Google finds its own route with car technology
30 June 2014, 12:58
San Francisco - In 2012, a small team of Google engineers and business staffers met with several of the world's largest car makers, to discuss partnerships to build self-driving cars.
In one meeting, both sides were enthusiastic about the futuristic technology, yet it soon became clear that they would not be working together.
The internet search company and the automaker disagreed on almost every point, from car capabilities and time needed to get it to market to extent of collaboration.
It was as if the two were "talking a different language", recalls one person who was present.
As Google expands beyond web search and seeks a foothold in the automotive market, the company's eagerness has begun to reek of arrogance to some in Detroit, who see danger as well as promise in Silicon Valley.
For now Google is moving forward on its own, building prototypes of fully autonomous vehicles that reject car makers' plans to gradually enhance existing cars with self-driving features.
But Google's hopes of making autonomous cars a reality may eventually require working with Detroit, even the California company acknowledges. The alternative is to spend potentially billions of dollars to try to break into a century-old industry in which it has no experience.
"The auto companies are watching Google closely and trying to understand what its intentions and ambitions are," said one person familiar with the auto industry, who asked to remain anonymous because of sensitive business relationships.
"Automakers are not sure if Google is their friend or their enemy, but they have a sneaking suspicion that whatever Google's going to do is going to cause upheaval in the industry."
Analysts estimate Google has invested tens of millions of dollars in an effort that's ultimately a side project. But car companies, all too familiar with the devastating financial and brand damage of recalls, would see any hiccups with the self-driving car as a threat to their main business.
Nowhere is the disconnect more evident than in Google's latest prototype. Two people sit abreast in the tiny pod-shaped car, which has a flexible windshield for safety and is topped by a spinning cone that helps navigation.
Google co-founder Sergey Brin has described self-driving cars as an on-demand service that consumers summon when needed. That would represent a seismic shift from a longstanding model based on individual ownership, an annual $375bn US market according to JD Power.
Moreover, a study by consulting firm KPMG in 2013 found that American consumers would trust brands like Google and Apple more for self-driving cars than they would automakers.
General Motors' global product development chief Mark Reuss recently said Google could become a "very serious competitive threat".
Chris Urmson, director of Google's self-driving car group, would not discuss any negotiations with automakers but argues that self-driving cars will benefit car companies and consumers by expanding the number of car users.
"I'm confident that when there is technology that makes sense, and when there is a business model that makes sense, that there will be interest and partnerships" with car makers, Urmson said.
Self-driving cars can free people to do more of the things that earn Google money, such as web search. But Urmson said Google is still figuring out how to make a profit from the technology.
"I would imagine that this is probably different than just making more time for people to click on websites," he said.
Car makers such as GM, Mercedes and Volvo have been developing their own autonomous vehicle technology for years.
But most favour an incremental approach to self-driving cars, in which features such as lane centring and parking assistance are gradually integrated into vehicles. Car makers are also hesitant to invest in new features until they are certain there is enough demand to pay for them.
That approach and car makers' long development process are at odds with Google's ambition to create a fully autonomous car in one swoop.
The internet company seemed to have little patience for Detroit, according to people involved in the 2012 talks with automakers.
"There was a certain amount of arrogance on the Google side, in the sense of 'We know what we're doing, you just help us,'" said a second person, representing a major car maker, who was involved in discussions with Google.
"We'd say, 'Well you don't really know that much. And we're not going to put our name on a project like that because if something goes wrong, we have a lot more to lose.'"
Some industry observers have suggested that Google should pair up with Tesla, which is also developing self-driving technology and which shares Google's Silicon Valley mindset.
With roughly $60bn in cash, Google could also acquire a smaller auto company, some speculate, though they note that such a move would involve more ongoing costs, liabilities and cultural challenges then Google may be willing to accept.
"Google is the 800-pound gorilla in the room and nobody wants to miss the boat," said Edwin Olson, assistant professor of computer science at the University of Michigan, who works with Ford on an automated vehicle project.
"But at the same time I don't think automakers want Google to be dictating terms if the time comes and Google is the only game in town."