Automakers Accelerate Toward Uncertain, Tech-Fueled Future
This essay originally appeared in Data Sheet, Fortune’s daily tech newsletter.
Thanks to the technology industry, this is easily the most exciting time for cars and trucks in years. Maybe decades.
The automobile is a technological marvel—of the last century. More recently technology gains have been incremental. Fuel-efficiency improvements have been real, if unexciting. Hybrid and electric cars, again, are wonders of science, but not game changers. Auto makers have nattered on about being connected, but their best onboard electronics were systemic rather than networked with other devices.
With the advent of self-driving cars and changes in driving habits driven (pardon the pun) by ride-sharing schemes, everything is about to change. That includes the industry’s major players.
Consider, a year-end list of companies issued autonomous vehicle testing permits by California’s Department of Motor Vehicles contained many names you’d expect, including Volkswagen (VLKAY), Google (GOOG), Tesla (TSLA), BMW (BMW-HM), and Ford (F). There was precisely one company you wouldn’t have heard of, a startup called Cruise Automation. General Motors (GM) bought Cruise last week for a reported price of a billion dollars.
States like California and Nevada have been leaders in robotic cars. Unsurprisingly, the feds don’t want to be left out. A Senate committee will hold a hearing Tuesday with the trying-too-hard title, “Hands off: The Future of Self-Driving Cars.” Executives from Google, GM, Delphi (DLPH), and Lyft will appear. Given that Republicans control the Senate, it’s telling how the committee frames the discussion. “Witnesses have been asked to testify on their continued efforts to develop automated vehicles, their views on the appropriate role of government in promoting innovation including removing unnecessary hurdles, and their strategy to grow consumer adoption of this new technology,” the committee advises, with my emphasis italicized.
Back in the real automotive world, cars and trucks had a banner year. But troubles loom. The Wall Street Journal published a fine piece suggesting a looming crisis in subprime auto loans. Critics blame the loans for fueling (sorry, again) strong sales, while auto and lending industry cheerleaders predictably suggest there’s nothing to see here; please keep moving—and buying more pickup trucks.
It’s hard to believe less than 10 years ago the auto industry was on its back. Surviving financial ruin was one thing. Let’s see how it confronts a tech tsunami.