Business / Auto China

Race to define car of the future shifts into high gear

(Agencies) Updated: 2015-01-09 14:05

Sense of urgency

The urgency among the companies looking to profit from connected vehicle technology, including the hardware and software required for automated driving, is increasing. Several automakers, including Mercedes, General Motors Co and Volkswagen AG's Audi, have said they want to have vehicles capable of significant levels of hands-free driving on the road between 2016 and 2020. That means contracts to supply hardware and software need to be signed now.

The head of Google's autonomous vehicle project, Chris Urmson, is scheduled to speak next week at an industry conference in Detroit to send the message that Google wants to forge partnerships with traditional automakers and suppliers to get its technology on the road.

Research firm IHS Automotive has estimated that self-driving car technology will add more than $31 billion in revenue for Google by 2040.

It is not clear, however, how automakers and such traditional technology suppliers as Continental AG, Delphi Automotive PLC, Robert Bosch GmbH or Visteon Corp, will welcome Google and other Silicon Valley companies looking to muscle their way between automotive brands and their customers.

Volkswagen, for example, announced at CES this week that it has partnered with Google rival TomTom to provide mapping data for its vehicles. Accurate maps are critical for autonomous driving, and they also provide richer information to drivers based on their location.  

Shaking up status quo

Investors are betting that whatever happens, the status quo will be upended. Enthusiasm is high for companies positioned to benefit from increased automation and digital connectivity - including ride-sharing companies such as Uber, which aim to blow up traditional car ownership.

Valuations for some technology upstarts in the auto sector have soared above many of the industry's stalwarts.

"You will see the Old Guard lose its (share price) multiples and the New Guard valued at crazy levels," said Cathie Wood, chief executive of Ark Investment Management LLC, which invests in shares of companies it believes will benefit from the growth in connected and autonomous vehicle technology.

The traditional auto sector is also investing heavily to avoid being eclipsed.

"It's protecting our future," said Tim Yerdon, vice president of Visteon's connected services. "We have to play in it one way or the other."

 

 

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