Apple finally spends its 215 billion dollar cash hoard and what does it do? Invests one billion dollars in the Chinese ride sharing app Didi Chuxing. Truly a brilliant strategic investment – though like all investments it’ll come down to the execution.
The autonomous driving space is as fundamentally transformative to the global economy as the internet.
If its purely about the automotive industry than its already large – almost 9 trillion dollars last year. But when we expand it to include how all people and goods are transported then its transformational to how we structure society – along with the size of the overall opportunity.
Forget car companies, there’s no need for logistics companies and trucking companies and home delivery companies. Baggage handlers, taxi drivers, home delivery and many other jobs will all disappear. And retail? When the incremental cost of delivering a product is a close to zero as possible why do I need a bodega at the end of the street? My milk can be delivered within half an hour.
And China will be the first country – though we can’t discount Japan – where this vision will roll out. That is why the Apple investment is so important.
The key external factor driving the adaptation of autonomous vehicles will be government regulation and encouragement.
Of course, the actual development is important. However, all the key players are showing a willingness to invest and seize the opportunity that is finally presenting itself.
- We know that it’s possible since we now have all the tools to implement autonomous vehicles.
- Clear digital representations of the physical world
- Artificial intelligence through big data.
- Networked connectivity through the cloud
- Sufficient processor speed
- It’s no longer a case of how but more a case of when? And that will be controlled by regulation since some fundamental changes need to occur to make it a reality.
The largest danger to autonomous vehicles are humans and their inability to drive rationally and safely.
The Google car has driven more than 1.7 million miles to date and of its 18 crashes in that time, 17 were caused by human error. Therefore, instead of refusing to allow autonomous vehicles, governments will need to more tightly regulate human drivers. Regulation with the goal of forcing all drivers from behind the wheel.
Autonomous vehicles provide for a vision of no cars parked on the streets, easy delivery and shipping of all products, massive impacts on pollution, the freeing up of substantial parts of everyones day along with the freeing up of a massive amount of dollars invested.
But it also demolishes the car manufacturing industry, the logistics industry, the taxi industry and many others. its estimated that 7.25 million jobs in the US are impacted by the car manufacturing industry and a further 8.7 million jobs impacted by the trucking industry.
Therefore there are substantial forces arrayed against self driving vehicles. The war waged on Uber by the taxi industry will seem like a skirmish when compared to that for the implementation of autonomous vehicles.
And that’s why it won’t happen quickly in the United States. The government is incapable of prioritising decisions good for society as a whole over those of industries and groups with significant vested interests who can manipulate both government and popular opinion.
The Chinese government, even if you ideologically disagree with many of their decisions, has shown itself willing and capable of making those broad based decisions in support of what they believe is for the good of society.
Yes there are also multitudes of vested interests however the dominant vested interest is that of the Communist Party, who’s very existence is based on making life better for its citizens.
I realise that may cause lots of ideological arguments so lets leave it at the Chinese government is much more capable at implementing large scale, transformational projects that impact a minority of the population for the benefit of the majority. For example the rapid growth of their high speed rail and road network or the rigorous implantation of strict urban planning regulations that underpins the growth of most of their cities.
And there’s no question that autonomous vehicles will be in Chinese society’s ultimate benefit. Reduction in traffic and pollution in the main cities is one point. But more importantly the population is aging rapidly so this will also free up labour for other industries.
The Alliances emerge
With Apple’s investment you can now see the outlines of the partnerships that will dominate what will be one of the leading industries of the future.
On one hand you have Baidu/Google/Uber. Baidu has invested more than 1 Billion dollars in Uber’s China subsidiary while Google has $250 million USD invested. All three are in advanced stages of their autonomous vehicles plans and each brings significant strategic assets to the table.
Both Google Maps and Baidu maps are the leading services for representing the physical world and Uber and google have captured significant driver data, though less so in China. Both Google and Baidu also have significant cloud computing experience.
Facing them are Didi Chuxing/Tencent/Alibaba/Lyft and now Apple. Tencent and Ali are together the majority shareholders in Didi and Didi is a major investor and partner of Lyft globally. Ali also owns Autonavi, the second largest map application in China and Apple obviously has Apple maps. Whats interesting though is that the Apple car is only rumoured, though apparently substantiated, Tencent has focused on electric vehicles with the recruitment of BMW’s main designers of electric cars, and Alibaba hasn’t made any broad claims. All partners seem significantly behind Google and Baidu who have discussed and quite openly tested their vehicles.
The two major players who seem to have forsaken the space are Facebook and Amazon. Facebook I assume has stayed out of it because it has enough other industries to dominate. However Amazon, where logistics make up a substantial part of their cost, is a surprising laggard and could potentially partner with one of the two groups.