Fear of disruption from companies such as Google and Uber has prompted automakers to pour billions into developing self-driving cars. Now they are realizing that achieving the dream of fully autonomous driving will take much longer than their initial promises.
"Some automakers have claimed they are farther down the road than they actually are. Many have started to realize this will take more time," Ian Robertson, BMW brand's global sales boss, told UK journalists in March. He said BMW had known this "from day one."
The advances in technology, the proliferation of test cars, the increase in investment and the eager cooperation of legislators are still overshadowed by the enormity of entrusting lives to a computer on a scale never seen before. "Historically, humans have shown nearly zero tolerance for injury or death caused by flaws in a machine," Gill Pratt, CEO of Toyota's mobility-focused Research Institute, told an audience at the Consumer Electronics Show (CES) in Las Vegas this year.
The penalty for getting it wrong is so severe that manufacturers such as Toyota, Ford and Volvo are saying they will skip the next major stage of driving automation, Level 3, which allows hands-off capability but requires the driver to take back control at any time. Instead they are concentrating on reaching the most automated stages, Levels 4 and 5.
Despite the reality check, the consensus is that autonomous vehicles will arrive and will pay off handsomely for companies that manage to deliver. Max Warburton, an analyst at investment research firm Bernstein, is skeptical about many elements of the promised mobility revolution. In May, Warburton warned in a note to investors that autonomous cars are "almost certainly far further away than some of the hyped headlines you may have seen." But he also said that they have the potential to upend the industry structure and the economics of car ownership "in a far more dramatic way than electric vehicles."
20% profit margins
Ford believes new mobility services, including autonomous driving, could bring the company profit margins of 20 percent. Analyst firm IHS Markit maintains its year-old prediction that autonomous cars will reach global sales of 600,000 by 2025 and 21 million by 2035, led by the U.S and "major markets" in Europe.
The automotive industry globally has spent $6.5 billion (5.8 billion euros) in the last two years on autonomous driving technology, with another $20 billion to $30 billion (18 billion to 27 billion euros) expected over the next five years, IHS estimates. "It's a major investment when you look at the compressed time frame," said Egil Juliussen, IHS director of research in automotive technology.
Daimler, judged by Bernstein's Warburton to be one of the leading automakers in the self-driving tech race, plans to spend 8.1 billion euros on r&d both this year and next year, up from 7.6 billion euros in 2016. A key reason for the increase is to pay for "the development of future mobility," the automaker said in its first quarter financial report.