The driverless future represents an uncertain blank canvas for traditional OEMs, but a key group of auto-industry players are set to benefit from the steep climb towards full autonomy

The transition from auto-motivity to auto-mobility is a journey whose significance we are only beginning to truly appreciate. After more than a century of life coloured by the old motoring paintbrush, new frontiers of automated transportation are opening up, giving us – for the first time – a real chance to contemplate a cleaner, safer, more cost-effective future.
And to glance at the auto industry of 2018 is to see snippets of the radical re-thinking that’s going on behind closed doors to make it happen. The driverless future – while nearer and more tangible than ever before – unquestionably represents a change not of degree, but of kind, demanding a long process of cutting-edge R&D from manufacturers more comfortable with gentle evolution.
Their challenge, of course, is getting the ‘positioning’ right; that is to say, predicting who will lead the charge towards autonomy, who will benefit from it, where the opportunity profits will be, and where the pitfalls of obsolescence might lie. Only when this uncertain constellation of factors is reconciled, can the unwieldy ships of legacy auto-manufacturing really crank themselves into the big turn away from their current mode of automotive business.
Intriguingly, though, while the big-name OEMs have been inching their way through the tricky process of finding a place in a future where global vehicle production would appear to be levelling off, another cluster of automotive players are preparing to reap the benefits of a coming boom that will see them thrust right to the apex of automotive progress and profit.
With the international appetite for semi-autonomous vehicles growing, the market for self-driving car components is already turning into a gold rush for automotive suppliers. By 2020, automakers are expected to produce more than 85 million vehicles equipped with some form of automated collision avoidance technology, up from a figure of just 10 million in 2017.
For the mega-suppliers like Bosch, Continental, Magna and ZF, this astonishing growth represents the tip of a money-drenched iceberg, as automakers add more and more autonomous features to their vehicles, and increasingly turn to these mega-suppliers for the necessary array of sensors, computer chips and software to support the technology.

In other words, while fully-automated vehicles won’t hit the market for another decade (or more), sales of their core technologies are already booming, and this favours the mega-suppliers in a big way, because they are uniquely positioned to amortise the huge R&D costs by exploiting the vast economies of scale they enjoy through long-standing relationships with OEMs.
Bosch – the German mega-supplier with close ties to some of the industry’s most powerful OEMs – is pursuing just such an approach. They currently generate more than one billion euros per year in the sale of sensors, software and actuators for self-driving systems to major OEMs, and have plans to invest deeply in the technology over the next five years. They’ve also signalled a desire to take a leading role in breaking down the old ‘vertical silos’ of the industry’s traditional business models, building a spider’s web of partnerships with both old OEM friends (like Mercedes-Benz) and new start-up disruptors.
In the latter case, Bosch has announced they’ll be working closely with Nvidia, the Silicon Valley-based microchip manufacturer that specialises in the application of artificial intelligence for autonomous vehicle software. Together, Bosch’s mighty engineering clout and Nvidia’s technological adroitness represent a formidable combination – and one that OEMs will be glad to turn to as a backer in the push towards even greater autonomy.
Meanwhile, other mega-suppliers are doing some positioning of their own, pulling off big acquisitions in a bid to gain access to key frontier technologies. Notably, in almost all cases, the bidders have sought instant status in a key new technology – such as when Delphi Automotive purchased automated-driving software specialist Otto-matika Inc., or when Intel spent more than $15 billion acquiring Mobileye NV, the world’s top producer of obstacle detection software.
This sort of approach – typical of the mega-supplier field right now – is a smart one. It allows companies to market themselves as an organisation that can provide a fully-integrated autonomous system for an OEM’s vehicles; one that combines the best of Silicon Valley expertise, with the stable backing of a deep-pocketed, proven supply partner.
In a way, it’s not all that dissimilar to the historical practice of car manufacturers buying-in components they don’t specialise in, such
as gearboxes or electronics modules. The difference, however, is in this case manufacturers are outsourcing the development of a technology that will eventually change the entire model
of how they do business. As Toyota’s chief executive puts it, the battle for the lead position in the autonomous, connected car market is “not about winning or losing, but about surviving or dying.”

And that prompts an interesting question: assuming they do survive, what do traditional automotive manufacturers want to be in the future? Right now, they are being squeezed on all sides by a jostling crowd of new players, each as well equipped or better than traditional OEMs to profit from the scale-up towards full autonomy. Yet by themselves, these players – be they suppliers, mega-suppliers, start-up firms or software developers – are not in a position to manufacture and then market a whole ‘vehicle’.
As a result, the natural place for the traditional automotive brands would seem to be as ‘agglomerators’; that is to say, companies who can draw on their expertise in holistic automotive design and development, and use that to bring together knowledge, both internally and from a key group of deeply-integrated, but ultimately separate collaborators, who would shift depending on who offers the best knowledge about the most recent frontier technology.
This strategy represents a departure from the old, cloistered ways of most OEMs – it asks them to be more collaborative, to be prepared to use systems developed with universality in mind, and to face up to the challenge of being seen as essentially a bit less their own company. The benefits, however, may well be too significant to ignore.
Indeed, we are already seeing this strategy from automakers, particularly those who were once criticised as technological laggards. For instance, Jaguar-Land Rover have signalled their intention to seek partnerships with a range of companies that span the entire potential spectrum of self-driving vehicle models, from ride-hailing services, to public transportation and individually owned cars. “We believe that this is a world where we don’t have to be afraid of anyone,” said their strategy director Hanno Kirner. “Co-operating with several people on several different products is good for us.”
Currently, JLR has an agreement with Waymo – Google’s self-driving vehicle division – which
will see the Californian tech-company install
their autonomous software in 20,000 Jaguar vehicles. JLR also supplies a fleet of vehicles for rival autonomous developer and ride-sharing company, Lyft.

Critics argue that JLR is positioning itself to be merely a kit supplier to technology businesses, who will ultimately dominate a ride-shared, cloud-connected, driverless future. But Hanno disagrees. He argues that a cross-partner, collaborative approach is the only path, because no automaker – however experienced – can possibly navigate this new future without drawing on the wellspring of knowledge from those on the cutting-edge of frontier tech.
In truth, only time will tell whether the increasingly-labyrinthine array of cross-industry partnerships will leave automakers as bit players on a cacophonous mobility stage, or whether they will find the limelight as the great ‘conductors’ of tomorrow’s automated transport solutions. But in the meantime, they must surely consider a sobering fact. Compared to the mega-suppliers, and the start-ups, who are benefitting from this re-weighting of the technological landscape, the traditional automakers appear to have the least to gain by getting the transition to autonomy right, and the most to lose if they get it wrong.

Written by Harrison Boudakin for AutoMate Training, an industry leading provider of online, on-demand digital training.
Visit www.automatetraining.com for a free 14-day trial.