Last Wednesday the House panel approved a measure to move forward a bill addressing autonomous cars. Does this signal that we are fast approaching the coming of age for advanced technology in vehicles? A history of the smartphone provides some clues as to where we are in the product development life cycle.
In the mid-1990s, smartphones weren’t that smart. We had a few hardware-centric devices with limited capabilities besides making phone calls. Over the next ten years, both processing power and the number of applications increased, but still resided on closed platforms tightly controlled by original equipment manufacturers. In 2007 Apple released the iPhone, followed by Google’s release of Android in 2008. The result was an explosion of consumer facing applications and supporting businesses, largely driven by open source software. A new economy was born.
Over the past few years, automakers have undergone a similar process, harnessing the power of open source development in their infotainment platforms (largely run on Automotive Grade Linux). Last Friday, GM became the first automotive firm to allow third party developers to test and modify approved applications in real-time road conditions, as passengers in their GM vehicle. On the autonomous driving front, Baidu recently announced “Project Apollo,” an open source consortium with over 50 leading automotive and technology firms aimed at rivaling the efforts of Waymo and the budding BMW, Delphi, Intel, Continental group. The race is on.
The Automobile's Route to Revolution
But not so fast. The automobile’s revolution will take a decisively different route than that of the smartphone. Unlike handheld devices, connected devices that passengers sit and travel in at high speeds require a much higher level of reliability and safety. In addition, passenger cars are more expensive, operate for longer lifespans (the average age of vehicles on the road today is over 11 years) and are held longer by individual consumers (over six years for new car and five years for used versus slightly over two for phones). As a result, the highly connected cars will be on the same roads as your grandad’s clunker for years to come, and a vast minority in the first few years.
But the new vehicles produced over the next five years will be highly differentiated from their less intelligent competition on the road, and this high level of differentiation (and likely cost) will be an opportunity for new business models. Morgan Stanley estimates the average car is driving on the road 4% of its life, with an even lower utilization rate once empty seats are factored in (that is, a car is driving 4% of its total lifetime time with one passenger most of the time).
Looking for Opportunities
The unused 96% (or more) capacity is the opportunity many leading innovators are looking to exploit — for example Waze (an Alphabet company) is releasing a carpooling application in California for existing commuters already using the Waze application. GM’s electric Chevy Bolt aims to be the first mass market electric and autonomous vehicle designed specifically for ride-hailing services, with a large back seat area for occupants. Removable seat covers that are easy to wash, augmented reality heads up displays, and destination specific advertising to Uber passengers are just the beginning in terms of consumer developments.
When is the iPhone Moment?
We are rapidly approaching the "iPhone moment" for the automotive industry. The vehicle will be the next mobile application platform, and those applications are going to be built on a foundation of open source components. If the explosion in mobile application development that has taken place in the last decade is any indicator, we are going to see both an unprecedented rate of innovation in the automotive industry as well as a proliferation of companies developing software specifically for "connected" vehicles.
The challenge will be to ensure that the security of these applications and in-vehicle systems keeps pace with the rate of innovation. This is especially true for autonomous driving and other safety-related systems, where the stakes are much higher than for a smartphone app. A multi-layer security fabric will need to be employed throughout the supply chain. Given the amount of open source that will be in these automotive applications, open source vulnerability management will be integral to that security fabric.