Tesla Motors Inc. (NASDAQ: TSLA) CEO Elon Musk told reporters in Japan that his company has started feverish work on self-driving cars. He really does not have any choice. One or another global car manufacturer seems to announce plans for a driverless car every day. Among the most recent was General Motors Co.’s (NYSE: GM) CEO Mary Barra, who said the number one U.S. car company will launch a nearly driverless Cadillac.
Musk has started to run out of tricks. The world’s largest manufacturers are in the midst of releasing all-electric cars to compete with Tesla. Most have failed to release a vehicle that is truly “all electric.” BMW’s heavily promoted i8 is an example. Unfortunately for the German car company, it has to admit the i8 is not a pure breed:
BMW TwinPower Turbo 3-cylinder 228-hp engine with high-precision direct injection; combines eDrive 129-hp electric motor. Total power output of 357 hp.
For the time being, Tesla can be the standard bearer for the all-electric segment. Soon, though, that will not be enough.
The innovations in the car industry that have captured the public’s attention are: 1) electric motors, and 2) cars in which people can ignore the road and be passive passengers. The driverless car is the more difficult to build. Even Google Inc. (NASDAQ: GOOG) admits its self-driving car is well short of perfect. Some driverless products may operate based on sensors under roads, although this solution is unrealistically expensive. Others will work with sensors and super-perfect map technology.
Musk finds Tesla ahead on “all electric” but behind in “driverless.” He admits that a Tesla that can drive itself will rely on his ability to source parts and systems from outside his company. He told AFP: “The overall system and software will be programmed by Tesla, but we will certainly use sensors and subcomponents from many companies.”
Musk has to hope that his advantages in the electric car segment will drive Tesla sales rapidly higher year after year, until the driverless car becomes a reality and he has to produce one as innovative as the Tesla is in the electric market.