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Google Set to Kick-Start the Driverless Car Supply Chain

Google has done a good job of associating itself with driverless cars and stirring the public's imagination for what many say is the inevitable day when we can work, eat, and even sleep in our cars as they drive themselves. As it readies a prototype fleet of self-driven cars without steering wheels, gas pedals, or brakes, the search engine giant has demonstrated how its autonomous Toyota and Lexus cars using Google's technology have successfully logged thousands of miles on California roads.

Indeed, Google has already become a recognized brand in a car segment that has yet to see commercialization. However, its role in the market will probably be relegated to the less visible function as that of a software player as self-driven cars begin to see commercial launch by 2020.

By funding the publicity campaign showing how driverless cars are viable and safe, Google is helping to create demand for software it will almost certainly look to license in the future. The company will likely seek to define driverless cars as it did the smartphone market with Android, by creating and licensing the OS on which autonomous car software and components are designed.

The supply chain implications are such that automatic systems suppliers, including Continental, Delphi, Siemens, Valeo, and others, will seek lucrative margins by developing and selling their own driverless car software with the components they offer. This would mean that Google will initially compete with its customers.

Google's self-driving software for cars “would provide competition for the Tier 1 ADAS [advanced driver assistance system] suppliers that are likely to also offer such software,” says Egil Juliussen, an analyst for IHS. “The top OEMs are expected to develop their own self-driving car software, but smaller OEMs will need help from Tier 1 suppliers and Google.”

Google's driverless car.

Google's driverless car.

The public's interest in driverless cars stemming from Google's publicity campaign has served to motivate suppliers to ready their technology as well.

“Google's investment is also advancing the technology much faster than if the OEM/Tier 1s were not challenged by Google,” Juliussen tells us. “Hence, Google's tech investment has sped up and forced OEMs to invest more money in autonomous driving and is likely resulting in earlier deployment of self-driving cars.”

Google's push in the driverless car space follows the inroads it has made in the “infotainment” sector. Already, the Android OS will serve as the main competing alternative to CarPlay. Google is also backing the Open Automotive Alliance (OAA)'s development of an Android-based infotainment platform with input from Audi, General Motors, Honda, Hyundai, and Nvidia.

As in the infotainment sector, driverless applications represent a gap that players from outside of the car industry can fill. Google and other vendors should further “impact the automotive supply chain,” as they have already done in the infotainment space, according to Juliussen.

The auto industry has managed to successfully develop a viable core auto electronic unit (ECU) on its own with its collective development of the AUTOSAR standard, Juliussen says. However, the complexity and scope of ECU software “is small compared to infotainment software and to what the software for self-driving cars will be in the future.

“The operating system, middleware, and apps for infotainment are primarily from outside the auto industry. The reason is that the auto industry needs much more software skills than has been available — especially for large software projects — and this need will continue and probably expand.”

Besides relying on software players to get the robustness and complexity of driverless code right, automotive OEMs will also likely place their trust in established vendors to bundle security features in their products, given the hacking threat that carmakers now face.

“This software opportunity is what Google and other software companies will tap into, and the auto industry will need all the help it can get to make reliable software and software that can withstand cyber security threats in the car.”

But while Google will more likely than not seek the higher profit margin in software, compared to the relatively low-margin business of the carmaker OEMs, it could certainly become a carmaker if it wanted to. Google's $12.22 billion in net income and $18.66 billion in operating cashflow in 2013 indicate that Google has ample financial reserves to fund an OEM acquisition. Electric carmaker Tesla has been cited as a potential Google acquisition target.

But the possibility of Google becoming a carmaker in its own right remains remote, Juliussen feels. “Google probably has the cash to become an OEM, but why would they enter a business with low profit margin, when Google can earn much higher margins on the software?”

So if and when driverless cars become fixtures on the road during the coming years, they will likely not bear a Google badge. But Google does have good shot at helping to define the OS on which the technology runs and the standard system developers will adopt.

27 comments on “Google Set to Kick-Start the Driverless Car Supply Chain

  1. Susan Fourtané
    August 2, 2014

    “By funding the publicity campaign showing how driverless cars are viable and safe, Google is helping to create demand for software it will almost certainly look to license in the future.”

    Since autonomous cars are being talked about many people seem to have become in a state of illusion mistakenly believing that cars driven by humans are safer than self-driven cars. The truth is, as the stats show every year, that humans cause plenty of annual deaths on the road. 

    Nearly 1.3 million people die in road crashes each year, on average 3,287 deaths a day, according to annual global road crash startistics. Those road crashes are caused by human error.

    -Susan   

     

  2. Adeniji Kayode
    August 2, 2014

    Well, while human can not be 100% perfect, even so the efficiency of every machine is less than 100%

  3. Susan Fourtané
    August 3, 2014

    Adeniji, 

    A machine can perform more accurate work for longer time than a human. Autonomous cars will reduce road accidents, that is a fact. 

    I saw statistics about this topic telling even the percentage of the reduction, but I don't remember exactly the percentage to be able to tell you now.

    -Susan 

  4. _hm
    August 3, 2014

    It looks more propaganda and very little of real work. Google team needs to put much more work before seeking so much of publicity. 

  5. FLYINGSCOT
    August 3, 2014

    I see they are also going to allow driverless cars in a few UK cities very soon.  This is a very interesting yet somewhat worrying development.  Have there been any incidents reported with driverless cars yet in CA?

  6. Susan Fourtané
    August 4, 2014

    Flyingscot, 

    I don't understand why people are worried about something that is going to help so many people who can't drive and is much safer than human drivers. 

    Do you know that nearly 1.3 million people die in road crashes each year, on average 3,287 deaths a day, according to annual global road crash startistics? Those road crashes are caused by human error.

    -Susan

  7. SP
    August 5, 2014

    @susan, quite agree with your point.There are many cases where elders are alone at home, noone to get usual stuff for them. Also as you correctly pointed there are people who cannot drive these cars would be a boon. Also sometimes it makes more sense to send the car alone and get the job done rather thane people sitting in it and wasting time. But can these driverless cars also manage crazy traffics like that of SFO….

  8. Susan Fourtané
    August 5, 2014

    SP, 

    Autonomous cars can manage traffic better than humans, according to tests and statistics about road accidents caused by human error. Did you see the stats I wrote in one of the comments below? 

    Many people are afraid of change, and this is what is happening here. Also, with all the automation going on in every industry some people are feeling threatened. Others started to show a kind of “human superiority” feelings. 

    The fact is, that autonomous cars are going to help plenty of people in different ways and will reduce road accidents. Those are the two more important things that people should be considering. 

    -Susan

  9. SP
    August 5, 2014

    Absolutely agreed. Have humans already taking rides in autonomous cars, how is the feel ?? is there any survey done on comments of those humans. It would be interesting to know.

  10. Adeniji Kayode
    August 8, 2014

    I really agree with you on that, my point is just that perfection can not be 100% and so with that in mind, can we go to sleep knowing fully well that machines get our backs

  11. Adeniji Kayode
    August 8, 2014

    I really agree with you on that, my point is just that perfection can not be 100% and so with that in mind, can we go to sleep knowing fully well that machines get our backs

  12. Adeniji Kayode
    August 8, 2014

    Im so sure Google will not want to miss it here, so much work must be going on.

  13. Adeniji Kayode
    August 8, 2014

    Do you think any part of CA is really ready for this?

  14. Adeniji Kayode
    August 8, 2014

    @Susan, Do you also see this having any positive effect on fuel economy?

  15. Susan Fourtané
    August 9, 2014

    Adeniji, 

    These cars are going to be environmentally friendly, solar energy powered. That's the plan. 

    -Susan 

  16. Susan Fourtané
    August 9, 2014

    Adeniji, 

    Yes. If California wouldn't be ready Google wouldn't be launching its test cars. During the test, Google is responsible for the cars. The same in Götemberg, Sweden where the whole city is going to test autonomous cars. 

    -Susan

  17. Susan Fourtané
    August 9, 2014

    Adeniji, 

    ” … can we go to sleep knowing fully well that machines get our backs?”

    You go to sleep and dangerous humans are around. I sleep better knowing that a well programmed machine is there and not a troubled human who is likely to cause road accidents. 

    -Susan

  18. Susan Fourtané
    August 9, 2014

    SP, 

    Yes, pleanty of humans have tested the cars already. I haven't been one of the lucky ones. Maybe I can find myself a way to test one in Sweden. 😀 I would love that. 

    I have read and heard comments of testers and all what I have heard has been great. They all looked very excited, especially the people who can't drive for one reason, or another. A whole world is going to be open for them improving their quality of life.

    -Susan

  19. SunitaT
    August 13, 2014

    Susan, will Google's marketing radar be directed towards South Asian countries as well? There are simply too many car companies in this part of the world. In USA you've got a handful with little pressure from European companies, and the first choice of Google would be marketing there.

  20. SunitaT
    August 13, 2014

    Google has everything considered. Most people into texting would probably buy most of these cars, because they wouldn't lose their life over it and still be able to reach their destination! 

  21. Susan Fourtané
    August 16, 2014

    tirlapur, 

    Google is a global company, as such the whole world is in its radar. However, with so many car companies in South Asia, as you mention, some of those car manufacturers may create their own autonomous car. 

    -Susan

  22. ahdand
    August 17, 2014

    @susan: Well I think its in process right now even. I saw one big company which has already decided to manufacture cars for their own usage. Sadly I cannot recall the name of the company but I will try my best to post the link in the message boards

  23. t.alex
    August 18, 2014

    is the future of human. However, are we ready for that technology yet? In my opinion we won't be ready for this technology at least 10 years from now and hopefully google still remains the best company in the world to help escalate this technology into our daily lives. 

  24. Adeniji Kayode
    August 19, 2014

    I got your point and I also know that machines are becoming dependable more and more.

  25. Susan Fourtané
    August 19, 2014

    Adeniji, 

    You need to see the stats about the millions of road accidents caused by human error globally per each year. I posted a link in one of the comments below. Did you see it? It's quite intersting. 

    -Susan

  26. Susan Fourtané
    August 19, 2014

    t.alex 

    Ready, or not, these cars are already a reality. 😀 They are not an option. It's not only Google. Volvo in Sweden is testing its autonomous cars on public roads in normal driving conditions as we speak. 🙂

    The Volvo cars are scheduled to be sold by 2017. Other car manufacturers are also working on autonomous cars. 10 years? Maybe cars will be flying by then. 😀 

    -Susan

  27. Susan Fourtané
    August 19, 2014

    Yes, Nimantha, several car manufacturers are working on their autonomous cars. It's not only Google. 

    -Susan

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