BMWs strategy for developing autonomous vehicles

BMWs status as an OEM in automotive is secured, but it needs to continue to enhance capabilities in manufacturing and design. What investments should the company make to develop appropriate resources? Use the Resource below to answer the question.

Many uncertainties related to self-driving automobiles will prompt both business executives and policy makers to take action of one kind or another. In this complex ecosystem issues emerge in six different areas:

Social: Who will use self-driving cars? Autonomous vehicles can be used to transport people who cannot drive, either because they are elderly, too young, physically or visually impaired. A car that today is driven by a family member can become an independent transportation vehicle for all fam- ily members, even those under 18 and without a drivers permit. However, it is not clear if, or how, this technology might be adopted by the consumer majority. What will be their aspirations, concerns, anxieties, and potential mistakes? Additionally, the permissible behaviors allowed in the car itself will depend on whether the vehicle is fully self-driving. For instance, driver-passengers could be able to spend their time in the car messaging, reading, or working. Drinking alcohol might also be permissible, since the fully autonomous car will not require any interven- tion by the passenger . . . or will it? What if systems fail and driver-passengers are required to become active drivers?

Technological: Today self-driving cars are possible because of the existing hardware and software tech- nology. However, as described, there are both cars with fully self-driving features pre-installed (such as Googles car), and systems like Cruise, which can allow other cars to become self-driving. The devel- opment cost of these technologies differs widely and will influence pricing to consumers and hence the adoption response by consumers: for instance, a survey by JD Power and Associates found that only 20% of Americans currently would definitely or probably buy a self-driving car if the price was only $30.000.34

Economic: Firstly, there are of course various crises in Asia, the U.S. and Europe that have depressed consumer spending over the past two decades. Will the global and regional economies recover suffi- ciently to enable consumers to replace their vehicles with new, unproven autonomous ones, or would they resort to buying pre-owned vehicles that are cheaper and use more established technologies? Secondly, self-driving vehicles will impact different market players. Insurance companies might change their business models based on a lower rate of acci- dents. Driverless vehicles may allow some com- panies to save money on drivers (such as taxi or bus companies). Also at the national level, research from The University of Texas35 estimated that if just 10% of vehicles were self-driving, a country such as the U.S. could save about $37 billion a year on healthcare and environmental costs. For the same reason, the U.K. government has announced its commitment to spend 10 million on a test-bed for self-driving cars.36 Finally, the cost and purchasing power in different regions will weigh into the mar- ket economics in different ways, since self-driving cars will change the current production process and countries will facilitate autonomous automobile adoption among consumers in different ways and along different timelines.

Environmental: Pollution regulations will change, considering the new emissions generated by self-driving cars, which may be lower than the emissions generated by cars today. This assumption is based on two main factors: first, autonomous vehicles will be able to optimize their consumption by themselves based on road conditions as well as acceleration and breaking behavior, and second, electric cars and smart charging infrastruc- ture may at some point converge on autonomous automobiles, such that gasoline could become obsolete.

Legal: Self-driving cars have to be explicitly legal and encouraged by regulators, not just be toler- ated as a dubious gray area. Bad or lagging leg- islation could slow down the investment required and therefore the development of the technol- ogy. Furthermore, authorities have to develop new liability frameworks to answer the following questions: who has what kind of influence over autonomous cars misbehaving and who will therefore bear the legal and financial responsibil- ity? Would it be the driver, the software or the IT hardware provider, the data processing companies, the telecom companies linking cars wirelessly, the application providers for different functionalities that may have little to do to with driving but could interfere with behavior in the car, the car manu- facturer, or the company responsible for the cars maintenance?

Ethical: Two main aspects represent key uncertain- ties in this area. The first issue concerns privacy: what information will be collected by autonomous automobiles, and who has access to it? The second point regards safety. How can autonomous cars be prevented from being hacked, getting virus-infected, and being used for remote criminal activities such as terrorist attack or drug delivery? How does society address computer-savvy minors hacking into cars and sending them on remote joy rides? Will physi- cally or visually impaired passengers be at the mercy of malfunctioning autonomous driving intelligence?