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Illustration: Rebecca Zisser/Axios

AV companies are largely developing their cars as a package deal, which requires extraordinary expertise and investment in vehicle technologies, software and cloud-based systems.

Why it matters: This strategy could ultimately take a toll on innovation and competition by limiting the possibility of interchangeable components that could drive down costs and bring AVs to market faster.

The big picture: In the vertically integrated approach, AV companies are developing all of their tech stack either in house or within proprietary partnerships. This means that an AV's components will be tied to just one company's ecosystem, even though it's unlikely any one company will dominate the field across vehicle, software and cloud.

The good:

  • This system results in better integration of hardware, software and cloud-based systems.
  • It also yields greater control over customer experience and software updates, and makes contracting out cybersecurity systems easier.

The bad:

  • The expertise needed to excel at all three components is expensive and time-consuming, even for tech giants like Google and Amazon. This could delay when AVs go to market, and make them more expensive for fleet owners and end users.
  • It could also impede innovation and competition, because AV companies would not have the flexibility to change systems or partners if better tech becomes available.

What's happening: Most AV companies don't have Google's budget and deep bench of multifaceted engineering expertise, and instead are pursuing proprietary partnerships.

As an alternative, AV companies could strategically collaborate with tech suppliers across the industry to make the most promising versions of any tech run in all AVs.

  • This would also be cheaper than building entire teams in house, and would allow for greater flexibility as tech companies compete.
  • Even Ford eventually abandoned Henry Ford's vertically integrated vision in favor of outsourcing technology to the best suppliers.

The bottom line: If AV tech is designed to be interchangeable, the market could be more competitive, and AVs could be available sooner and at a lower cost.

Bibhrajit Halder is the CEO of an early-stage AV startup and has worked on autonomous vehicles at Ford, Caterpillar and Apple. He is also a member of GLG, a platform connecting businesses with industry experts.

Go deeper

House passes government funding, debt ceiling bill

Speaker Nancy Pelosi. Photo by Kevin Dietsch/Getty Images

The House passed a bill on Tuesday to fund the government through early December, along with a measure to raise the debt ceiling through December 2022.

Why it matters: The stopgap measure, which needs to be passed to avoid a government shutdown when funding expires on Sept. 30, faces a difficult journey in the Senate where at least ten Republicans would need to vote in favor.

2 hours ago - Politics & Policy

The Democrats' debt dilemma

Illustration: Aïda Amer/Axios

Democrats find themselves in a political and potentially catastrophic economic quagmire as Republicans stand firm on denying them any help in raising the federal debt ceiling.

Why it matters: The Democrats are technically right — the debt comes, in part, from past spending by President Trump and his predecessors, not only President Biden's new big-ticket programs. But Senate Minority Leader Mitch McConnell (R-Ky.) is saddling them with the public relations challenge of making that distinction during next year's crucial midterms.

Pelosi's endgame

House Speaker Nancy Pelosi appears at a news conference on Tuesday. Photo: Sarah Silbiger/Bloomberg via Getty Images

House Speaker Nancy Pelosi (D-Calif.) began her infrastructure endgame Tuesday, pressuring centrists to ultimately support as much social spending as possible while pleading with progressives to pass the roads-and-bridges package preceding it.

Why it matters: Neither group can achieve what it wants without the other, their ultimatums be damned. The leaders of both acknowledged the speaker's unique gift for pulling off a deal after separate conversations with Democratic leaders.