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Your Ultimate Guide to the Self-Driving Car Market

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The ever-developing autonomous car industry was in for a major shakeup Tuesday as Ford Motor Company (F - Free Report) announced that, alongside Chinese search engine Baidu (BIDU - Free Report) , it will be investing a combined $150 million in Velodyne Lidar Inc., a maker of light sensor technology.

Lidar will use the new cash to improve its sensors, which bounce light off objects to determine location and shape. In addition to its stake in Lidar, Ford is doubling the size of its Silicon Valley lab in an effort to expedite the development of its self-driving cars.

Ford’s latest move in the autonomous vehicle market comes as a reminder that both automakers and tech companies are rapidly developing this new technology, and consumer-level options will be available to the public sooner than some might think.

Today we’ll take a look at the current state of the industry to determine when drivers can expect to be taking their hands off the wheel and what brands will be leading the way when they do.

Defining Key Terms

Before we really dive in to the companies involved in this technology, we need to get on the same page about what it is that we are talking about here. Technically speaking, “self-driving” and “autonomous” mean different things and can cause some confusion when talking about the development of these cars.

A good place to start is the National Highway Traffic Safety Administration’s (NHTSA) system of defining automated vehicles. The NHTSA has a 5-tier system that categorizes vehicles from Level 0 (No-Automation) to Level 4 (Full Self-Driving Automation).

Typically when we talk about “self-driving” cars, we’re talking about Level 3 vehicles. In fact, the NHTSA cites Alphabet Inc’s (GOOGL - Free Report) automated car program as an example of a Level 3 vehicle. Tesla’s (TSLA - Free Report) Autopilot falls somewhere in between Level 2 and 3.

The word “autonomous” is used to describe cars that can control absolutely every condition during the entire duration of the trip. These cars start the journey, navigate, execute turns, and park—all without any intervention from the driver.

Self-driving cars are nearly available for widespread public purchase, while fully autonomous vehicles will still take some time to develop and release.

Leading Companies

As I mentioned before, Alphabet and Tesla are both working on self-driving technology and promise to be leaders in the market. In some capacity, Alphabet/Google has been working on its self-driving car for many years, and its fleet of data-collecting vehicles have racked up millions of miles already. In May, Alphabet announced a partnership with Fiat Chrysler to develop 100 Chrysler Pacifica minivans to be used as test vehicles.

On the other hand, Tesla actually has a self-driving product available right now. In October of 2015, Tesla released a software update that enabled its Autopilot feature, which basically functions as a “hands-off” version of cruise control. With Autopilot on, Tesla vehicles can change lanes, brake, and detect other objects without help from the driver.

Tesla also made automation one of the primary focuses of its new “Master Plan.” Elon Musk and the company hope to use Tesla’s technology in buses and will continue to develop the Autopilot feature, which they claim will eventually be 10 times safer than regular driving (also read: Tesla Unveils Second Master Plan).

Throughout both the automotive and technology industries, nearly every major company seems to have some sort of self-driving vehicle research and development underway.

On Tuesday, Volkswagen’s Audi brand announced the introduction of its new “vehicle-to-infrastructure” or “V-to-I” technology, which will allow its cars to “communicate” with traffic lights. Interaction with traffic-related structures is an important part of driving automation, and the new V-to-I technology is an important introduction to the market for Audi.

General Motors (GM - Free Report) has had a foot in the self-driving car door for several years, but it recently turned up the intensity of its program with a few major purchases. In March, the U.S. automaker bought Cruise, a developer of self-driving car software, for $1 billion, and GM also invested $500 million in ride-hailing service Lyft back in January.

Ride-hailing services look to be a big factor in the industry, as Uber has also made major moves in this area. Back in May, Uber started testing several of its own uniquely designed Ford Fusions, and the company has partnered with Carnegie Melon University to advance its self-driving technology (also read: Forget Lawsuits, Uber Drivers' Days Are Numbered).

Partnerships and alliances also seem to be the standard right now. A team of MobilEye (MBLY - Free Report) , Intel (INTC - Free Report) , and BMW (BAMXF - Free Report) was announced in May, with all three companies promising to use each other’s’ technology to work on self-driving cars.

Volvo VLVLY, which has relations with Microsoft (MSFT - Free Report) , has said its ready to ship its own self-driving cars as soon as regulatory approvals come through, which could be as soon as 2017 or 2018.

And finally, tech behemoth Apple (AAPL - Free Report) is also working on its own autonomous car project. We don’t know much about Apple’s plans, but we do know that the company greenlighted a 1,000 person team, led by former Ford engineer Steve Zadesky, to work on a top-secret car project. Apple is keeping the details of its car closely guarded, but we do know that it’s called “Project Titan” and could be modeled around a minivan.

Bottom Line

With all of these companies making major investments in self-driving car technology, the actual products are not that far out. People are already using software that enables them to take their hands off the wheel while going full-speed on the highway, and it won’t be long until every step of the trip is handled by the vehicle itself.

The only major roadblock right now is regulatory approval. Entities like the NHTSA and other federal agencies are in the process of figuring out what to do with self-driving cars from a legal standpoint, but the government has been mostly supportive of the technology to this point.

If I was a betting man, I’d guess that the major automakers will have their own lines of self-driving cars out by 2018, with automated driving becoming a standard feature of new cars by 2020.

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