Podcast: executive sessions – automotive today
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In MiddleGround’s third episode of executive sessions, Clayton Gullett leads discussions with two guests: MiddleGround Capital Founding and Managing Partner, John Stewart, and a VP on the Transaction team, Tyler May. This episode covers:
- Factors in driving electrification and autonomous vehicles forward
- Shift from the automotive industry to the mobility industry
- Barriers to fully autonomous cars
Factors in driving electrification and autonomous vehicles forward
The rise of electric vehicles (EVs) has been kickstarted by competition. Tesla and other EV producers are racing to not only make the best EV on the market, but to narrow (and eventually eliminate) the gap between the cost of EVs and internal combustion engine (ICE) vehicles.
Gaining public trust in these technologic advances is also essential to encouraging scaled adoption. Statistically, autonomous vehicles enhance overall safety by reducing human error. Despite this the general populace has remained skeptical – fixating on the few accidents caused by autonomous vehicles rather than proven safety metrics. Most of these accidents are due to misuse of technology, not true technological error. For example, people think of partially autonomous vehicles (think Tesla autopilot) as fully autonomous, even napping behind the wheel, when the technology still requires a fully attentive driver.
Shift from the automotive industry to the mobility industry
The automotive industry is undergoing a significant transformation; automakers are no longer solely focused on automotive manufacturing and are beginning to behave more like tech companies. This shift from automotive, which fell solidly within transportation, to mobility, which leans more on technology, opens a world of possibility. For example, in a traditional ICE vehicle, revenue is driven by the sale of vehicles. In a connected vehicle, you drive the same up-front revenue from sales, but that vehicle is also constantly generating user data which can drive incremental (and significant) revenue.
There are also potential innovations in business models, for example, subscription-based systems. With an autonomous vehicle, an auto maker can offer a range of features to be activated or deactivated based on preference, with users paying subscription fees for select functionalities. This approach allows drivers to access advanced features, such as level five autonomous driving on a road trip, rather than paying a substantial upfront cost for continuous use.
Barriers to full autonomy
This may be shocking, but there are no significant technological obstacles within the vehicles preventing the widespread rollout of fully autonomous cars. The challenges lie in establishing infrastructure with standardized communication systems and resolving legal/regulatory considerations. These elements are significantly delayed by the slow pace at which the U.S. government operates. It can be argued that government should play a minimal role in technological developments, but there is merit in them setting standards and guidelines. Government involvement can ensure the efficient implementation of connectivity, benefiting both consumers and the industry.
When considering viable connectivity options, 5G technology stands out as the frontrunner. Its infrastructure is accessible, and the necessary components for expanding the network are widely available. Moreover, 5G bandwidth is already reserved, ensuring reliable and high-speed connectivity. While alternatives such as the C-V2X format or Wi-Fi have their merits, 5G offers a more comprehensive and accessible solution.