The thing about a big inflection point like autonomous or electric is they go through what the Gartner Group calls the Hype Cycle. It’s what everybody is talking about, the sky is falling and we’ve got to get into this immediately. It’s urgent, urgent, urgent. And we’ve seen this over and over again. In the dot com era for example, everybody had to have a website. And then it all came crashing down, because a lot of the ecosystem wasn’t there yet.
When I think about where the automotive players are now, we’re really looking at a dramatically incomplete ecosystem which is the first problem. Everybody says autonomous vehicles would be great. And yet, I can’t pinpoint one place where it’s going to make enough of a difference that people will invest billions in buying these things, because it is a systemic change. Systemic changes tend to start where there is actually a demonstrated need where somebody really has to have this offer because it solves a problem which cannot be solved in any other way.
My favorite example of this at the moment is the military, which have to run supply trucks to their front lines. Right now, it’s 2 people per truck to drive the truck. Let’s say you need seven trucks, we’ve got 14 people now at risk. They’re not doing other, more useful things, they’re just sitting there driving a truck. What Northrop Grumman is innovating is a system where you have two people in the front truck, and then the other six just daisy-chain along behind. Autonomous technology is good enough to do that. It can replace the driver in those trucks. There’s a case where you’ve got a real need, there’s a real problem it’s solving. They’ve got a real budget to put against it. The savings are considerable. In other words, there’s a strong business case.
There’s no business case for autonomy to work the way people are talking about it working. I would have to maybe subscribe to an autonomous driving service, but some other provider is going to have to own and maintain the vehicles and manage the programming. We still don’t know who’s going to deal with the risk. We don’t know what the insurance implications are. The ecosystem just isn’t clearly there yet.
If I were a car maker, what I’d be doing is I’d certainly be taking on options. I’d be making small investments, I’d be paying very close attention, but until you have that complete ecosystem where the economic roles and who the money is going to go to sorted out, it’s not going to become the norm.