Thursday, February 16, 2017

Ford Just Invested $1 Billion in Self-Driving Cars

            Like the race to get to space between the United States and Soviet Russia, the race to build autonomous cars is revving up. Autonomous, or self-driving, cars detect their surroundings using GPS, radar, and computer vision among other things. Self-driving cars are becoming so important to car companies because all signs point to autonomous cars being the future of the roads.
            Friday afternoon, Ford announced it would invest $1 billion over in a previously unheard of startup for self-driving cars. Ford will be teaming up with Argo AI, led by Google and Uber veterans, to develop the fully autonomous car. Argo AI hopes to have 200 employees by year’s ends split between Silicon Valley, Michigan, and Pittsburgh. All automakers’ worst nightmare is to turn into Nokia, which was a global leader in cell phones until Apple turned the whole world upside with its new, sleek iPhone. Nokia just couldn’t keep up with the Silicon Valley giants such as Google and Apple. It is obvious that Ford will spend a very ample amount to avoid this and they hope their self-driving cars will help.
            This enormous investment is a huge risk for the American car company. First of all, there is already a lot of competition in the field of autonomous cars. Competitors such as Tesla, Uber, Google, Volkswagen, Alphabet, and more, are already well ahead of Ford. A problem regarding this is that Ford is not as flashy as companies such as Tesla and Google. Since it can be assumed that future first generation models of driverless cars will be pretty expensive, people will be more likely to get the cars of the more “techy” companies because they will already be spending a lot of money so why not spend just a little bit more for it to be a Google or Tesla car. Google currently has the most autonomous cars on California public roads with 424,331 cars (Fung). Tesla is the current frontrunner, given that “the company announced last October that all of its cars will now have the hardware necessary to become autonomous vehicles,” (Salzman). This puts Tesla ahead of the curve because if and once self-driving cars actually become a “thing”, Tesla will have the ability to make all of their current cars autonomous.
            Not only will Ford have to deal with competitors, but what if self-driving cars really are not the future? Right now, other than Google, there are obviously not many cars on the road without drivers, so it really is just assumptions and hope that autonomous cars will be the way of transportation for the future. However, if autonomous cars aren’t the future, Ford just wasted a plethora of money with this investment.
            In my opinion, if Ford wants to remain as one of the powerhouse American car companies, this is a risk worth taking. A lot can definitely go wrong, but this could make them one of the more reliable autonomous car companies if they do ever become a staple of the road.


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Matt Lodato said...

I strongly agree with your overall opinion that if Ford wants to remain as one of the powerhouse American car companies, investing in autonomous vehicles is a risk worth taking. Despite the very high costs, I feel that this is an investment that most car producers in the United States and around the world will have to make at some point in their lifetimes in order to remain competitive in the market, especially as it becomes more popular in demand. There are only a few companies that you mentioned (Tesla, Uber, Google, Volkswagen, Alphabet) plus a few more that have begun working on or have produced autonomous vehicles, so while Ford did not join this race immediately, I still feel that they are not too late. While I agree that Ford is not as much of a flashy and appealing brand name as Tesla or Google, I do not think this is a reason that they should hold out. They may never be able to compete with the work of Tesla, as you mentioned that they have the ability to make all of their current cars autonomous, but even so it is important for Ford to show their abilities and that they will be competitive in the future market. If they are able to produce an autonomous vehicle similar to that of the flashier companies that is a fraction of the price, consumers might lean towards them as they are still a very popular and trusted American car brand. Whether or not autonomous vehicles will be the way of the future is up for debate. As of now it seems as if signs are pointing to it being very popular one day. It is an incredible technological advancement that is drawing a ton of consumer attention. Regardless I believe that Fords costly $1 Billion investment to begin working on self-driving cars is well worth it to ensure that they will remain competitive with some of the best car brands in the future. The last thing that Ford needs, as you mentioned, is to become a company similar to Nokia because they were unable to keep up with their competitors. The last point that I feel is worth making is that this move made by Ford to show a strong interest in manufacturing autonomous vehicles might influence other similar car companies and potential competitors such as Toyota or Honda to do the same so that they don't fall off in the market. This will only increase the chances of this truly becoming the way of the future.

Bryce Carrasco said...

When it comes to the emergence of autonomous cars in the automobile industry, there are a few important things to evaluate when analyzing whether the investment made by Ford will prove to be lucrative. In order for autonomous cars to dominate the automobile industry, the marketing strategy will be vital to whether the cars will be able to sell on a massive scale. Autonomous cars are certainly a discontinuous innovation in the automobile industry, so many consumers will be hesitant to trust the technology and replace their existing cars with ones that are self-driving. Autonomous cars have tremendous potential and provide a lot of upside for businesses and people. The ability to remove labor costs for drivers salaries out of the equation can be very lucrative for companies that need to ship products to consumers. Distribution can become much more efficient if driving were automated across the board. One big issue is convincing the market that these cars are safe and reliable, because most people will be skeptical and hesitant to embrace this entirely new way of driving. Ford's investment in this technology in no way is a waste of money, because in order to maintain their share of the automobile market, they must be able to provide the technology that companies like google and tesla are. Ford has the resources to create an autonomous car and compete in the market for self-driving cars. In my opinion, the best way that Ford can create a competitive advantage in this market is to scale their production and offer these autonomous vehicles at a lower price that can appeal to a wider range of consumers. If Ford can succeed in marketing the cars to not only the rich but the middle class too they will dominate this market and elevate autonomous cars from simply a niche market to one that is large-scale and dominate.