Self-Driving Cars

CES show returns to realism after self-driving bubble bursts

The age of adventure is being replaced by the realm of reality in the automotive displays at the annual Consumer Electronics Show in Las Vegas this year as automakers shift their focus from autonomous driving to electrification.

When the show opens on Jan. 5, CES will spotlight transportation technologies that are here and now, like self-driving tractors and electric cars.

After the high-profile collapse of Argo AI in October, the former self-driving unit of Ford Motor and Volkswagen Group, the focus at this year’s CES is profit, not potential.

Car companies and startups alike will show technologies they expect will provide a return on investment in the near-term, not in some hazy tomorrow that may never come.

The show still will be packed with eye-catching products. At least 274 automotive and mobility exhibitors will cover more than 400,000 square feet – equal to seven football fields – a 70 percent increase in floor space from last year’s pandemic-depressed levels, according to the Consumer Technology Association that puts on the show.

But practicality and profit will be the buzz words at a more sober CES.

“There is no question that there has been a shift,” Gary Shapiro, president of the CTA, said in an interview. “The Biden administration has focused more on electric vehicles than they have on autonomous.”

And the transportation exhibitors are doing the same. There will be an electric Ram pickup truck concept from Stellantis that is set to take on Ford’s F-150 Lightning, Rivian’s R1T and Tesla’s forthcoming Cybertruck.

Electric truck startup Lordstown Motors will show its Endurance plug-in pickup. BMW will show off a digital services concept car. General Motors, Mercedes-Benz and Volvo also are scheduled to tout new EVs.

As for autonomy, instead of robot rides aimed at taking us anywhere, the star of the show is likely to be John Deere’s self-driving tractor that promises to lighten the load on farmers by tilling the fields until the cows come home.

“It’s sexy realism,” Gary Silberg, a global partner and head of the automotive practice for consultant KPMG. “There are great toys out there and it’s going to be awesome, but we have got to be real about how we are going to use them.”

Automakers have begun redeploying the capital they spent on self-driving research into automated features that promise a quicker return.

After taking a $2.7 billion writedown on the shutdown of Argo, Ford is shifting its focus to semi-autonomous features, such as its Blue Cruise hands-free driving system that car buyers are showing a willingness to pay for right now.

The automakers “are asking, ‘Where can we make profits?’” Abuelsamid said. With systems that allow drivers to take their hands off the wheel on the highway, “they know they can sell that and the cost to develop it is much more modest” than full self-driving cars.

Automakers are now turning inward and trying to revolutionize the cockpit with technology drivers can download to their car’s modem.

Automakers are looking to offer an a la carte menu of features such as horsepower upgrades and dashboard gaming systems. They say such features could generate double-digit margins.

Stellantis and e-commerce giant will each have displays at CES showing how connected cars will transform the in-vehicle experience.

Volvo and chipmaker Qualcomm will jointly show how they are revolutionizing the cockpit with infotainment and safety systems.

Many of the changes coming to car interiors started out as technology tested on full self-driving car prototypes, such as sensors that detect occupants in a vehicle.

“The big step,” Abuelsamid said, “is that a lot of the technologies we have been seeing at the show over the years are now migrating into areas that are becoming actual products that will launch over the next couple years.”

Pushing the pragmatism is the mountain of money automakers have committed to take on Tesla in the emerging electric vehicle market. KPMG estimates global automakers are making a half-trillion-dollar bet on electric vehicles.

Quicker return

With that kind of money on the line, there is not much appetite for pouring billions into autonomous vehicles every year with little hope of a return any time soon.

“People are realizing that the market for large-scale adoption of AVs is still quite a few years away because the technology is just not mature enough,” Sam Abuelsamid, principal analyst of e-mobility with consultant Guidehouse Insights. “The profits are almost certainly not going to be there in this decade.”

Auto executives are even paring back expectations on electric vehicles after confronting the reality of battery shortages and soaring raw material costs.

A new survey from KPMG of 500 global auto executives found they now expect just over one-third of global auto sales to be electric by 2030, down from nearly two-thirds a year earlier. And one-third of automotive leaders do not see autonomous vehicles being commercially available this decade.

With only so much money to spend, auto executives are putting resources into EVs at the expense of AVs.

About 64 percent of US auto executives said they are very or extremely likely to sell off non-strategic parts of their business over the next few years to help pay for EV investments.

“When we asked these same questions last year, it was all rainbows and butterflies,” KPMG’s Silberg said. “But now it’s no longer theoretical and you see this realism.”

Private money also is getting real. The days of dazzling deep-pocketed venture capitalists with your amazing display at CES are over, Abuelsamid said.

“We are beyond the stage where there is easy VC money to be had,” he said. “The investment community has decided ‘we are not going to put any more money into’” self-driving cars “‘because we do not see it as a near-term growth business.’”

Car companies and startups alike will show technologies they expect will provide a return on investment in the near-term, not in some hazy tomorrow that may never come.


Donovan Larsen

Donovan is a columnist and associate editor at the Dark News. He has written on everything from the politics to diversity issues in the workplace.

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