Self-driving Technology Is Creating New Business Model for Vehicles
If you want to find someone to talk about vehicles in the beginning week of 2017, Las Vegas must be a perfect place. The Consumer Electronic Show(CES), an annual event that often sets the tone for the year in tech, was dominated by automakers this year, instead of gadgets like phones, cameras and TVs.
In the CES, Ford, Mercedes, BMW, FCA, Volkswagen, Infiniti and more all showed off their self-driving cars. Meanwhile, some of them published plans that the autonomous fleets will be expanding, from 40 to 100.
The Evolution of Automaker’s Business Model
When Google started to pioneer autonomous tests, most people still held doubts on it. Today self-driving technology is regarded as a huge cake. After the rapid development, the market seems like quite competitive everywhere.
What transferred doubts into big investment? On the one hand, the magnates like Google, Uber and Tesla are continuing to making progress in technology, moreover, traditional automakers are conscious about the ADAS (Advanced driver assistance systems) having been altering the auto industry since diesel was invented.
The business potential underneath self-driving is tremendous. Essentially, the commonalities between self-driving and internet is that they “cut out the fluff” to reduce the cost. What internet has been doing is lowering the cost of transporting information, while self-driving is lowering the cost of transporting physical things, like goods and people. You can easily imagine the potential of self-driving in contrast of the impact internet has been doing to our life.
New Transportation Service
When automakers add self-driving function to a car, the problem no longer limits to designing and selling a car, it includes providing Transportation-as-a-Service (TaaS). The TaaS market has two key components:
- Making a self-driving car
- Getting the car to the passage and moving them around
When you integrate these two parts, the market involved is huge. The evolution of self-driving technology and electric cars technology don’t influence each other. Self-driving internal combustion engine cars and human driving electric cars are both possible to exist. In the short term, getting a ride with someone who is in the same direction with you is much economical than self-driving cars, given that the cost of self-driving car is still huge. The new transportation service has done massive impact on traditional automakers. Once private cars become transportation tools, the target customers of traditional automakers will become TaaS operators. The following thing is the influence of automaker will be weaker than before. Gradually, customers will get used to the thought that transportation as a service rather than a private good, the nature of products and service in this market will also change. In the long run, it may even completely change the current public transport infrastructure.
If automakers can win the self-driving competition would heavily determine the destiny of next decade.