Robot cars are coming sooner than you think
Industry and governments are pouring money into robot cars. Matthew Partridge looks at the sector, and the firms best-placed to benefit.
One of the great things with being part of the team at MoneyWeek is catching a tech trend in its early stages and then watching it develop.
When we first covered it in October 2012, driverless (or self-driving) cars still sounded more like bad sci-fi, rather than a serious idea. Only a handful of firms were developing it. The idea of robot cars actually hitting the roads seemed a legal and logistical nightmare.
Today, things have changed a lot. It's hard to name a single major car company that isn't working in the area, with several talking about releasing roadworthy models before the end of the decade.
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Governments are now clamouring for trials to take place in their countries. US president Barack Obama has promised $4bn in grants to help speed up development, and keep US firms ahead of their rivals.
So who's best placed to benefit?
The race to take over the roads is heating up
In the lead right now are Google (now known as Alphabet) and Mercedes.
Both have working prototypes. Mercedes trialed its F-015 model at various car industry events last year, while Alphabet is trialling its own system, and is currently in talks with Ford. Details are sketchy, but there's speculation that it might strike a deal which would allow the first self-driving cars to be mass-produced within a few years.
But other players are making major achievements in the field too. Audi's robo-car can both navigate busy roads and take a lap of a racing track faster than a professional driver.
And Apple could be the joker in the pack. Almost everyone believes that the tech giant is secretly developing an "iCar".
So a completely self-driving car could be much closer than we think. In the meantime, part-automated cars are already on the roads. These "cyborg cars" (using a mixture of human and robot inputs) are getting quite sophisticated.
Cars can now parallel park without human intervention, taking the hassle out of an aspect of driving that many humans never quite get to grips with. Systems that will slam on the breaks in an emergency without human intervention are also now standard in many high-end models.
Tesla's Model S electric car even introduced a downloadable autopilot last year. This can automatically steer the car without human input. It's far from perfect and not recommended in urban areas. But the evidence is that it works surprisingly well, allowing commuters to take some of the load off during long journeys.
Bad news for taxis, good news for road users
Take taxis. You've probably already heard a lot about the big battle between Uber and black-cab drivers (and if you live in London you might have seen the protests). But self-driving cars could do away with the lot of them.
Eventually, taxi firms will automate all parts of their business, not just the driving. Smart software programs will predict demand, make minute-by-minute changes to logistics, prices and schedules to maximise the efficiency of the robot fleet and minimise traffic congestion even order new taxis direct from the manufacturer.
Sounds near-utopian. Yet much of the technology already exists it's just a case of bringing things together. Uber is already investing large sums in a deal with Carnegie Mellon University to develop self-driving technology. Meanwhile, General Motors just invested $500m into rival Lyft (which offers a similar service to Uber), with the long-term goal of developing its own fleet of robot taxis.
It might be bad news for taxi drivers, but all the evidence so far suggests that driverless cars can improve safety. Trials show far lower accident rates, with the companies claiming that any accidents that do happen have mostly been down to human error on the part of other cars.
This implies that the more robot cars there are, the fewer accidents there will be. Indeed, humans could eventually be banned from the road as presenting a risk to other drivers. Insurance companies are concerned that robo-cars will improve road safety so much that premiums (and thus profits) will go through the floor.
Of course, robo-cars raise a slightly different safety concern cybersecurity.
Firms in this sector are already warning that robo-cars could become a massive target for hackers. One made headlines last year by showing how today's intelligent cars could be remotely hijacked. As we've said before, this could be a big opportunity for the cyber-security sector.
We'll be taking a much more detailed look at the whole sector in MoneyWeek magazine in the very near future.
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Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
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