Ed Wallace

Say What?

By Ed Wallace

Sometime in the near future, say within the next 50 years, scientists will find ways to tame the climate so well that every major city in the world has an average temperature of 69 degrees every day and exactly the right amount of rain to grow crops for all humanity and plants for our landscaping — but without creating mud for our pets to drag into the house. The oil age will end, not for a lack of oil, but simply because the price of solar panels will fall so much that our homes’ and electric cars’ electricity costs will be just barely over zip. Our subscription cable TV will cover all entertainment and news, plus special interest documentaries, with over 3,000 channels, and yet there still won’t be anything worth watching most nights.

Or not.

Of course that mostly optimistic opening paragraph is diametrically opposite what most are predicting in our future. After all, few if any articles have suggested that generating electricity via solar panels would become so inexpensive and practical that, in a world of battery-powered automobiles, your cost to drive might be simply the net cost of the car. No, instead the automakers are quietly but firmly insisting that their future and ours will be morphing into “mobility companies.” They think the cars they produce will be self-driving, on-demand vehicles; think Uber without drivers who, apparently, can’t do math to see how badly they’re being taken.

Or maybe the world’s automakers will be the ones behind keeping the electric push scooter craze going; Ford has already purchased one of those companies. There are now so many of those scooters on our streets that they could potentially shave 5 years off the average American’s lifespan — and have the unintended consequence of balancing the Social Security trust fund.

They Don’t See the Irony

One story last year crystallized the problems that Detroit’s automakers have with changing to manufacturing only self-driving cars. As that article pointed out, in order to fund its transformation into building self-driving cars that one will rent by the minute, GM today is completely depending on sales of large trucks and SUVs.

Yeah, think about that. GM is in the process of closing five plants and discontinuing some of the finest cars it has ever built, simply because there’s not enough demand anymore for sedans, coupes, and compacts. Chrysler has done the same with its Dodge Dart and Chrysler 200, while Ford has stated that almost all of its car lines have been targeted for extinction. Like GM, Ford and Chrysler depend almost completely on sales of trucks and SUVs to survive.

And thus the obvious question: In a world where the public doesn’t buy exceptional and reasonably priced personal sedans, what exactly makes Detroit think it’s going to shoehorn us into unreasonably priced self-driving sedans in the future? Based on consumer preference, shouldn’t they be working on self-driving big pickup trucks and SUVs?

Keep in mind that the program most discussed is one where we won’t buy our own personal vehicles; we’ll simply call them up from our smartphones, assuming some OS update doesn’t crash those automotive apps. Even Bob Lutz, former vice chairman of GM, said these will be nondescript vehicles that will pick us up, whisk us down the freeway at incredible speeds, and bring an end to automotive accidents and congestion. But as of right now, in spite of the never-ending hype about our automotive future, not one person has written or called me — or, apparently, gone into any dealership in America — and excitedly asked when this incredible future is going to happen. Yet untold billions are being spent right now to make it a reality.

And these are the same auto execs who brag about how well they know their customers.

And That’s a Good Thing?

What’s worse is the way they keep selling us on the progress of these autonomous cars. On the last day of November, Business Insider posted a list of all the companies testing self-driving cars; it also showed what percentage of those fleets have been involved in accidents and how many accidents that percentage reflects. Here’s the top two: 41 percent of the test cars in the Waymo (Google) fleet have been involved in a wreck, or 36 crashes. GM’s Cruise fleet has had 30 percent of its test cars in accidents, for a total of 52 wrecks. As the PR spin put it, the good news is that most of the accidents that self-driving cars are involved in are not caused by the self-driving car, but by the other car’s driver running into it.

Sounds great, but here’s the fallacy in that spin: For a truly autonomous vehicle to protect you and your passengers, it has to anticipate and react to the other vehicle that is going to hit you. Think about it: Who would ever get into a self-driving car if it’s no safer than the human-driven car about to crash into it? It’s just nuts that these automotive writers take such pains to point out that the wreck wasn’t the autonomous car’s fault, but completely overlook the reality that any accident involving an autonomous vehicle is an engineering repudiation of their vaunted capabilities.

Of course, we’re in the early stages of these vehicles, and the really smart money is saying that it might be decades before this automotive bet pays off. But that too is doubtful. Frankly, as much as their test programs cost, it’s hard to believe that any car company in the world can afford to keep throwing money away to perfect these vehicles — especially for a payoff that’s likely decades out. Just last week the Israeli newspaper Haaretz revealed that Volkswagen, which invested $300 million in Internet taxi company Gett in 2016, has already written off all but $18 million and is about to wipe that off their books too. If that story is true, that’s a breathtaking amount of money lost in an extremely short period on a misplaced bet on the future of Internet livery services. Again, Uber, Lyft, and others are all bleeding money, too.

And the odds are that only one or maybe two companies will end up creating self-driving car systems so exceptional that they will become standards for the entire industry. Think of VHS and Beta videotape systems. Beta was the far superior system; VHS was the inferior long-term winner. And both became obsolete within decades, replaced by digital recording.

GroupThink as a Mental Illness

Why do automakers believe that people are going to give up owning and driving automobiles, particularly trucks and SUVs — both of which are purchases based on self-image and personal control — and instead opt to ride around in a pay-by-the-minute, nondescript little box with wheels that they can’t control? For carmakers to be so certain that we’ll fall in line with that futuristic vision, either they are suffering from cognitive dissonance or they know something truly dystopian about our future that no one is willing to tell us.

At this point it would probably be more fun if automotive journalists covering these breathtaking, near-daily announcements of progress on the future of autonomous vehicles would ask the executives spreading these stories a question: How are you going to sell the public on an autonomous car when you are canceling all of your current car lines that buyers can control because they don’t sell in large enough numbers?

That really works as a viable question for General Motors right now. After all, its Chevrolet Volt was the car of the future not that many years ago. Part electric, part hybrid, high tech — and it sold in such low numbers it’s now been canceled. Or how about the Chevy Bolt? It’s a super high-mileage electric car that’s supposed to be the wave of the future, but in the last quarter its sales collapsed by 41 percent. And how about the Cadillac CT6 luxury sedan? It features SuperCruise, which is hands down the most advanced Level 2 autonomous driving system on any vehicle today. Are buyers rushing into Cadillac dealerships demanding the finest autonomous driving system now available? No, sadly, they aren’t. In fact, GM is closing the U.S. factory where that CT6 is built.

So, GM’s bet on the Chevy Volt didn’t pay off. GM’s bet on the Chevy Bolt is looking a little dicier. GM’s bet on its SuperCruise system is not looking good at all. But here’s what those three vehicles were: They were absolutely exceptional technology in great GM products. They didn’t fail because they weren’t great; they failed because the buying public didn’t care how great they were: They weren’t SUVs or pickups.

Self-driving cars are coming, likely city only vehicles with lower speeds and a market of 78 million rapidly aging Boomers. Most of the billions being spent today on the future will likely end up yielding little more than additional safety equipment on vehicles that customers will drive themselves. As famed newsman Edward R. Murrow once said, the obscure we see eventually. The completely obvious, it seems, takes a little longer. Someone should tell the CEOs of the world’s automotive companies that if the only way they are minting money today is by selling large pickup trucks and SUVs, that’s the obvious. And according to Murrow, some day they may just figure that out.

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: edwallace570@gmail.com

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