Driverless Cars – More Progress and Positioning – I

Once again, I could probably write a weekly blog on this topic alone.  It’s worthy of it too, as we will see this week and beyond.  So, let’s start to get caught up.

We start with Fox News’s June 30th “Driverless ‘CargoPods’ are delivering groceries to Londoners in new trial.”  That’s a valid autonomous-vehicle proposition, and will move from the manned trucks now in use to unoccupied ones texting or phoning customers when they’re outside, but how much will they charge?  As name recognition and brand establishment would seem less important for a venture both seriously price-competitive and startable on short notice, it seems wrong for any firm to accept losses for years to position themselves for eventual possible profitability, so online grocer Ocado should be expecting positive cash flow soon.

Less substantive is Brent Snavely’s July 2^nd Detroit Free Press report that “Ford exec points to ‘great progress’ in driverless cars.”  That company has done better than moving toward “deploying its first fully self-driving car by 2021” which others have achieved already, such as by assembling a consortium including software maker Argo AI.  Ford’s vice president of research and advanced engineering may have said “we don’t worry too much about where the competitors are,” but we don’t need to take this sort of announcement, clearly for public consumption, seriously.

One area of autonomous vehicles which could go in many ways is the nature of their interiors.  With no need for them to be focused on the needs of drivers, car interiors will be blank canvases.  One of an infinite number of possibilities, described in “Autonomous cars will bring a moveable feast of products and services” (Cyrus Radfar, Yahoo Finance, July 2), is “the mobile mall,” using displays to simulate the interiors of a variety of stores.  Such would coordinate well with the inexorable-seeming trend toward online shopping, post-credit-card point of sale technology, and the preferences of those in the Millennial and Generation Z generations.  For car interiors we can use all the imaginative ideas we can find, and this one is certainly reasonable.  

We’re in the early stages of intercity rivalries in this industry, and one of the most prominent so far is “Michigan’s New Motor City:  Ann Arbor as a Driverless-Car Hub” (Neal E. Boudette, The New York Times, July 9).  To the well-established MCity proving grounds, that college town will soon add autonomous buses, as of early July was up to 1,500 vehicles which “radio their speed and direction to each other and to equipment like traffic lights and crosswalk signals,” and soon expects to make good use of all those personally-carried cellphones by having them broadcast pedestrians’ locations to traffic signals and on to cars.  Elsewhere in that state, additional and much larger proving grounds are being built in Ypsilanti and Flint, where, among other things, consortia can aggressively address the problematic issue of autonomous snow driving.

We saw more progress in such business conglomerations in “Waymo and Apple Pick Their Dance Partners for Self-Driving Cars” (The Motley Fool in Fox Business, July 10^th.)  We now have Waymo, Google’s driverless vehicle concern, pairing with Avis and Chrysler, and Apple simultaneously announcing its Hertz partnership involving Lexus cars.  It’s well worthwhile for consortia to work with companies knowing about physically managing millions of vehicles, and also benefiting Hertz and Avis is easier entrée into the future of car rental, which, as the article points out, “will likely become more, not less, relevant in an autonomous world.”  The consortia themselves may include “non-exclusive partnerships,” which, as we will see in this series, are happening already.  These are good positive trends.

It is well worthwhile to keep an eye on how investors, as well as other analysts, see driverless-technology companies.  These same sources published “3 Top Stocks in Self-Driving Cars” on July 12^th, a piece, which after suggesting that to some people such vehicles still seem “like a bit of cheesy ‘50s-era science fiction” and citing a well-obsolete Business Insider study suggesting “that there will be 10 million autonomous cars on the roads by 2020” (not that many only three years from now) and overly conservative HIS Automotive forecasts of 600,000 by 2025 (let’s try 10-20 million) and 21 million by 2035 (could be 200 million), then moved on to the merits of Waymo, onboard computer maker NVIDIA, and China’s driverless consortium leader Baidu.  All are potentially great buys, especially for investors with the stomach for risk, as any could also turn out like Stutz or Hupmobile.  

A problem with that huge Asian market is the subject of “China’s Grip on Maps Hinders Self-Driving Car Makers” (Liza Lin and Tim Higgins, The Wall Street Journal, July 13).  China, which we sometimes forget is not a free country, “is limiting the amount of mapping that can be done by foreign companies.”  A bad idea, and one reason why I do not think it will be anywhere near the forefront of self-driving progress.

Moving on to the regulatory side, we found out on July 21^st from Kevin Roose in The New York Times that “As Self-Driving Cars Near, Washington Plays Catch-Up.”  Although there is no such thing as “a bill that would speed up the development of self-driving cars,” federal regulatory efforts, thus far mercifully mild, are still small in the proposed Highly Automated Vehicle Testing and Deployment Act of 2017.  That bill may do more to remove obsolete regulations than to create new ones, and, as Roose pointed out, state governments, wanting economic benefits from driverless business activity, have generally been lenient as well.

That’s three weeks’ worth – much more will follow.