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Report points to trouble for auto industry

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Self-driving cars could be on our roads in just 5 years. USA TODAY’s Chris Woodyard takes a look at what it’s going to take to get the roads ready. Video by Robert Hanashiro and Jefferson Graham, USA TODAY

DETROIT — Automakers face a perilous road over the next 10 years as they place multibillion-dollar bets on the development of self-driving vehicles and other new technology, a new study finds.

 

A survey of 1,000 drivers in 10 key markets conducted by AlixPartners reveals consumers are not yet aware of the work that companies such as Ford and General Motors are doing to develop self-driving cars and might not trust them when they do launch new vehicles.

The auto industry must grapple with what form of driverless technology it is going to develop and how soon to deploy it.

What’s more, automakers are going up against technology companies that sometimes have more cash at their disposal to spend on product development. 

“There are more than 50 … companies that are trying to develop an autonomous vehicle system … and a lot of them are wasting money right now,” said Mark Wakefield, a partner with AlixPartners, a global consulting firm based in Southfield. “You really have to step back and recognize they are not all going to be successful.”

Consumers are more aware of self-driving car technology from Google and Tesla than any traditional automaker.

In the survey, when drivers were asked to name a company with self-driving car technology, 55% of respondents named Tesla and 20% named Google but only 12% could name a traditional automaker.

Equally troubling: Consumers trust Silicon Valley more on autonomous vehicle software than automakers. Among those surveyed, 41% said they would trust a Silicon Valley company the most for autonomous vehicle software while only 16% said they would trust a traditional Detroit manufacturer the most.

“That doesn’t mean you don’t participate” in the development of self-driving cars, Wakefield said. “You have to be humble in one sense about knowing what your capabilities are but also, at the same time, move fast.”

Automakers and suppliers that move too slowly could be left out of one of the most fundamental changes in the auto industry in decades.

Wakefield said the smart automotive and technology companies will form partnerships to spread out both the costs and the risk of making the wrong choices. 

“Things are changing so quickly that it’s risky to commit billions to technologies that lock you in or partnerships that lock you in,” Wakefield said.

The smartest strategy for automakers is to develop partnerships with suppliers and technology companies to spread out the risk and development cost.

And that has been happening. Troy, Mich.-based Delphi has either acquired or invested in a number of companies over the past two years as it has expanded its autonomous vehicle technology.

Ford earlier this year acquired a majority interest in Argo AI, which is developing the software that will operate the Dearborn, Mich., automaker’s self-driving car.

And GM spent $581 million last year to acquire Cruise Automation, a Silicon Valley start-up that is developing self-driving software for the Detroit automaker.

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