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German publication Das Spiegel came out with a very good analysis on the car industry in the country and how new technology is changing its landscape significantly. Yes, it went over how far behind the former auto industry leader is now in terms of electric vehicles, but what I found even more interesting were the details hashed out about self-driving technology.
German auto makers are woefully behind in the tech, especially compared to companies like Waymo; however, most of those companies are looking to license their products rather than compete with car companies directly (unlike Tesla’s Master of the Universe approach). We’ve heard about the promises that autonomous taxi networks will live up to, so now I’ve started to wonder.
How much is manufacturer branding going to matter in the long term? Will the auto industry head towards a future similar to the airline industry? As Das Spiegel puts it, “At the end of the day, people don’t fly with a brand like Airbus or Boeing, they do so with an airline like Lufthansa or Emirates.”
Additionally, is it going to matter how well everyone (i.e., legacy auto) keeps up with EV makers when transportation overall is going to change so significantly that the old sales models will no longer apply?
Citing Waymo CEO John Krafcik’s perspective on Autopilot-type programs as a prompt, the article explains, “…companies could be making money not only from the sale of vehicles, but also from every single mile the customer travels… That will be even more true once human drivers, the greatest cost factor in an autonomous vehicle, are completely eliminated. Taxis without drivers, maintenance trips without staff, deliveries without deliverers — in this new world, there will be no salaries or benefits to pay and the machines only go on strike when they have technical problems.” What happens when humans neither impact the manufacturing and service decisions and play a much smaller role in the purchasing decisions?
It seems like German auto makers have been very slow to come around to the EV future due, in part, to a nostalgia for what the driving experience used to be and still is for those who still pay premium prices for such ‘driving machines.’ If the future of car ownership is going to be handed over to merely what’s most efficient for place-to-place travel, though, what does that mean for this industry’s experience factor when the engine is eliminated for electric motors and passengers aren’t even paying attention to the feeling of their wheels on the road, the turning radius, the pedal response, etc.?
Sure, some of these things will matter. Using the airline metaphor, customers have serious opinions about the kind of plane they travel in. Small seats and shaky cabins get terrible reviews, but when you need a ticket to your family reunion and price is the biggest factor in your decision, how much input does a customer really have when it comes to the vehicle being used to transport them? Car companies today are appealing to consumers as individuals, but when the consumers start becoming just one number in a larger “base” of people hailing a ride, or perhaps individual business owners looking for the most cost-efficient vehicle to generate money while they’re not using it, what does that mean for the whole “driving experience” model?
Will companies like BMW and Porsche switch over to a pooling type approach, appealing to taxi companies and the like instead of the mom or dad that has kids? Will they purchase all of their parts for various suppliers and just concentrate on the body design and tech offerings? Subscription services similar to cellular companies? On ride hailing apps, customers choose the size or general style of the car they want to take, but that’s obviously a starkly different decision process than seeing ads, browsing at dealerships, taking test rides, etc.
Tesla will probably be an initial bellwether for how customers will respond to the transition, but I do wonder how much the airline metaphor will play out. WiFi, drink selections, destination discounts, travel package offers, etc., combined with other in-car luxuries like individual temperature controls and so forth will come along I’m sure. But, still.
What happens to, “Because we promised you a Mercedes Benz, that’s why…,”?