In the lead-up to the International CES in Las Vegas two weeks from now, rumors are beginning to run wild that
Such a venture between the century-old automaker and the Silicon Valley technology titan has the potential to benefit each in numerous ways, though there are no guarantees of success. Nonetheless, they may have no reasonable option but to try hooking up to bring shared, on-demand transportation services to the masses. A number of recent moves by the two companies, including the announcement of Ford’s dynamic shuttle service and
For many years now, Ford has been aware that the future of its core business of building and selling cars and trucks to people is probably not sustainable over the long term. It’s not that the need for individual transportation devices is going away, far from it. With a growing global population the need to move people is stronger than ever. However, increases in population density and urbanization plus the need to address traffic safety and environmental issues means that individuals are less likely to be the ones purchasing vehicles.
Similarly, despite record profits, Alphabet (the recently formed parent holding company of Google and numerous other ventures) is feeling the pressure on its core advertising business. Google built a fortune by delivering targeting online advertising based on the information it collected from users and charging higher rates than its competitors could. But now anti-trust and privacy concerns threaten that business which has pushed Google’s founders Larry Page and Sergey Brin to try out an array of new possibilities for future revenue streams including self-driving cars.
But why these two companies and why now?
Over the past several years, Ford has consistently tried to rebrand itself as a smart mobility company rather than an automaker. While the consumer-facing company has consistently attempted to create more appealing mainstream products that drive sales today, behind the scenes, the staff at the company’s Research and Innovation Center in Dearborn have been dabbling with a range of ideas including autonomous and connected vehicles as well as carsharing services.
Many major automakers including
Total Members in Carsharing Services by Region, World Markets: 2015-2024 (image credit: Navigant... [+]
On the other hand, taxis have long provided the sort of on-demand, point-to-point mobility that people desire, but they can often be difficult hail during busy times as well as being costly. Google Ventures was an early investor in Uber, a service that enabled drivers with cars to effectively become taxi drivers on demand, circumventing the highly regulated licensing systems in place in most large cities. The key to Uber’s success has been to leverage smartphone technology and a cloud-based infrastructure to connect passengers and drivers in the most efficient way possible.
However, while Google Ventures still owns its stake in Uber, the companies have largely taken separate paths recently following controversial public statements and actions by members of Uber’s executive team. Early in 2015, Uber established its own autonomous vehicle program in Pittsburgh, Penn. hiring away many of the top researchers from Carnegie-Mellon University that had been working with GM.
Since launching its self-driving car program in the wake of the DARPA Urban Challenge program that concluded successfully in 2007, Google has made tremendous progress on advancing the technology, but very little in terms of commercializing it. Over the past two years, representatives at several automakers have acknowledged on background that Google has approached the companies to collaborate on autonomous vehicles.
The problem is is that Google wanted the manufacturers to simply supply the vehicle platforms and Google would provide black-box autonomous control systems that the automakers would have no control over. Citing liability concerns among other issues, none of these companies have been willing to turn over such control to Google.
It’s likely that Google’s attitude toward the traditional industry has shifted significantly since former Ford and Hyundai executive joined the Mountain View, Calif. company in September as the CEO of its car program. Krafcik’s career in the auto industry has made him more far more aware of the difficult realities of mass-producing cars than those that have spent their entire working life writing software in northern California. As a result he is more likely to be able to cut mutually favorable deals than his colleagues.
Meanwhile back in Michigan, Ford recently announced its Dynamic Shuttle service. Ford has long operated a fleet of shuttle vans to transport employees among the dozens of buildings it occupies on its sprawling product development campus and the surrounding area in Dearborn and Allen Park. Until now, an employee could call a central number from a company phone and request a shuttle ride but could never be entirely sure when it would arrive or whether it would get them to a meeting on time.
Using its existing big data infrastructure that helps in the product development and marketing process, Ford has built an Uber-like system that tracks its updated fleet of shuttles in real-time via location transmitted back from the new Transit vans. Shuttles can now be dispatched in real-time to where they are needed using a smartphone app provided to employees just like Uber. The new fleet of vans has also been optimized to help keep everyone productive while moving around with on-board WiFi, storage space and USB charging ports at each seat, exactly the sort of amenities that riders might expect in a consumer product.
For now the Dynamic Shuttle fleet continue to be driven by a crew of drivers consisting mostly of retirees from local Ford factories. At the announcement of the service, Ken Washington, Ford vice president of research and advanced engineering declined to give a timeline for when the company might start using autonomous vehicles as part of the program although he acknowledged that it would make sense to do that at some point.
Last September, GM announced plans to do exactly that at its Warren, Mich., technical center sometime in 2016 using a fleet of autonomous Chevrolet Volts. GM has a logistical advantage because its tech center is self contained and the vehicles won’t have to go out on public roads to move people around. Ford’s facilities are spread over a much larger area so the autonomous vehicles are likely to be limited to the product development center at first.
Ford and Google are likely to establish a pilot program that combines Ford vehicle platforms and its new ride dispatching platform with Google’s autonomous control systems to provide a commercial mobility service. In the near term, this is likely to be offered as a service to commercial and academic campuses in much the same way that Ford using it. Over the longer-term it would likely be expanded to urban centers where no human driven cars are allowed.
From the nearly two million miles of public testing conducted to date by Google to date, it has become clear that contrary to expectations, autonomous vehicles have actually had roughly double the accident rate of traditional vehicles. However, these accidents have all been caused by human-driven vehicles running into the computer-driven machines. As a result of the mismatch between the ways that people and computers drive, fully autonomous operation may be limited to zones where the vehicles don’t have to mix. Regions like London’s central congestion zone may well be where these systems are first widely deployed.
Together, Ford and Alphabet/Google have the potential to help define the new business model for the transportation industry in the 21st century.
