GM, Toyota, Volkswagen and other major vehicle manufacturers are scurrying to realign for the next big things — driverless and electric vehicles — but China, not Western manufacturers, may provide the impulse that transforms personal transportation.
GM will soon test a fleet of self-driving cars in Manhattan to assert leadership in a technology that threatens to send bus and truck drivers the way of blacksmiths.
Internal combustion engines, transmissions and vehicle structure are the core competencies of major vehicle manufacturers. They outsource and rely on others for quality control of seats, dashboards and the like but keep close drivetrain technologies and aerodynamic designs that determine horsepower, gas mileage and compliance with emission standards.
Electronics, computers and the like are not what auto makers do well, and that’s why onboard electronics like dashboard displays, entertainment systems and Bluetooth fail so often. Before parents put 6-year-olds in driverless carpools on a dark, rainy school morning, those systems must run flawlessly between periodic maintenance checks — and that is not likely to happen anytime soon.
Also, autonomous drive systems will be connected to the internet and centralized control systems. If terrorists can hack Google and the SEC, they surely can seize control of vehicle systems guiding tractor trailers and cause carnage on our highways.
More likely, systems now being tested will spin off advanced applications that better assist ordinary drivers. For example, artificial intelligence systems — keyed to drivers’ activities inside and before they enter the vehicle — could alert drivers when they are too tired and offer to engage driver-monitored automatic pilot systems.
The principal barriers to profitable production and wide adaptation of EVs are range, high costs and the availability of charging stations.
As with the railroads (with land grants and right of ways) and airlines (with postal contracts and municipal financing of airports) aggressive government intervention may prove necessary to create a broad enough market to overcome those challenges.
GM and others are introducing vehicles that can go up to 200 miles before recharging. That range will gradually improve and recharge times will come down — eventually providing the practical range necessary for most family trips — and not just errands and commuting.
However, until a mass market truly emerges to spur more rapid innovation and drive down the cost of batteries, EVs will remain an expensive fashion statement. With gas prices likely to stay around $2.50 for the foreseeable future, EVs simply cost too much more than conventional SUVs to purchase and operate overall.
Also, too many families lack space for charging facilities, especially in cities that are built straight up, like New York. Even more spread-out cities like Washington have many homes with no driveway and whose cars are parked on the street.
Cash-strapped municipalities can barely maintain water and sewage systems, ambulance services and roads now, never mind build out systems of curb-side electrical charging stations. They will have to turn to private investors who must be assured of enough subscribers to make such large investments attractive.
The federal government provides tax credits up to $7,500 for the first 200,000 EVs sold by each manufacturer. Tesla TSLA, -0.63% will soon cross that threshold and lose its subsidies without yet producing a vehicle whose price can cover costs.
Beijing is more aggressively underwriting domestic manufactures and building a vast system of charging stations.
By 2019, major manufacturers will be required to make and offer for sale EVs in China, meet progressively rising EV quotas after that, and use batteries manufactured by Chinese companies. And along with the U.K., France and India, Beijing has signaled its intention to eventually ban the sale of gas-powered vehicles.
With a subsidized indigenous auto sector, protected domestic battery manufacturers and a market for motor vehicles about twice the size of the United States or Europe, all this could provide the scale to drive down Chinese manufacturing costs to levels competitive with or even lower than gas and diesel vehicles — and then flood the U.S. market.
Americans may not like their government similarly meddling in their market for personal transportation, but experiences with rail and air transportation demonstrate that is exactly what may be necessary to keep American manufacturers in the game.