During a conversation held Tuesday at MarketWaves18, an investor and startup founder talked about the health of the automotive industry, and how autonomous vehicle trends differ in the auto and freight markets.
“The secret is out. Trucks are the better, faster application of self-driving technology today,” said Alden Woodrow, the founder of Ike, an autonomous trucking startup.
Woodrow, who named Ike after Dwight D. Eisenhower, instigator of the interstate highway system, said there are several reasons why trucks are a better fit. One is that highway driving offers simpler, more structured access than city driving. Second, from a safety perspective, it’s easier to move goods than people, and third, truck outfits can start small — “with a single truck line,” he said.
Chris Stallman, a partner with Fontinalis Partners, described the auto industry rebound since the recession as “remarkable.” But the sector’s reliance over the past ten years on leases — 39% of all new car sales — is problematic.
“Those vehicles have to come back to auto makers. That creates a lot of risk,” Stallman said.
In a separate MarketWaves talk, Jason Schenker, President of Prestige Economics, noted the slowdown in auto sales and forecast elevated risk for autos, along with housing and construction, in 2019.
These risks are likely to become more volatile as the trade war with China battles on, Schenker said. The midterm election results won’t put the brakes on Trump’s policy, he warned. “The president has almost unilateral authority to make trade policy. The number of folks the president needs to consider on tariff policy is zero.”
Back to the auto panel: Another challenge for industry, Stallman said, is that legacy car companies are struggling to capture the transactional value generated by upstart urban mobility businesses. OEMs want to do more than provide fleets, Stallman said.
Stallman noted that just a few days ago, Ford acquired Spin, an electric scooter company. That’s a brand new revenue stream. “Scooter companies essentially monetize walking,” Stallman observed.
On the autonomous vehicle side, trucking interests can pick up a few lessons from the auto experience, Stallman said.
“In the beginning, car companies thought they could do it themselves. But the industry has come to more of a collaborative stance, and I think on the freight side we can skip the growing pains and learn from that experience.”
Autonomous trucks are coming both sooner and later than we think, Woodrow said. “There will be self-driving trucks but very small scale and in limited geographies. Over the next ten years, that scale and geography will expand.”