Download now: Cannabis Cash

Why the IoT is Essential to Autonomous Driving

Written by Meg Dailey
Posted December 11, 2016

I don't know about you, but I'm ready to stop putting so much effort into my commute!

Carmakers have been touting their “driving assist” abilities for years, but that’s not what we really want, is it?

If you're waiting anxiously for the day you never have to touch that steering wheel again, I've got good news, and I've got bad news.

The good news is that a number of companies already have plans to roll out mostly or entirely driverless car technology by 2021.

The bad news is that it’s pretty unlikely that the tech will be commercially available by then. It’ll be a surprise, in fact, if those functions are even allowed on public roads.

There’s still a lot of red tape for autonomous tech to cut through before we can own cars that drive us without any human input.

But don’t let that discourage you from investing in prospective winners. In fact, now may be the best time to start buying before this industry really takes off...

The Tech is Ticking

Earlier this year, Tesla had its first major autopilot scandal when a man auto-piloting his Model S crashed into a tractor trailer that neither he nor Tesla’s camera system reacted to in time.

tesla model s It was a huge blow to the company’s momentum, which had been going strong on positive reviews from Consumer Reports, good news about the Model 3 rollout, and increased use of the autopilot system across the country.

It was Tesla’s pioneering in this technology that led to so many other carmakers jumping on the autonomous bandwagon in the first place. Many had been developing the technology already, but this was the last push they needed to really ramp up the R&D.

Unfortunately, the crash and subsequent death of the driver set Tesla back in more ways than one.

In addition to having to revamp its advertising for autopilot, Tesla lost its hardware partner, Mobileye.

Mobileye is the creator of the software that enables Tesla’s cameras to recognize obstacles on the road. Tesla still uses the software in its Model S vehicles, though it’s now looking into making its own version in-house.

That might not be a bad move for Tesla, which has moved nearly all of its hardware production in-house for one reason or another over the years.

And it certainly ended up being good for Mobileye. Within months of ending the partnership, the camera chipmaker was working with BMW to develop the company’s iNext fully autonomous sedan. Chipmaker Intel Corp. is also part of the project.

What’s important to note here is that the hardware is hardly the problem. Cameras, chips, and even radar systems are developing quickly and can already identify most of the physical challenges the cars face, from curbs to human beings.

Issues arise when this data is collected... and the computer doesn’t know what to do with it.

The hardware is essential. But the software is the key to true autonomous driving.

Let the Chip Drive

There’s a reason tech giants like Google and Apple are jumping on this trend, too.

You may remember a few months ago we explained that Apple was scrapping its “secret” autonomous car, Project Titan. Instead, the company claimed it would just be building the software and selling it to other companies.

The only downside is that it won’t have a car to test it all on.

This problem doesn’t plague almost any other company breaking into the autonomous industry.

BMW, Ford, Nissan, General Motors, Toyota, and Tesla already have experience in making cars. Uber and Lyft (working with GM) have their own fleets to test on as well.

Even Google is building its own Google Cars, some with neither steering wheels nor pedals for human testers to work with.

The challenge all of these companies face is integrating adaptable, self-teaching software into the hardware they already have.

Sound familiar?

We’re witnessing the creation of a whole new branch of the Internet of Things specifically for transportation. And it’s just getting started.

More than just connecting to the Internet, these cars will have to learn to make decisions based on the information the hardware collects. Cars will eventually be able to connect and communicate with each other, further accelerating the learning curve and making autonomous driving that much safer.

I don’t doubt for a second that we’ll continue to see huge strides being made in autonomous hardware.

However, the software that makes it all run is going to be the biggest focus from here on out.

Cruising with IoT

Now that these projects are becoming more common, the federal government has created guidelines for producing and operating driverless cars. The National Highway Traffic Safety Administration has also created a scale on which autonomy can be graded, from 0 where humans are totally in control to 5 where the car is driving itself.

Autonomous driving, at least at levels above 2 or 3, where driving-assist abilities live, is going to remain a niche market for a little while longer.

In fact, cars in levels 2 and 3 are expected to account for about 86% of all autonomous vehicles by 2026, according to ABI Research.

What does this mean for investors today?

Just that we’ve got a nice long-term investment on our hands. After all, the world isn’t very well going to start going backwards with its technology. And even today’s low-autonomy car market has already proven itself to be pretty valuable.

By 2021, just four years from now, there’s no telling how far the technology will have come.

But it is easy to tell that it’s an investment well worth your attention now, even if only to cash in on the accelerated growth we’re about to see in the next few years.

Until next time,

Megan Dailey
Energy and Capital

Hydrogen Fuel Cells: The Downfall of Tesla?