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Comment by abhinai | Hacker News Reader

These are seriously big and well funded companies. Why do they need to share development? If Cruise can build a working prototype as a startup so can BMW. What is going on?

Part of me wonders if self driving tech ended up being harder than expected. These companies can't get it to work but also don't want to be left behind. Collaboration makes perfect sense.

Pure speculation.

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Cost control. They are already working together on various different things. In the high end market, it doesn’t matter if you have your own self-driving software or you co-develop. People who purchase a Mercedes vs BMW select base on different things like brand loyalty and perception. To me (personally), I would always pick BMW over an Audi or Mercedes, even if they all came from the same groupation / factory, because it’s the brand I care about.

>In the high end market, it doesn’t matter if you have your own self-driving software or you co-develop.

Maybe. But what if it turns out that everything other than the core intelligence, communication and software platform features turn out to be low margin components?

What if these key functions turn out to be the only differentiator of any substance and the rest is just marketing blurb and a bit of component assembly?

Then companies that traditionally make their money with hardware will have a hard time accepting that. There are millions of lines of code in a modern car, but car manufacturers don't see themselves primarily as software companies.

Exactly. And let's not forget that car makers are also losing their key powertrain competency to electrification.

If they don't commit to really owning some of the new tech then there will be nothing left of them.

In my view, these traditional car makers are a slow motion train wreck of epic proportion.

How on earth can BWM and Daimler decide to pay more than 5% dividend instead of investing every last cent they earn into surviving the current technological revolution?

Apparently they have decided to die and pay out what's left to shareholders. This may be a legit strategy for a private equity fund, but if I was a German polititician or trade union official I would be horrified.

Basically all diesel cars in the world use the common rail system that was developed at FIAT, sold to Bosch and licensed to everyone else.

Licensing an electric powertrain technology is not that different, there is a lot more in a car than the powertrain.

Likewise, MacBooks are more than their intel cpu.

I'm not talking about licensing some basic patents. The question is, what will be that high margin thing that's worth optimising the heck out of for years and decades to come?

And who will own the customer? Who will define the software platform that creates all the stickiness and benefits from all the network effects?

If car makers continue down the path they are on now, they will own none of it. Like publishers, they will be reduced to go begging for the help of regulators to impose some form of Google tax.

There are not many differentiators on cars now either and we still have a range of "different" cars/brands. What makes you think the electrification will change anything(considering all cars will run the same self driving software)?

Electric motors are far simpler than ICEs. A lot of expertise that traditional car makers have will become obsolete. Many jobs will be lost, factories shut. The highest margins will no longer be in anything that car makers have traditionally done themselves.

I don't doubt that there will be many brands, probably far more brands than ever before, exactly because it will be so much simpler to make cars from off-the-shelf parts, or just order them from some white label manufacturer.

But where will the highest margins be? Wouldn't it be wise if car makers were asking this question and then invest in whatever that is with the greatest sense of urgency?

>considering all cars will run the same self driving software

If all cars run the same self driving software then I suspect that the maker of that software will benefit from some of the highest margins in the industry. I also think that there will be a lot of money in the network effects of linking the data that all those cars generate.

The car companies should be forced to share the traffic data(i.e a kind of traffic data neutrality law) so it can benefit all. After all it should belong to the people not to a single car company. I'm pretty sure there is enough left to innovate and increase the margins. Self driving should be a standard/norm, not a premium proprietary feature.

Cars like most products are about far more than just technologies.

It's about brand, design, experience, service etc.

Otherwise we would all be driving cheap Chinese cars, wearing counterfeit clothes and using no-name brand Android phones.

Absolutely, but these differentiators already exist while a lot of the high margin work that car makers are performing today is moving somewhere else in the value chain.

The key competency of the car manufacturers is integration and supply chain management. Sure they also develop some of the software and engines in house. But they would do so for electric cars as well. So there is not a huge difference. They are also very aware of the threat of being commodified software platforms and they are actively invest to prevent that. Both in ASICs to be not solely dependent on NVIDIA, as well as in software and maps.

Ford seem to be moving in that way.

http://freakonomics.com/podcast/ford/

...did you just admit you buy BMW just for the perception of buying BMW?

Compare an $80,000 Mercedes to an $80,000 BMW and you're not going to find much in the way of objective material differences. At that point your choice will mostly come down to personal preferences about dash layouts, precise seating styles, the sound of the engine, the precise feel of the pedals, etc, which all pretty much fall under "brand".

Those things are real differences in how the car ia designed. If it was the brand you cared about, then you would buy BMW even if you didn't prefer those things in BMWs.

They're real differences in how the car is designed, but barring some outliers, they're not differences that are objectively better in one or the other. I consider those kinds of design choices to be things that fall under "brand" as a whole.

Why not? I mean this companies already have many parts of the car designed and built by third parties, there is no need to have everything designed and built by themselves.

So if you have 3 big companies collaborating you will have more money and maybe more important more training data for the self driving program. Now Uber,Tesla and Google do not share their data(probably the data is not compatible either) but if this data was shared progress could have been faster and lives could have been saved.

We hear a lot those days in Europe how Germany rested on old school industry during the last two decades, and failed to anticipate the big changes coming. They relied a bit too much on « good old german quality » without trying to rethink itself.

But it could be just jealousy speaking, since germany has been doing so well compared to the rest of us, i don’t know.

Berlin is more or less the capital of the continental Europe startup scene too.

I'm pretty sure they'll be fine even if old German industry declines.

I’ve heard so many cities claiming to be the capital of europe’s start up scene. I’ll believe it once one of those city manage to build a competitor to any GAFA.

Those people don't understand that a lot of "german" manufacturing is happening in low cost countries. The bulk of the manufacturing remaining in Germany is highly automated.

I suspect it's mostly an optics/ignorance issue. If you never set foot into a modern factory, you could legitimately believe that german industry had not changed, simply because it's the same names as decades ago. But once you get the chance to take a peek behind the curtains, you quickly realized how high-tech those "dinosaurs" are.

They aren't tech companies. It's like asking why satellite makers don't build their own rocket. The algorithms used in most cars whether it's deep RL or something even more specific isn't easily understood and worst yet scalable by many people. Say nothing for the custom hardware google uses in the form of TPUs.

While they are surely no leading innovators in deep learning saying they are not tech companies is a bit ridiculous, as they innovate in many areas of technology. Sure, VW and Daimler don’t produce their own chips (as far as I’m aware) as they rely on partners like Bosch to do it for them. Bosch sensors and ICs are found in many devices btw (even iPhones I think). So I’d argue there’s plenty of innovation here, just nothing that is very visible for most folks in “tech”. Btw Tesla’s cars use electronic and mechanical parts from around 40 different German suppliers if I remember correctly.

They absolutely design their own chips, typically the precise details are outsourced. But they are actively developing chips from MCUs (motor control units) up to simple things like seat heating sensors. At the moment they have pushed the German government to invest billions in German made inference accelerators for cars, to not be solely dependent on foreign chips by NVIDIA and Intel for that.

Nobody who is sane uses deep reinforcement learning for autonomous vehicles, far too dangerous. Remember, the first 99% is easy, it's the last .999% that's hard.

That's a very narrow definition of tech companies. I wouldn't be surprised if VW, BMW and Daimler together employ more software engineers than Google or Apple. Don't forget that modern cars use over a hundred micro-controllers.

That's true, but only indirectly. Since these companies mainly assemble cars from components designed and built by suppliers, the software engineers are working for suppliers like Bosch. If you talk to the tech people from, e.g., BMW, their roles are managing budgets and projects implemented by external partners.

This is also why they want self driving to be just another standard function that they can buy from a supplier, while letting the suppliers compete away their margins.

They don’t, and the parent is right that they are no software companies. Cars carry an enormous amount of software, but most of it is contracted and built by tier1 suppliers like Bosch. I worked at one of the mentioned companies and was the only person in my department (of >500 engineers) who had production software run software running inside cars.

In the meantime they realized they need to get more into software, but it takes a lot of time to change course for tankers.

VW (in this case AUDI) founded AID (http://aid-driving.eu/) as a software centric powerhouse to work on autonomous driving for all of VW. They employ lots of software engineers directly (I work there)

There are certainly multiple reasons for it:

- Commoditize the stuff you don't want to compete on. I don't think German companies want to compete on self driving - they are positioning their product as a premium product and thus compete on performance, quality and emotions.

- Have a common interface to the outside - there is more to self driving than sensors and software: Legal framework, insurance market, road standards, parking standards, home garage standards, refueling standards. These external partners need to change and if too many competing priorities and possibly contradictory demands are coming nothing will change.

Self driving is certainly harder than it looks. If your market is the world and not just the relatively empty and wide grid streets in the US things are even more complex.

I'm sure there is some fear of losing out. More however I think about the limited upside: The cost for developing self driving vs the later ability to charge for it is very limited from a car manufacturers POV: Sensor's are bought in and software is either bought or very expensive to develop and run. Differentiation is minimal: Either considered safe or can't be sold. Self driving here has different economics from EV.

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