Self-driving vehicles – another technology frenzy?
May 1, 2018
Got half-a-billion to burn? Welcome to the self-driving technology race.
Long before anyone actually makes money on autonomous vehicles, most of today’s players will be forced from the field and lots of money will be lost. Lots and lots of money.
And just in case you were wondering, there will still be driving jobs.
Scores of companies are pouring stockholders’ money into self-driving technology. From startups to tech behemoths like Google, Apple, and Intel not to mention old-line industrial giants like Daimler, GM, and Volkswagen. The Brookings Institute documented more than $80 billion spent from mid-2014 to mid-2017. That’s roughly the national budget of Taiwan, the far-east technology powerhouse with a population of 23 million. But hard numbers are hard to come by, so in its report, Brookings notes “it is reasonable to presume that total global investment … is significantly more than this.”
Of course, investment has only increased since mid-2017.
So there will be driverless trucks and cars at some point. But long before that, many development efforts now underway will collapse or be absorbed into others. Even at that the driverless future that does evolve won’t look much like what investors have in mind now – assuming they have a practical commercial vision at all.
In fact, the current self-driving technology stampede reminds me of a similar craziness in the 1990s when boom-time money was flowing. Back then we were simply tossing it into the sky, at least in a manner of speaking. I’m talking about the LEO (low earth orbit) satellite madness.
Relatively cheap satellites in orbits far lower than most previous satellites would cost far less to build and launch. They would connect virtually everyone on earth with everyone else. Everybody everywhere would have phone and internet service, and we would be able to track anything anywhere for next to nothing. At an ATA event in 1998, one speaker declared, “LEOs will be the best thing that ever happened to the trucking industry.”
Yeah, some companies made a go of it, particularly in trailer tracking. But the big guy, Qualcomm, continued to lead the way with its traditional service from satellites 22,000 miles up. LEOs, by contrast, orbited at less than 1,000 miles. Soon virtually all the satellite services for trucking would be undercut in the market by terrestrial competition – the rapidly growing cell phone networks.
That isn’t what happened with satellite radio, though. Satellite radio was going to be the greatest entertainment medium ever, at least according to the lavish promotion at the time. XM and Sirius use LEOs too, but when they first launched, the market they thought was there simply wasn’t. Only a handful of people – truckers among them – were willing to buy and install the necessary hardware. Then there was the timing. In September of 2001, just weeks after 9-11, anything in the sky was suspect. It was a bad time to be selling a satellite service.
Satellite radio was saved when it finally became available in new cars. But that didn’t happen in time to spare the once high-flying XM and Sirius from bankruptcy and merger. Much money was lost before ultimate profitability.
But all that is trifling compared to the big LEO losses. They occurred when some very ambitious, very expensive projects fell to earth (not literally, of course, though many LEO satellites eventually leave orbit and burn up in the atmosphere). Here we’re talking about major endeavors like Globalstar, Skybridge, and Teledesic which were funded by big money from big corporations and individuals like Bill Gates and Saudi Prince Alwaleed bin Talal.
Take the enterprise called Iridium. Motorola and European phone companies backed the multi-billion-dollar project in the late 1980s when it was designed to deliver inexpensive telephone and data service around the globe. A billion then was worth a lot more than a billion now, but it was doomed from the start. Engineers built and launched satellites – 66 in all – even as the cellular networks were building out. By the time Iridium was operational, most of its market was gone. Prospective customers had long since committed to cellular services for voice and data. To make matters worse, Iridium’s data bandwidth, which been decided in the 1980s, before the commercial internet and data services explosion, was too narrow for other uses.
Yes, Iridium and some others still exist, but only as overhauled miniatures of what they were once supposed to be. Meanwhile, they burned up billions of investor dollars.
I’m not saying there’s a technology about to steal a market from self-driving technology – especially where trucking is concerned. No one is about to deploy highly accurate catapults to move the freight. But I am saying the market for all this vehicle autonomy won’t be as big as current investors think it will.
Self-driving trucks doing interstate linehaul? That will happen.
But trucks in local delivery?
By the time that can happen on any meaningful scale, we may not need it. The robots will have taken over.