Ford-AH-1

AH Primetime: Ford-Google Deal May Shake Up Industry

December 24, 2015 - Written By Daniel Fuller

Google’s self-driving car project, recently given its own identity as a company under Alphabet, is one of Google’s largest undertakings outside of their core internet business. It has caused controversy after controversy and thrown analysts for a loop. For a good while, everybody thought that Google may keep the technology to itself and leave traditional auto makers in the cold, but Google was not hesitant to state that they were not looking to make cars in the long run and were seeking hardware partners. In the end, they settled on Ford. In a deal struck just yesterday, Google has decided to form a joint venture with Ford. Google will be designing the software and Ford will be designing the hardware around that software. This deadly alliance will be Google’s first foray into commercial manufacture of self-driving cars and is expected to be announced at CES 2016.

Other auto makers may want to take note. This new pairing has potential to literally shake the auto industry to its core. When most auto makers simply wrote off driverless cars as a novelty, it gave Google plenty of room to innovate and test ideas unperturbed. As a result, the software was refined to near-perfection, save a few odd bugs mostly related to erratic human drivers. Now, with a reputable company like Ford producing hardware built around the self-driving car software, a shift in business model could be imminent.

For starters, private car ownership could decrease drastically. If these cars end up not needing human drivers, ride hailing services like Uber or Google’s own future service will explode, able to roll out a huge fleet at a dramatically lower cost than manned vehicles. With this being the case, the motivation to own and maintain a car that will sit in your driveway most of the time will be much lower. If this shift becomes reality, car makers will need to shift their strategy to focus on quality and profit margin, since quantity will no longer be a factor. This will, of course, require more staff, longer design schedules and compatibility with self-driving software. This could also mean that auto makers who continue to only produce manned vehicles will see themselves fading into irrelevance fairly soon.

On that same token, however, Google very well might just pump all their resources into the partnership with Ford rather than putting themselves and their software out there. Should that happen, a trend toward self-driving cars would mean a trend toward Ford, leaving other manufacturers in the dust. Antitrust regulators the world over already aren’t exactly in love with Google and a move like this would likely be frowned upon, but it is still a possibility. On top of that, new markets that could exclusively be served by self-driving cars will pop up and leave traditional manufacturers boxed out. There are many who are too old, disabled or otherwise left unable to drive and would jump at the chance to have mobility on level with somebody who can own and drive a traditional car.

Although some makers and other software firms are beginning to produce their own self-driving car software, none at this point can boast the level of functionality and maturity that Google’s system possesses, making it a perfect candidate to be the first to mass market. At that point, it will only be further tested and improved through public use over the years. In essence, this means nobody else will be able to catch up through traditional means and would have to put in substantial work to do so, or simply pray that Google releases their software. That, of course, is a highly unlikely scenario for the foreseeable future.