The last month saw two accidents involving self-driving cars but that hasn’t dented the spirit of automakers. Autonomous cars continue to be a major area of focus for most automakers and Ford Motor Company (F - Free Report) is the latest to jump the bandwagon. Ford, reportedly, plans to launch its own self-driving car fleet by 2021 to transport and deliver goods. Although Ford is a late entrant in the self-driving car space, it is now quite evident that every major automaker is thinking along those lines with autonomous cars becoming top priority to stay in the race.
While the last two accidents, one involving ride-sharing behemoth Uber, and the other involving a Tesla, Inc. (TSLA - Free Report) car, have raised concerns about the lack of safety standards in self-driving cars, automakers are confident about their bright future. Moreover, autonomous cars are still at a nascent stage and the accidents are only expected to make automakers focus more on the safety aspects associated with their products.
Ford Steeps Up the Self-Driving Car Race
Reportedly, Zacks Rank #3 (Hold) Ford is the latest addition to the long list of automakers focusing on self-driving cars. Ford plans to start operating its own fleet of self-driving cars to transport and deliver goods by 2021. This is much in line with its rival, Zacks #3 Ranked General Motors Company (GM - Free Report) , which plans to launch its robotaxis in 2019. Ford’s latest move comes after 2016, when it had announced plans of launching self-driving taxis by 2021. In 2017, the company bought artificial intelligence firm Agro AI in a bid to take on General Motors and Waymo in the self-driving car race.
However, Ford’s service will still differ from that of General Motors’ in a major way. The company plans to introduce a new vehicle capable of transporting both people and cargo, much like its Ford Transit Van. For this, the company will operate a hybrid engine that can function 20 hours per day. General Motors, on the other hand, will be using the Chevrolet Bolt EV hatchback for its taxi service.
Moreover, Ford is thinking a lot differently than several other automakers in the self-driving car space. Unlike companies like Fiat Chrysler Automobiles N.V. (FCAU - Free Report) and Tata Motors Limited’s (TTM - Free Report) Jaguar Land Rover that have been supplying cars to other tech companies developing the self-driving car technology, Ford plans to both develop and launch the autonomous vehicle on its own. This makes Zacks #1 Ranked (Strong Buy) Fiat more of a hardware supplier. And by keeping the service in-house, Ford will also become direct competitors to tech companies like Lyft and Uber.
Undoubtedly, with Ford developing the technology in-house and at the same time launching the service on its own, the self-driving car race will heat up.
Automakers Upbeat About Future of Driverless Cars
General Motors, Fiat and Tata Motors are already exploring the self-driving car space. And now, Ford will be following suit. It is estimated that by 2020 there will be almost 10 millions driverless cars. Although it is a small percentage compared with 1.4 billion cars on road, the picture is quite clear that driverless cars are fast being accepted. Per Global Semi-autonomous Vehicles Market Insights, Opportunity Analysis, Market Shares and Forecast, 2017 -2023, the global semi-autonomous vehicle market is projected to witness a CAGR of 19% between 2016 and 2023. This is perhaps because of the changing tastes of consumers and the younger generations’ technological bent.
Moreover, according to research and advisory company Lux Research, the self-driving car market is projected to be worth $87 billion by 2030. Given this scenario, automakers are pumping in more money to develop the technology. General Motors will be investing $100 billion to upgrade two of its factories in order to mass produce self-driving cars. Fiat too has been focusing on the driverless car front, while Ford bought Agro AI in 2017 for $1 billion to ramp up its driverless car plans. Tesla, which carries a Zacks Rank #3, is completely dedicated to driverless cars and has been stressing that self-driving cars can significantly bring down the number of road accidents annually. You can see the complete list of today’s Zacks #1 Rank stocks here.
Accidents Don’t Dent Automakers’ Confidence
In March, for the first time ever, a driverless car at the hands of Uber ran over a pedestrian. A few days later, a Tesla Model X car on autopilot mode was involved in a fatal crash, leading to an investigation by National Transport Safety Board. This certainly has raised questions on the future of driverless cars but hasn’t dented the spirit of automakers. Neither Uber nor Tesla is backing out from testing the driverless car technology. Moreover, the use of driverless vehicles could save more than 69 lives every year in the United States, according to the National Highway Traffic Safety Association.
That said, the two back-to-back accidents might just be an eye opener for automakers, which will increase their focus on the safety standards of driverless cars. The two accidents have already seen automakers shifting their attention to technology that could aid in preventing future collisions given that an increasing number of companies are testing autonomous cars. So prospects of autonomous vehicles certainly appear bright with more players joining the race.
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