The News
On Wednesday January 4th it was announced that Mobileye and the BMW Group will put 40 autonomous test vehicles on the road by the second half of 2017. The upper luxury BMW 7 series, an early target segment for autonomous driving, will be testing vehicles in real traffic conditions in the U.S. and Europe to begin with. Their goal is to develop a fully autonomous vehicle for production (the BMW iNEXT) by 2021. Introduced at the show was a concept car (BMWi Inside Future) which has the steering wheel tucked away when in autonomous driving mode. BMW hopes to release this car after 2020.
Who Cares?
Mobileye and BMW are thought to be furthest along to a standard autonomous driving solution. This follow-up announcement on the Mobileye/BMW partnership shows this announcement was not just a smoke and mirrors deal back in June. The more significant target would be making fully autonomous driving an option on an established model or series. U.S. sales of the BMW 7 series represented about 15% of upper luxury vehicle sales in the U.S. and an announcement closer to 2020 of autonomous driving being an affordable option on this car would more of a needle mover. Autonomous driving has the ability to increase demand through significantly lowering insurance premiums as well as creating demand from segments of the population (seniors, disabled and youths) that can not drive.
Slow Turnaround For A Level 4 Autonomous Driving Vehicle
The 2021 timeline for a fully autonomous vehicle is well behind Tesla’s goal of 2018. However Elon Musk provided this goal prior to the U.S. NHTSA updating its standards in July 2016 and he has yet to update this commentary. The new NHTSA standards now defines fully automated vehicles as having no licensed human driver required under certain road conditions.
Musk has also set the bar on safety lower. Back in December he stated “When I say level 4, I mean level 4 autonomy with the probability of an accident is less than that of person.” BMW and Mobileye’s bar on safety is expected to be significantly higher than this given Mobileye’s break-up with Tesla following the first AutoPilot death and its desire to incorporate LiDAR. However higher standards will undoubtedly result in higher costs and timing. The desire to keep their platform open to other OEMs and suppliers will also make the path more difficult.
Higher Safety Ratings = Higher Sales = Higher Share Price = Raise Money – Tesla appears set to once again move ahead in consumer safety ratings with their self-driving updates in 2018. The NHTSA’s safety ratings tend to reward vehicles making innovations in safety, inline with their goal of continuously reducing deaths and injuries from motor vehicle crashes. However after 2020, autonomous driving solutions from BMW and eventually other luxury vehicles are on pace to overtake Tesla. Tesla raising billions of dollars before that time is also likely.
Indirect Shot At Elon Musk Hints At Slower Turnaround Time
A surprising number of statement were made by BMW’s head of development Klaus Fröhlich and Mobileye founder Amnon Shashua against Tesla during the announcement.
“We know that the holy grail of fully autonomous driving will not be easy. How do we replace the human brain, the recognition and decision making with an intelligent system. Many innovators, some marketing pros are trying to perfect this. I think most of them will fail.”
“What makes us different, we are not only focused on the vehicles, the technologies and systems. The critical success factor will be the “How”. How to execute more successfully then our competitors. How to move faster without losing strategic direction, and how to build the best partnerships.”
“We have the experience to validate all systems to a very high level, before offering them to the customer.”
Shashua stated that what sets the partnership apart is that they are inclusive. “Rather than trying to set us apart from the World, we tell the World come and join us. “
Recall Tesla raised nearly $1.5 billion in equity at $212 per share despite hundreds of millions of dollars in losses a quarter and consistently missing production targets. Their loyal shareholder base has allowed Musk to carry out his electric car and autonomous driving goals despite what would not be an economic business plan. These remarks against Tesla hint at further proof that Tesla’s ability to raise capital at virtually no costs to their business plans have forced competitors to take them and their innovations seriously.
Partnership Is Real
Many partnerships in technology are announced and fail after a few months after further discussions or changing interests. However things appear on track with 19 separate active workstreams including:
- Sensing
- Computer vision
- Processing (radars, LiDARs, fusion)
- Mapping
- Driving Policy
The next steps were said to be building a scalable platform. There will be options of components OEMs can choose from for visioning, computing and connectivity. It remains to be seen how interested BMW really is in sharing data to its direct luxury vehicle competitors. Pricing has yet to come up on company conference calls to date.
