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Hi. Bob Aldons from Car Business again, with advice on cars and everything automotive. I’m pleased to bring you this discussion between industry experts from McKinsey. Hans-Werner Kaas and Detley Mohr along with Luke Collins to discuss the future of self-driving cars. However, before you jump into a comfortable wet day read, let me give you my opinion about autonomous cars and driving.

Funny thing is that we already have access to autonomous vehicles, at least from a driver’s perspective – they’re called taxi’s, buses, trains and the like. With a self-driving car, you’re generally not taking a 1000 mile/kilometre trip – it would be more economical to take a plane. SO what about travelling to a major city from say 40 kilometres/miles away? You’re still faced with the issue of parking, time and cost.

My thought with self-driving or autonomous cars is that they’re able to take control of the vehicle when a number of things happen.

  • A telephone or perhaps in the future a video call comes to the car’s included telephone
  • The car predicts a mechanical issue and takes over before the drivers is able to react.
  • In the event of an accident, the car is able to predict the outcome and severity of the collision way before a driver has had time to react.
  • When the driver is drowsy, the car takes control and steers and stops in a safe way
  • The car can control the speed of the car in defined areas – 60kph or less in a 60kph zone. 40kph in a school zone and override the drivers desire to maintain an illegal or unsafe speed.

Personally,  I want to drive my car – I enjoy driving. I can use the cruise control, my car as accident avoidance technology already and as I said previously, if I didn’t want to drive I’d catch a taxi cab or book a driver. Now, I’m pretty confident that this blog won’t get to the Elon Musk’s of this world and that Tesla and all the other manufacturers will continue to pour billions of dollars into self-driving cars, but perhaps they need to have a re-think.

Car Business is a multi-dimensional automotive company that aims to help you to buy your new car for a better price than you can do on your own. Based on the Redcliffe Peninsula about 15 minutes from Brisbane Airport and 30 minutes from the Brisbane CBD, Car Business is located in an area that allows us to pick and choose from Brisbane’s finest new cars for sale.

The ‘go to’ Brisbane car buying agents, Car Business, is so much better than a car broker – first and foremost, Car Business is an experienced Car Buyer’s Advocacy service. Our experienced staff will stand alongside you, and act on your behalf to help you buy your new car at a better price than you can directly through new car dealers.

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McKinsey Podcast

The driverless car is coming, but significant questions remain. Will consumers actually want to cede control of their vehicles? Can autonomous cars be truly safe in a world of variable driving conditions and human error? And what could it all mean for the future of the auto sector? In this episode of the McKinsey Podcast, senior partners Hans-Werner Kaas and Detlev Mohr talk with McKinsey’s Luke Collins about how car manufacturers are responding and whether the art of driving will disappear.

Podcast transcript

Luke Collins: Welcome to the McKinsey Podcast. I’m Luke Collins, an executive editor with McKinsey Publishing. Today we’re talking about cars and, more specifically, the future of the automotive sector in a world where the fundamental relationship between consumers and the act of driving is changing.

 

Self-driving cars and the future of the auto sector

Joining me today are two leaders in McKinsey’s automotive practice, based in two of the world’s most iconic automotive cities. Hans-Werner Kaas is a senior partner in McKinsey’s office in Detroit, the cradle of the United States automotive sector. And Detlev Mohr is a senior partner in our office in Stuttgart, Germany, the city where Karl Benz, in 1885, invented the automobile. Hans-Werner and Detlev, thanks so much for being here.

Hans-Werner Kaas: You’re welcome, Luke.

Detlev Mohr: Welcome.

Luke Collins: Let’s start with a subject that has never been very far from the headlines for the past couple of years: autonomous vehicles, or self-driving vehicles. We can get into some definitions around what a self-driving vehicle is, but the bottom line is early this year McKinsey predicted that up to 15 percent of new vehicles sold by 2030 could be fully autonomous. Hans-Werner, what exactly does that mean?

Hans-Werner Kaas: Thank you, Luke. According to the definition of Level Four Autonomy by NHTSA, the National Highway Traffic Safety Administration in the United States, it means that a vehicle can operate under any condition, regardless of weather, or regardless of potential constraints in the infrastructure in the surroundings, fully autonomously, without the intervention of a driver.

What does it really mean? Obviously the technology is the first question, which has to be resolved. That requires advanced-sensor technologies, but also multiple-sensor technologies. And frankly, there are still technological barriers, which we will need to address.

Second, obviously, regulation. Regulation has to define very clearly under which infrastructure conditions one can operate such vehicles. And third, in my view what is often overlooked, is actually the acquaintance and the acceptance of autonomous solutions by the consumer.

We as individuals need to feel comfortable to actually cede the control of the vehicle to a set of very intelligent processors and sensors and, frankly, underlying software. That last point, I think, Luke, is very frequently overlooked.

Luke Collins: Yes, I was going to ask Detlev’s opinion on this, because a lot of people like driving. They really like driving, and the idea of handing control of your vehicle to a computer, for example, seems not ideal from asafety perspective, at least, intellectually. And not ideal from the perspective of not enjoying driving anymore.

Detlev Mohr: I think for most consumers, it will be important to have choice. All of us know situations like, for example, in the morning when it’s rush hour and you’re in a big traffic jam, driving is not really fun. If you have an autonomous driving system, that could really improve your lifestyle. You could be reading, you could be relaxing.

On the other hand if it’s a great day, it’s a weekend, and you can drive in the countryside and have real fun, then of course you want to drive yourself. So, bottom line, my sense is most people will love the choice and decide, depending on their personal mood, and the traffic situation, when they will use the feature and when not.

Luke Collins: It strikes me that in an ideal world, the safest conditions for autonomous vehicles would be one where every single vehicle is autonomous. And obviously, that’s not realistic. We’re going to have a situation where some people enjoy driving, they continue driving, they don’t trust computers, for example. And you’ll have some people who quite happily hand over control over their car.

Is it possible for manufacturers and for the technology—ensuring that the roads are set up a certain way, that there are signs that are set up a certain way—to transmit the data that’s necessary to ensure the vehicle is safe? Can we strike that balance?

Detlev Mohr: I think that’s exactly the technological challenge a lot of manufacturers are working on. When we get to Level Four driving, these cars have to deal with many, many cars that are still without the technology and are driven by ordinary people.

There needs to be sufficient sensor technology, sufficient computer power within the car, and computer algorithms that detect out-of-picture, out-of-sensor data, real-life traffic situations, and give the right reaction to the car. That is the technical challenge, and manufacturers are working hard on it.

That’s why we will probably see Level Four capabilities will be first in road and traffic situations that are easier. So imagine you have a highway with separated lanes. You have great weather. That is much less complicated than having a small city with lots of small roads—let’s say, here in Europe—and bad weather conditions. But with more and more driving experience, and learning of the system, and improved technological powers, we will see more and more situations that can be taken up by the system.

Luke Collins: This obviously pulls a lot of automotive manufacturers into fields that traditionally they wouldn’t have been involved in. What kind of things are car companies now doing to ensure that they have the technological prowess that they need?

Hans-Werner Kaas: There are a common set of elements all of them pursue. I think point one is you do need to have a very clear technological architecture defined under which you really want to make autonomous vehicles work.

What that means is a multiple sensor technology as input. Multiple-sensor technology, to give you an idea of what is really behind it, could be camera-based sensors, which are detecting obviously visual pictures of our surroundings. It can be radar-based pictures. It can be light-based pictures. It can frankly even be ultrasonic-based pictures or inputs.

And the critical point number two on that technological architecture is what experts call sensor-fusioning. How do you actually compare and reconcile different sensor input into the software algorithm? Could be simple things like, “At which speed is an obstacle moving? Is it moving away from you? Toward you? Alongside you? Sideways to you?”

And that then obviously provides a set of instructive orders to the vehicle: turning the steering wheel, accelerating, or braking. That type of processing has to happen in real time. And “real time” means that can be a tenth of a second.

Many original-equipment manufacturers (OEMs) do invest organic resources, which means, frankly, that they are expanding and hiring the right technological expertise and engineering. But also engineers that are capable of systems integration, which can marry, in simple terms, the hardware with the software.

They are also making significant investments in prototypes and testing. Testing can be in defined and confined environments, but it can sometimes also be on open roads. You can imagine that the breadth and depth of technological expertise required is hardly to be found in a single company, even though we talk about really significant, large companies, in the case of auto companies. But certainly the technology companies have a word to say in that.

And last but not least, there is a very rich setup of start-ups and small companies that own proprietary expertise in the different fields of technology.

Luke Collins: One thing I’ve always actually been curious about is the extent to which this effort, which it seems all current car companies are now on board with, is being driven by demand from consumers as opposed to simply a desire of car companies?

Detlev Mohr: I’d say it is mainly car companies thinking through, “What could technology do, and how could technology deal with maybe underlying desires of consumers to spend their time in a different and maybe more productive way?” But also additional benefits that could derive out of it; for example, from an insurance point of view, there could be less traffic accidents.

I would say it is more supply driven and assessing the technological possibilities versus customers crying for this product today. But, from my point of view, this is also pretty common in many tech areas where, in a way, innovation has to provide or has to create markets—and is basically tapping into unmet or latent demand.

Hans-Werner Kaas: There are, in our view, four major forces of disruption happening, and the unique thing is that they’re happening in a simultaneous fashion. Today, we talk about electrification of vehicles. Obviously, that is not a new, but I would say a still-relevant force of disruption in terms of a more efficient, environmentally sustainable power train.

Number two, we talk about connectivity or digitization. So, with wireless technology, the amount of information being able to be transferred between different constituencies, it could be a car, a third party, could be between two cars, et cetera, obviously opens up very new technological opportunities and possibilities.

Third, it is about what we call advanced driver-assistance systems, leading the pathway towards autonomous vehicles. Last but not least is mobility. There are many more diverse forms of mobility. In other words, how do you get from A to B?

The former three technological forces I mentioned: they could accelerate mobility, both the adoption and diverse forms of mobility, but they’re not necessarily needed to actually push new mobility forms. That is very important to note, to understand those inter-relationships.

So what are carmakers doing today? On the one hand you see the spectrum of carmakers who are cautiously exploring in their own way—they call it sometimes experiments, they call it sometimes small pilots—which of those future mobility forms might be willingly adopted by consumers. That is one end of the spectrum.

You see other carmakers making actually clearly bets already today, including with equity investments and investments into partnerships. In many cases, they involve capital. In many cases, they involve intellectual property-sharing. But they don’t have to. Or it can be a combination of both.

So you see a full spectrum of engagement by carmakers today. And frankly, if I stretch it a little bit further, when you look at technological players—whether a Google, an Apple, or mobility providers like Lyft or Uber—they also reach out to the incumbents, and understand what type of domain knowledge in the auto industry is critical to actually define an offer of viable services.

Detlev Mohr: The relationship between the consumer and the automobile is getting more diverse. We see today that, especially younger people are much, much more looking for mobility services; maybe are less keen on driving a car.

The traffic situation in many major cities is very problematic: lots of congestion, not to mention the environmental situation. So big cities are looking for opportunities to have less or better-flowing traffic. And at the same time, they also try to free up additiona