market”.

Ford, which is perceived as being behind GM in technology, plans to launch “at scale” in 2021 with a service that offers both passenger services and also goods deliveries.

Meanwhile, Mrs Barra, by praising Honda’s “geographic reach”, signalled that Cruise planned to leverage its new shareholder’s international presence to launch in markets further away from GM’s heartland, such as Japan.

What Honda’s investment brings to GM’s Cruise

Honda’s tie-up with Cruise brings two other powerful things to the company. The first is “external validation” for the technology, which now has the backing of another carmaker.

That helps it in the contest against BMW. In 2016 the German carmaker launched a partnership with Intel, the chipmaker, and Mobileye, a camera business subsequently acquired by Intel, and said it wanted the consortium to become the blueprint for the industry. The venture has since been joined by Delphi and Fiat Chrysler, making it one of the only other self-driving projects to attract more than one carmaker.

Meanwhile, Ford split its self-driving division from the rest of its business in July, and is currently in “active discussions” with possible investors into the unit, the company said.

The other powerful thing — perhaps the most important — that Honda brings to the table is money.

This is essential when looking to deploy in several areas. Adam Jonas at Morgan Stanley estimates Cruise has $9bn at its disposal to roll out its service, once Honda has invested the full $2.75bn it pledged.

“It gives Cruise even more cash to scale up autonomous vehicles quickly without further using GM’s funds,” said David Whitson, automotive analyst at Morningstar.

Joseph Spak, auto analyst at RBC Capital Markets, said: “The need for capital to execute on autonomous efforts could be greater than appreciated. Thus, companies may need to look for additional partners. We would expect further ‘consortiums’ to develop to help bring autonomous to reality.”

Additional reporting by Patti Waldmeir in Chicago 

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