“The vehicles, however, will no longer be driven by humans because in 15 to 20 years — at the latest — human-driven vehicles will be legislated off the highways.” — Bob Lutz, Automotive News November 5 .
Bob Lutz has truly had a storied career. Born in Switzerland, the son of a Credit Suisse vice chairman, he spent part of his youth growing up in Scarsdale, New York. Took American citizenship at 11, fluent in five languages, sold vacuum cleaners in Walnut Creek, Calif., while attending Berkeley; and somewhere in there had time to become a Marine Corps fighter pilot. When Lutz earned a degree in production management, his father steered him in the direction of working for General Motors in the early Sixties — and likely picked up the phone and got his impatient son a job with GM Europe.
After eight years at GM, he moved over to BMW, then Ford, then Chrysler, and finally ended his legendary career as vice chairman of General Motors. Along the way his fingerprints helped the first BMW 3 Series; and he saved Ford financially in the early Eighties, when his Aero-designed European Ford products became huge best sellers and minted money for the perennial second-place American car company.
At Chrysler, he gave us the Dodge Viper and virtually every hot selling product that company had in the Nineties. Oh, and at GM he saved the entire company by bringing great design back to its automobiles; in the end he was the father of the Chevy Volt hybrid electric.
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Lee Iacocca admitted late in life that his biggest mistake was not making Lutz chairman of Chrysler when he left the company. But, by his own admission, Lutz has never suffered fools gladly, even if the fool was his direct superior. That’s not a great personality trait if one is aiming for the top job at any company.
Still, Lutz is one of those bigger-than-life individuals. His brilliance at knowing what the public wants in automobiles long before the public knows makes him, without question, the last real “car guy” standing in the auto industry. Too bad he thinks that’s not going to matter much longer.
Lutz has become convinced that the days of the auto industry as we know it are quickly coming to an end because an “accelerating change curve” of new technology is sweeping the industry. Lutz now envisions a world in which one will summon a transportation module to wherever you may be that will whisk you to your destination, possibly at 120 – 150 miles an hour on our freeways, and safely deposit you wherever. You will then pay with your credit card or possibly be billed by leaving your fingerprint. As Lutz put it in his recent interview, the world will belong to the Ubers, Lyfts and whomever of the world, who will own those modules. And this will all come about because technology will exist to make it a reality, while ending traffic fatalities — which is why Lutz thinks that, within 20 years, tops, your ability to drive yourself in your own car will be outlawed.
Oh, and for those of you reading this column who own dealerships, Lutz’s prediction means automotive retailing will cease to exist too.
Of course, Lutz is not the only one making this prediction. Adam Jonas of Morgan Stanley virtually mirrored Lutz’s statement, saying the need to retail cars will vanish and only service facilities will exist from that point on. That is, he believes the entire auto industry will be consolidated into the existing national chains, which will then only service and repair the self-driving modules of the future.
But there’s a problem with all of these predictions. That same week, it was revealed that the RAND Corporation looked into how much better a self-driving car system needs to be than a human driver before those vehicles can be allowed on our highways. More than 35,000 individuals were killed in accidents involving motorized vehicles in 2016, so RAND believes that we should use self-driving technology if it performs just 10 percent better than a human motorist. The study claims that small margin alone would save hundreds of thousands of lives over the next three decades.
There’s a problem with that, too — a fairly obvious one. As members of the human race, most understand that we are all imperfect and make mistakes. When one makes a serious enough mistake in an automobile it can lead to an accident, injuries and possibly deaths. And Americans seem naturally litigious, often suing the driver responsible for the accident, his or her insurance company, and even the entity that built either their car or the car that hit them, claiming some type of failure there, too.
A self-driving car will severely limit where those lawsuits go, but will increase their numbers substantially. The reason is obvious. While not every accident ends up in a lawsuit, if a self-driving car caused the accident it could well end up in two lawsuits: If you are the owner, you’ll sue the manufacturer for your vehicle’s failure that led to the wreck. And the motorist, or pedestrian, you hit will likely sue also, because of that same mechanical error.
That’s right. We actually cut humans some slack for mistakes we all make; but no one will be tolerant if a self-driving car crashes into another vehicle, person or anything else of value. Remember, RAND said it only has to be 10 percent better than a human driver to bring it to market. Doing the math, we go from 35,000 killed in automobile accidents to just 31,500 deaths — each one a likely lawsuit(s) against car companies for making defective products.
Remember, Bob Lutz said all of this may happen because of future legislation making it illegal to operate your own vehicle. So obviously, the GOP could insert language into such a bill forcing you to use arbitration in case of a wreck, thereby blocking you from legal redress in much the same way as it just gave cover to banks that lost your money or committed fraud in their loans.
However, my high regard for Bob Lutz and his entire career notwithstanding, it seems highly unlikely to me that any of this will happen. After all, technology has been in place for decades that would allow tens of millions of workers to telecommute to their offices; and yet that once-promising trend, which would have the effect of less congestion on our roads, huge savings in gasoline and pollution costs, lower costs for employers — who would no longer need as much office space and so on — never really caught on in a big way and what did happen is now reversing. Many big-name companies such as IBM are calling it a failed noble experiment. And that’s an easy tech evolutionary improvement to our economic society.
Further, we can’t even get enough roads built to handle our massive growth in North Texas and in many other successful metropolitan areas in America. Where are we going to come up with the trillions of dollars it will take to put our roads and highways into the pristine condition necessary for 150 mph self-driving cars to even function? If you study the history of economic cycles, what you’ll find is that the self-driving, module won’t ever catch on with the public until the cost of using them falls well below the cost of automobile ownership and offers more convenience. Think of the movement from horse and carriage to automobiles, or from ocean clippers with sails to steamships.
Then again, forget the road conditions, forget the potential for 31,500 or more lawsuits against car companies for making self-driving cars that will still get into accidents. How likely are you to buy a self-driving car after you’ve read in the newspaper that, in spite of RAND’s rosy forecast, 31,500 fatalities occurred the year before because of other people’s self-driving cars?
Finally, I’ve asked all the new car dealers I know, “How many potential buyers have come into your stores asking on what day they can take delivery of a self-driving car?” The total? Just one person. Meaning so far no impulse buyer is jumping up and down to be the first person on their block to own one. That’s a substantial problem to have, considering how much money is being spent worldwide to make such a vehicle a reality.
It’s been 40 years since the first Apple II computer came to market, and we still haven’t made the perfect personal computer yet — not to mention the bulletproof operating system or software that doesn’t go haywire from time to time. How many people need to tell you how bad the last OS update to their iPhone has been? And yet we expect that when we put this high tech into our cars, at magnitudes of complexity beyond what one can imagine, our self-driving cars will be safer than most drivers on an average day?
A far more realistic goal would be to have low-speed city commuter cars that drive themselves, so aging Baby Boomers can keep doing for themselves — and improve on the product from there. Judging by the evolution of personal computers and operating systems, and by the amount of repair software one is forced to buy regularly to keep a personal computer working, it’s a fair guess that maybe 40 years from now truly self-driving, never-fail automobiles will be here.
As for Lutz’s prediction that governments will outlaw one’s ability to own and drive your own car? That’s no more likely to happen than getting the 2nd Amendment repealed in order to pick up everybody’s guns first.
© Ed Wallace 2017; Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: email@example.com