Slow and steady could win the self-driving car race (APTV, AUDVF)
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The bulk of the attention in the autonomous vehicle (AV) space has been focused on Alphabet's Waymo and GM, which will likely be the two earliest entrants into the US autonomous ride-hailing space.
But nearly a half-dozen other companies are nipping at their heels and are expecting to launch ride-hailing AVs across the next three years. This week, two such firms, Audi and Aptiv — the digitally focused spinoff of legacy auto supplier Delphi — laid out new details on their autonomous car strategies.
- Aptiv announced it'll open a new facility in Las Vegas to support its autonomous ride-hailing test program, according to The Drive. The facility will handle AV research and development, vehicle operations, and data management for Aptiv's test fleet in Las Vegas, Boston, and Pittsburgh. Aptiv said its 75 self-driving test cars in Vegas — 30 of which are being tested within Lyft's ride-hailing network — have completed over 25,000 rides for customers. Aptiv seems intent on using Lyft as at least one of its go-to-market partners for its AV technologies, gradually deploying its vehicles in Lyft's ride-hailing network. Last year, it said it planned to bring an AV to market with BMW by 2021, and this separate effort with Lyft could thus have a similar timeframe.
- German luxury automaker Audi, meanwhile, offered new details on its plans to release an AV in 2021. The company houses all of its self-driving technology development in its Autonomous Intelligent Driving (AID) unit, a wholly owned subsidiary of Audi akin to GM's Cruise or Ford's Argo.ai. AID, which employs about 150 people, is currently testing 12 AVs with its technology on public roads in Germany. In an interview with The Verge, Alexandre Haag, the Chief Technology Officer of AID, put forward a bearish view of autonomous technology, arguing "I think we’re still some way from real scaling." Haag emphasized that Audi and AID are playing the long game with their AV technologies, hinting that even in 2021 it might deploy AVs on a limited scale.
Audi and Aptiv are taking the slow and steady approach with their AV projects, opting for lower risk even if that means lower upside. An aggressive approach to AV testing and development can come with a heavy price, as ride-hailing titan Uber found out earlier this year. The company was testing its AVs in multiple locations across the US despite reports that its cars had technical troubles.
Then in March, a self-driving Uber hit and killed a pedestrian in Tempe, Arizona, leading the firm to halt its AV tests for over six months. By not rushing to market with their AVs and waiting until the technology is truly ready, Aptiv and Audi aren't at as great a risk of such an incident.
Autonomous cars and mobility services will take decades to scale such that they're broadly available. By the time this occurs, any points won by Waymo and GM for moving fast could be lost due to potential crashes or other technical issues.
And the long time horizon means entering the market a few years later won't leave Audi and Aptiv at a significant disadvantage, especially given that the global AV market will be so massive — $556 billion in 2026, per Allied Market Research estimates cited by Forbes.
Even if Aptiv and Audi cede the top spots in the market to earlier entrants, there's plenty of space for them to make money as the AV market matures.