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Autonomous Driving: Thin Evidence For Tesla's Lead

Summary

With little news from Tesla, discussion has turned to competition in both the EV space and autonomous driving.

Recent announcement about autonomous driving timeline by Ford raises questions on Tesla's timeline.

Tesla's advantage in this area is likely overstated on Seeking Alpha.

Winners in this race will be partnerships between tech companies and traditional car makers.

The Gigafactory has been opened, the Model 3 announced. Tesla (NASDAQ:TSLA) made its move and we will now have to wait on the execution. This means the debate has now shifted to the competition and their plans to complete with Tesla both on battery electric vehicles (BEVS) and autonomous driving. Most contenders plan to move into both spaces. This article only covers the autonomous driving part. In particular, we will discuss Tesla's alleged lead, as discussed by other Seeking Alpha contributors.

Tesla's alleged pole position

Ford (NYSE:F) has recently announced its own plans to bring autonomous driving (level 4 - the car performs all functions without driver in control at any time) to market in 2021. This comes with the announcement of a collaboration with Baidu (NASDAQ:BIDU) in the form a co-investment in Velodyne, a LIDAR maker. Baidu had previously announced plans to develop autonomous driving capabilities and license them to existing carmakers. These news of course invites us to draw parallels to Google's (NASDAQ:GOOG)(NASDAQ:GOOGL) deal with Fiat Chrysler (NYSE:FCAU) on self-driving minivans. Uber (Private:UBER) and Volvo (OTCPK:VOLVY) have struck similar deals. Big tech and big car are partnering up all over.

Meanwhile, Elon Musk has proclaimed that Tesla will offer full autonomy 2-3 years earlier than everyone else - in 2017/2018. In light of these claims, another contributor has recently made the following comments on Tesla's autonomous driving capabilities in an article that focused on a comparison to GM's (NYSE:GM) Bolt:

I expect Tesla to be ahead of anyone else in the race to full autonomy, since (1) Tesla's Autopilot was already twice as good as humans as of April 2016, and no other manufacturer has even come close to offering a similar service (..)

A key point is that Tesla already has a fleet of over 100,000 cars continuously accumulating more than 1 billion miles of knowledge per year (run-rate as of July 2016). This rate is bound to increase as Tesla more than doubles the size of its fleet over the next twelve months, and its vast database of partially autonomous miles will be an important source of knowledge and competitive advantage through the end of this decade. Anyone who says partially autonomous miles are not useful in developing full autonomy is trying to justify their short position in their head.

First, the fact that no other company has offered a similar service points more to sensible management decisions on their end than to Tesla's lead. Google has been testing fully autonomous prototypes for awhile. It has sensibly decided not to rely on end consumers as test subjects for technology they don't understand.

Second, partially autonomous miles are useful. Nobody is denying that. Yet, there is thin evidence for this allowing Tesla to be the first to market with fully autonomous driving. Let's begin with what we know:

  • Tesla rolled out Autopilot in October 2015 through an over-the-air (OTA) update as part of its version 7 software update. In January, version 7.1 added...

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