You might have heard by now, but today's technology giants want to take over your car.
Tesla Motors (NASDAQ:TSLA) is already hard at work to (eventually) bring electric cars to the masses. As we've seen in the headlines repeatedly this year, larger tech powers like Google (NASDAQ:GOOG) (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL) are also eying an entry into this massive market in the coming years. However, according to one source, the coming convergence of the tech and auto industries might not come quite as quickly as some companies might have you believe.
Hitting the brakes on autonomous driving
Earlier this week, renowned consulting company Boston Consulting Group released a detailed report about the evolution of the automotive industry and its widely discussed path toward self-driving cars. In the report, BCG argues the global automotive industry is reaching its most significant inflection point in nearly 100 years, and that autonomous driving cars are virtually inevitable at this point.
However, BCG believes the mass-market roll-out of these self-driving autos won't happen at as aggressive a pace as the Apples and Googles of the world might wish. Rather, BCG plausibly argues that the roadmap from today to our driverless future will involve a series of measured and tightly managed multi-year steps. Governments and other key stakeholders will understandably want to evaluate each step in this technological roll-out, and BCG believes this will lengthen the time horizon for driverless autos to hit the road.
Per BCG's analysis, cars featuring the first driverless elements like single-lane steering and automatic valet parking capabilities will reach the market this year and early next year. However, fully autonomous vehicles will not reach market at scale until 2025, a full five years after Google hopes to have its self-driving cars on the streets. That's a massive difference in timing, one that Google investors -- and Apple investors, to a lesser extent -- certainly need to note.
Where the rubber meets the road
The natural question in all this for technology investors is what kind of impact this possible mass-market delay could have on individual companies like Tesla, Apple, and Google.
Without question, the tech company most negatively affected by this prediction is Google, as it's made by far the biggest explicit bet on self-driving cars. The entire premise of Google's automotive ambitions has centered on driverless cars.
Whereas Tesla's and Apple's interests in the auto space seem to stem from the desire to make a better car, Google's driverless car initiative appears to have begun as a way to leverage its pre-existing leadership in mapping technologies.
As such, the notion of Google selling cars to either individuals or larger entities like taxi companies seems linked with the mass market acceptance of its autonomous autos. Should BCG prove correct, the intersection of the tech and auto industries -- and Google's positioning there -- might prove further down the road than Google investors might wish.
Unlike Google, this report isn't especially troubling for Tesla and Apple. Tesla has been producing cars for years now, and its production plans and road to profitability aren't especially predicated on the eventual acceptance of driverless cars.
For Apple, a report from Reuters explicitly cites its interest in incorporating autonomous driving capabilities into its recently leaked Project Titan. However, the bulk of reports I've seen on the subject don't depict Apple's automotive planning to be specifically focused on self-driving cars. Like the rest of the automotive industry, Apple and Tesla will likely gravitate toward the technology as it becomes more common. However, neither Apple nor Tesla has specifically attached itself to self-driving technology like Google.
At the end of the day, the global auto industry is an understandable target for today's tech titans. In order to continue growing, Tesla -- and especially Apple and Google -- will need to continue to take on bigger and bigger challenges. And with the U.S. automobile market alone producing an estimated $500 billion in annual sales, aiming to disrupt this market seems like a worthy ambition.
It's important to remember this is a generational shift. So, while it's certainly fun for investors today to dream, it will likely be quite some time before Google becomes your personal chauffeur.