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- Today's Smart Brevity count: 1,222 words, a <5 minute read.
- Expert Voices contributor Sudha Jamthe looks at retraining for people displaced by automation.
1 big thing: AVs take a back seat to EVs
Automakers are beginning to make strategic tradeoffs between investing in electric vehicles or self-driving car technology. They can't afford to do both.
Why it matters: Investors reward AV developers with higher valuations, but it'll be years — maybe decades — before the technology is ready and it's not clear the public even wants them. People aren't clamoring for EVs, either, but to meet looming emissions standards, carmakers will need them.
It makes sense to prioritize EVs over AVs, given the relative time horizons and the costs involved. Plus, EVs will ultimately become the basis for most self-driving cars because they can best supply the necessary power to all those AV sensors and computers.
"Wall Street wants everyone to focus on AVs. The really expensive, nearer term problem to solve is how to make EVs profitable. AVs don't have to be solved in the next couple of quarters."— Reilly Brennan, founding general partner at Trucks Venture Capital
Companies have already committed huge amounts for both technologies — $225 billion on electrification between now and 2023, and another $85 billion so far on autonomous vehicles, according to a study by AlixPartners.
- The future will be even more capital intensive, and most automakers now "realize doing both powertrain development and creating AVs is simply impossible for one company," says Brennan.
- "You're talking about green-lighting projects that are going to be tens of billions of dollars. The reality is most CEOs aren't used to [that]. Neither are their boards. Very few have the stomach for it, and even fewer have the cash."
- "If you get it wrong the company is, no question, out of business."
What's happening: Last week's big tech-sharing deal between Volkswagen and Ford illustrates the point.
- VW is already going huge on EVs — they've committed €30 billion ($33.7 billion) through 2023 with 22 million battery-electric vehicles planned by 2028. The company decided the smart play was to invest $2.6 billion in Argo AI, a Ford-backed AV startup, rather than try to keep funding its own autonomy efforts.
- Ford, meanwhile, found an expedient way to meet rising emissions standards: it will use VW's electric vehicle platform to produce 600,000 EVs for Europe — worth up to $20 billion in future sales.
- "The more cars that are manufactured using this platform, the cheaper they become, and the faster the penetration of e-mobility is driven," VW CEO Herbert Diess said at a press conference last Friday.
Yes, but: It will be 8–10 years before automakers begin to see any return on their investment in EVs, warns Arun Kumar of Alix Partners. But with battery costs coming down and government mandates driving demand, at least there's hope for a payoff in sight.
2. Disruption and scandal are backdrop to auto talks
Detroit automakers are kicking off negotiations with the United Auto Workers union on new labor contracts this week.
Why it matters: Auto talks are always contentious over issues such as wages and health care benefits, but this year's bargaining is colored by unusual factors and disruptive forces roiling the industry, notes Bloomberg.
- Auto workers are furious about GM plant closings in Michigan, Ohio and Maryland and the increased use of lower-paid temporary workers.
- Fiat Chrysler and the UAW are still dealing with the legal fallout of a years-long corruption scheme that federal prosecutors said diverted money from a union training fund to the pockets of former leaders at the company and the union.
- GM, Ford and FCA have all seen strong profits in recent years, but executives are sweating shrinking sales and risky billion-dollar bets on future electric vehicles and self-driving cars.
What to watch: Everyone was all smiles for this week's ceremonial handshake at each of the Detroit Three, but the tone will get more serious as talks intensify ahead of a mid-September bargaining deadline.
3. Automation is outpacing skills re-training programs
The shift towards automation in transportation and mobility is expected to eliminate jobs, but it could also create opportunities, like training the artificial intelligence that powers machines, Sudha Jamthe writes for Axios Expert Voices.
The big picture: Affected workers will need to be trained in the key areas of data literacy, higher cognition decision-making and emotional skills — but currently there are few organizations providing that training.
- Organizations like the Michigan Mobility Institute, the Center on Rural Innovation and ARM Institute are focused on skills training for workers traditionally employed in manufacturing.
- Training courses offered by Coursera, EdX and more teach data science and how to build AI-powered tech, including autonomous vehicles.
- Stanford Continuing Studies offers opportunities for product and business managers to re-skill for mobility-related jobs impacted by AI.
Yes, but: Higher cognitive and emotional skills are expected to be in demand in new jobs that require humans to act as intermediaries between customers and machines, and training on these skills is not receiving the same kind of programatic investment.
- Training AV safety drivers, work that is taxing and involves higher cognitive decision-making, remains a challenge.
The bottom line: Re-skilling programs should help provide job security to current workers — but it's also crucial to establish a long-term pipeline for those who will one day train and work alongside machines.
Jamthe is director of DriverlessWorldSchool and teaches AV Business at Stanford Continuing Studies.
4. Driving the conversation
Air taxi: Taking flight from an automotive cradle (Pete Bigelow — Automotive News)
- Why it matters: Jon Rimanelli's startup, Airspace Experience Technologies (ASX) is leveraging Detroit's traditional automotive supply chain to create an electric vertical takeoff-and-landing aircraft called the Mobi-One. "We're not building flying cars, but we are assembling car parts that you can fly."
Documentary: Can we teach cars to drive? (Retro Report)
- The big picture: this well-done, 10-minute video by the non-profit media group explores the technological advancements and ongoing challenges of self-driving cars. Clyde Haberman wrote an accompanying article in the New York Times, which partnered with Retro Report on the documentary.
Squawk: Bird CEO counters report of $100 million Q1 loss (Dion Rabouin — Axios)
5. 1 parade thing: Soldier on a hoverboard
French inventor Franky Zapata soared above the Champs-Élysees on a turbine engine-powered flyboard in front of President Emmanuel Macron and other EU leaders during France's Bastille Day parade this week.
Why it matters: Holding a rifle, the former jet-skiing champion aimed to show the possible military uses of his flying hoverboard, which can take off and reach speeds up to 118 mph and run for 10 minutes.
- French Armed Forces Minister Florence Parly told France Inter radio ahead of the parade that the flyboard "can allow tests for different kinds of uses, for example as a flying logistical platform or, indeed, as an assault platform," according to France24.
Yes, but: The journalists at Task & Purpose point out a number of issues:
- Soldiers would have to carry extra jet fuel for most missions.
- At an estimated $250,000 apiece, just kitting out a single 9-man Army infantry squad would cost more than $2 million.
- Soldiers would be entirely exposed to enemy fire and it's not clear if the user can fire a weapon, even one-handed, while flying.
- While it's fast and maneuverable, the platform moves relatively slowly when it takes off and lands.
- Its turbine engine is loud, as well, ruling out most covert operations.
What to watch: Later this month, Zapata will try crossing the English Channel which, for the first time, will require a refueling in mid-flight.