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How Self Driving Cars are Rewriting the American Dream

How Self Driving Cars are Rewriting the American Dream

Autonomous driving and electric vehicles are undoubtedly the future of the auto industry, but how these technologies reshape the industry and its integral role in the American Dream could change who the winners – and losers – are.

The electric vehicle stock boom in 2020 was far from the start of the speculation and interest in the industry, and is likely to be far from the end of the conversation between electric vehicles versus their slowly antiquating counterpart of gasoline and diesel vehicles. In addition to being cheaper per mile to drive, they also require fewer parts which in turn affords electric vehicle makers the freedom to innovate every other aspect of their car, as they need less space for the various systems fossil-fuel powered cars require.

This has put to the electric vehicle market at the forefront of a lot of the innovations that we expect to eventually find their way into everyday vehicles, including autonomous driving features. The merging of cutting-edge battery technology and AI powered vehicles has spurred thousands of EV-related startups, all with their own answer to the question of, “What will be the role of cars in the future?”

Self-driving car technology is broken down into five levels, ranging from driver assistance in Level 1 to full automation in Level 5. Today’s technology mostly falls between Levels 2 and 3, with Google’s Waymo division and Tesla’s Full Self-Driving currently beta testing in the “High Automation” Level 4, which requires no person in the driver seat, but is restricted to only operating without a driver when driving in known cases.

The latest bullish news surrounding the world of self-driving cars is that Microsoft (MSFT), alongside a group of other companies, is joining forces with General Motors (GM) in a $2 billion investment in GM’s self-driving startup ‘Cruise’ and will see Microsoft’s Azure cloud-computing as Cruise’s cloud service provider.

Microsoft’s interest in self-driving cars likely has a lot less to do with securing business for Azure than leveraging their capabilities for first-rights to monetize the data collected by connected vehicles. Where you go, how long you stay, and all the excruciatingly personal data collected by a phone connected to a car’s WiFi network. This could lead to a revolution in marketing and targeted advertising as improved access to our schedules and physical location open the door for hyper-targeted ads that always seem to come across your device in the exact right moment to ensure you see coffee ads before you head to work, ads on your work computer to lunch spots nearby that always seem to match your palette, and a flood of ads for takeout anytime you remain at your work location past your usual time as the company all too uncomfortably knows that you’ve had a long day and would prefer to not have to cook.

This brings us back to the question of what the future market is and who the winners will be. To answer this question we must first dig deeper to the more fundamental question of why people even own cars in the first place. This is simple, it’s for getting from Point A to Point B safely, quickly, and efficiently (and in fortunate circumstances, in style). These are the needs that the automobile answered in the first place and are the reasons that the automobile replaced horses, despite banks and others initially seeing the automobile as a fad.

For this reason it would be silly to side with stagnation and assume that self-driving cars are merely a fad. Under the assumption that it is the inevitable next step, we can draw on the changes that occurred in society following the adoption of the automobile.

The first and most important thing to note is that people rid themselves of the responsibility of owning a horse as quickly as they could. Because of this, Herbert Hoover described the American Dream as “a chicken in every pot and two cars in every garage.” This could be up for reevaluation though, with cars driving being able to drive themselves between points with no humans onboard and becoming a safer alternative to actually having a human drive (you can now put ALL of your attention on your phone).

For those living in cities, driver-free taxis may become the most economical way to travel around town when walking won’t cut it. This would certainly reduce demand for personal cars and could push prices higher as fleets would likely buy fewer base-model cars.

Also, with cars communicating back and forth and AI minimizing the wear and tear of everyday driving, the life of a car (in miles) will likely be extended. Lastly, if cars can drop you off, bring the next family member to their destination and then pick both of you up at the correct times, then the instances where families would ever even have the need for a second car decreases significantly. This also probably results in one, nicer car, per family more often than two cheaper cars.

In their current form, EVs, especially those including self-driving features, are a luxury item while cars are a widespread necessity. This has led EV startups to offer a range of products from a pretty traditional car to build a brand around while slowly introducing and building bridges towards the self-driving future. An example of this is ElectraMeccanica Vehicles (SOLO) which currently sell a retro-looking fashioned eRoadster, and is preparing to offer a speedy modern looking sports car, all while stocking showrooms in big cities across the world with their one-seater commuter car called the “SOLO EV”.

While the days where one-seaters dominate the road are very far off, especially while every kid is growing up with a dream car that still resembles a traditional gas-powered car, there remains the possibility that everyday people will not be in charge of that change. As consumers can justify owning their own car less and less, companies may be forced, through the competition for labor, to start owning fleets of various automobiles. This could be autonomous buses for bringing employees to work, some stylish rides for greeting clients or investors, while having other kinds of cars for various other company needs. Travel solutions could even become an outsourced business, just like janitorial services and lots of IT work.

So what companies will be the winners? Certainly those who end up monetizing the car’s data will be the biggest winners, especially if it is a third-party company like Microsoft, who will mostly miss the R&D costs associated with bringing the future of driving to the streets.

The next biggest winners will be the companies that develop the leading software. While we can expect there to be multiple software options to choose from, the ones that boast the highest stats will certainly be the most desired software platforms for protecting you and your family. The company that owns the best software will have no incentive for cars to be locked in to a particular automaker and will be incentivized to ensure that they can offer that software on any car. This would ring true even if the best software is developed by a car company such as Tesla. If a customer chooses a car from GM instead of Tesla, this would allow Tesla to keep some of that lost business.

Lastly, the battery makers will be big winners. As of now, batteries tend to be married to the automaker as the range of an EV is often a a major factor in a purchasing decision. As the dust settles in the EV market, much like with self-driving software, we can expect batteries to become more interchangeable as the companies with the best batteries pressure the market to open that part of the supply chain up to competition. An example of a company already doing this is Chinese EV-maker Nio (NIO) who is working on creating a battery swap station that would allow you to swap your battery with a fully charged one in just a couple of minutes. If this innovation is successful, Tesla and other EV car companies will be forced to abandon long-charge times for a battery and make their batteries removable as well, which could open the door to consumers choosing their battery.

And finally, the losers. These will be the companies that cling to a horse as the world demands something new. The exact form of this can vary greatly and will likely be greatly influenced by whoever comes out the leader on the other side. Early EVs represent bridges to an unknown future. We don’t know exactly where the bridge will lead, but the ones that prevail will be the ones whose cars represent steps in the right direction.

So does an EV maker seem to be building cars under the assumption that the fundamental market structure will remain intact with only the fuel the car runs on changing? If so, you may be looking at the 21st century equivalent of the buggy whip.

Source: www.investorsobserver.com

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