Goldman: Automated Trucks To Cost 300k Jobs Per Year

Authored by Jon LeSage via OilPrice.com,

While Google’s Waymo company has taken center stage for bringing self-driving cars to roads, autonomous trucking may make it to the mainstream first. 

Silicon Valley startups, technologists, and venture capitalists see great potential in the technology - even more than most traditional trucking companies are supporting.

For months, Tesla CEO Elon Musk has put out teasers that the electric carmaker will soon reveal an electric semi-truck with autonomous capabilities. That announcement may take place this week, on November 16.

Embark, a Silicon Valley start-up, is scheduled to release details next week on its self-driving technology for trucking. The automated system has tested in partnership with truck-leasing company Ryder and Electrolux, an appliance manufacturer. Trial runs are exploring the potential of transporting trailers to Electrolux’s California warehouses with autonomous trucks.

CB Insight, which tracks venture capital, reports that companies will place about $1 billion in commercial truck autonomous systems this year, 10 times the level of spending three years ago.

The $700 billion trucking industry continues to be an integral part of the U.S. economy, and that of other economic giants and developing countries around the world. With more manufacturing happening overseas in places like China, trucking is part of making sure everything from automobiles to packaged food products make it to warehouses and end users on time.

Trucking companies and giants who invest heavily in logistics—like Amazon and Walmart—see great potential in cutting costs and speeding up delivery times. That will come via cutting labor costs when truck drivers no longer become necessary, and by extending the hours that commercial trucks can be kept in operation.

Companies also believe that traffic accidents will be reduced when autonomous vehicles become widely adopted for passenger and cargo transport.

Insurance premiums are expected to go down, along with collision repair costs. Autonomous driving is expected to be much safer than what’s delivered by human drivers.

Waymo and other tech companies and automakers currently testing out self-driving cars are preparing to play a part in developing cities around the world. Government officials, employers, and residents in these cities hope that self-driving cars will eventually reduce the number of cars on the streets and make them safer with less car crashes.

Self-driving cars face tougher challenges navigating through crowded, chaotic city streets—and face even tougher regulatory hurdles to cross. Cargo trucks spend most of their time traveling down broad, open highways with much less traffic.

There’s also the practicality of several trucks “platooning” together on highways that simplifying the equation over companies like Waymo dealing with crowded cities and higher risk for collisions.

Volvo Trucks sees great potential in utilizing platooning systems for cost savings and achieving more efficiency in freight hauling. One autonomous truck can lead a platoon with two or more trucks following close behind, taking advantage of the aerodynamic efficiency.

The company successfully demonstrated on-highway truck platooning in California during March 2017. An alliance was set up for the trial run with Partners for Advanced Transportation Technology (PATH) at the University of California, Berkeley, to test three Volvo VNL 670 model tractors hauling cargo containers at the Los Angeles Port complex and along Interstate 110.

Volvo sees opportunities in achieving fuel savings, improving highway safety, and increasing the capacity of transportation systems.

Daimler AG’s truck division is following a similar path, announcing in September that it will test platooning technology on U.S. roads. The German company’s U.S. division gained approval from Oregon’s transportation regulatory agency after completing a successful trial run in the state.

US Xpress, one of the largest trucking companies in the U.S., added autonomous braking and collision-avoidance systems to its 7,000-plus truck fleet. Next, the company will add automated lane steering for deployment within the next three years.

The 7,000-plus trucks owned by US Xpress, one of the nation’s largest trucking companies, were updated with autonomous braking and collision-avoidance systems. Max Fuller, the company’s co-founder and executive chairman, plans to upgrade them to have automated lane steering in three years.

“I’m putting building blocks into my trucks that each year gets us closer and closer,” said Max Fuller, the company’s co-founder and executive chairman.

Another Silicon Valley company, Peloton Technology, is developing a platooning system that will make it easier for trucks to travel within a platoon. That means they’ll save large volumes of gasoline and diesel typically consumed by work trucks.

Peloton’s system uses cameras, sensors, and networking equipment for trucks to communicate with each other. It can avoid disasters such as a second truck ramming into the first after a sudden stop.

Goldman Sachs economists predicted that trucking will shed about 300,000 jobs per year starting in about 25 years. That may begin sooner than anticipated if automated trucking clears government hurdles and technology innovations—and becomes widely adopted by trucking companies.

New iPhones are not enough to keep Apple’s stock going, it needs a new category

It is hard to find a bigger Apple stock cheerleader than me. I’ve been writing Apple stock love poems for years. For a long time, it was easy to love the shares because they were unloved by others and it was cheap.

Until recently, when Apple stock was still trading in the low $100s and at single-digit multiples, we were buying current product categories at a discount and were not paying for future product categories.

At today’s price that is not the case anymore. That is true with any company – the more expensive the stock gets, the more clairvoyance investors need to discern the company’s future growth.

At Apple’s size it is very hard for the company to increase its earnings significantly. Macs, iPads, and even iPhones are mature products.

The iPhone may have a few growth spurts left, but not many. It is facing an unavoidable headwind: the elongation of its replacement cycle. The iPhone improved substantially over the years, but as the i-marvels piled up, the incremental improvements that motivated people to buy a new phone every two years or so became less and less significant.

At some point the iPhone will face the fate of the iPad – its replacement cycle long in the tooth and sales stagnant and declining.

Will the iPhone’s sales stop growing in 2018, or 2020? I don’t know, but from a long-term perspective of the company’s valuation, a few years don’t make that much difference.

(A new iPhone is expected to be unveiled next week. The stock fell slightly Wednesday on concern supply disruptions could cause shipping delays with the new phone.)

Services is the only segment that can grow at a double-digit rate for a considerable period of time, but it only represents 13 percent of revenue. Even the Apple Watch doesn’t really move the needle.

They need another genius

But can Apple come up with new product categories? Let’s ponder on this question in the context of the following quote:

“Talent hits a target no one else can hit; Genius hits a target no one else can see.” – Arthur Schopenhauer

Apple has a lot of talented people designing and redesigning products in the categories that Apple already dominates. They are hitting a lot of targets no else can hit. Apple’s brand is as healthy as ever, and so is product satisfaction.

However, to create a new category of products Apple needs to “hit targets no one else can see,” and this requires a genius. But in an organization of this size with a lot of bright and talented people, it also requires a benevolent dictator – someone able to make bold, unconventional decisions (and own them), someone who in addition to everything else is able to inspire others to create what they may think is impossible. Yes, I am referring to the one and only Steve Jobs, he of the “reality distortion field.”

Here is an instance that comes to mind: Jobs asked his engineers to come up with a touchscreen computer – a tablet. They did. It looked like a bulky version of today’s iPad. Steve looked at and said “Let’s put the tablet on ice,” then refocused the company on miniaturizing that tablet and making a phone instead.

It is important to remember that at the time, though Apple was financially healthy, it was not swimming in cash the way it does today. Jobs made a benevolent dictator-like decision: He diverted engineers who were working on the MacOS to work on what would become the iPhone OS, causing the late release of some Mac products. And only years later, after the iPhone was a raging success, Apple brought the iPad back to life. That was Jobs’ Apple.

Now let’s visit Tim Cook’s Apple. The New York Times ran an in-depth article unearthing why Apple has (so far) failed to come up with an electric self-driving car. These few sentences jumped out at me:

“But the car project ran into trouble, said the five people familiar with it, dogged by its size and by the lack of a clearly defined vision of what Apple wanted in a vehicle. Team members complained of shifting priorities and arbitrary or unrealistic deadlines.”

Nokia spent a lot on R&D too

Even Jobs admitted that Cook is not a “product man.” Cook doesn’t have “the vision,” and thus he doesn’t have the authority to be a benevolent dictator. Nor does he have the charisma to project and maintain a reality distortion field.

Today Apple spends almost $12 billion on R&D – double what it spent just a few years ago. But as outside observers, we really don’t know where this money is going. Or more importantly, how productively it is being spent. I vividly remember how Nokia was increasing its R&D spend every year during the last years of its dumb-phone dominance, but all that R&D did not bring forth new products that would have saved the company from its eventual demise. Apple is not facing Nokia-like collapse, but the R&D argument still stands: R&D spend doesn’t always equal great new products.

The NY Times article said that Apple curtailed its ambition to make a car and is now focusing solely on self-driving technology. In other words, Apple is basically pulling out of the electric car space (at least for now).

If Apple develops and licenses its self-driving technology, it will recover some of its losses on investments made to date. But it will not be able to take advantage of the significant competitive advantage that comes with its incredible brand, its distribution network – hundreds of stores (potential car dealerships) sprinkled all over the world – its know-how in battery management, its design prowess, and its i-ecosystem.

We still own a little bit of Apple stock but have sold most of what we owned at current prices. Maybe Apple’s augmented reality products will become a huge success, or maybe the company is working on a brand new category of products that we have not even imagined. It is all possible.

In making investment decisions you never have perfect information. Apple is no exception. At today’s valuation we are paying for genius – Apple’s ability to successfully create and dominate a new, large product category. While the company is run by very talented people who will do a great job getting us excited about the categories of products they are already in, the company’s genius died with Steve Jobs.

Read addition thoughts on Apple, here.

I am the CIO at Investment Management Associates, which is anything but your average investment firm. (Seriously, take a look.)

I wrote two books on investing, which were published by John Wiley & Sons and have been translated into eight languages. (Even in Polish!)

In a brief moment of senility, Forbes magazine called me “the new Benjamin Graham.” (They must have been impressed by the eloquence of the Polish translation.)

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Who Leads The Autonomous Driving Patent Race? (Spoiler Alert: Not Who You Think)

These days the broad consensus on the future of driving seems to be that the car of tomorrow will be (at least partly) autonomous. Many companies, including traditional car makers, suppliers and leading tech companies are currently working on self-driving technology, all eager to save themselves a piece of what they reckon will be an enormous pie.

Many of these companies are already testing their tech on designated proving grounds for self-driving vehicles, but, as Statista"s Felix Richter notes, for people outside the industry it’s hard to judge who is leading the autonomy race.

One possible indicator for a company’s efforts in the self-driving vehicle segment is the number of patent filings in the field.

You will find more statistics at Statista

The Cologne Institute for Economic Research identified and analyzed 5,839 patents related to autonomous driving to find out which companies are most active on that front.

As the chart above illustrates, Germany’s traditionally strong car industry is keen to maintain its strong position in the future: 6 of the top 10 patent holders are German companies with Bosch, a key supplier of car manufacturers, leading the field.

Google, widely considered to be a leader in autonomous driving research just makes the top 10 with 338 patents filed in its name between 2010 and July 2017.

Self-Driving Vehicles And The Failure To Understand Capitalism

Authored by Mike Shedlock via MishTalk.com,

Despite accelerating progress towards fully autonomous cars and trucks, many people still do not accept the obvious fact it’s going to happen soon.

For example, in response to Death Spiral for Car Ownership? End of Fuel-Powered Cars by 2024? one reader suggested it will not happen because of capitalism.

Failure to Understand Capitalism

People who believe in this utopia do not understand capitalism. We own cars because consumers chose what they wanted and backed that up with their hard earned cash.

It is already far cheaper to ride the bus or carpool. Few choose that because sharing has its downsides. Fleets of driverless cars are really just a more modular bus service. Some will use this, but most will prefer ownership.

As Backwards

The above line of thinking is ass backwards.

Capitalism is precisely why driverless is coming. Corporations are betting their money and resources. The government is not resisting. The trucking industry will save hundreds of millions of dollars. People who believe driverless is not coming are the ones who do not understand capitalism!

Fully autonomous vehicles are not some pie in the sky prediction by Al Gore. Real companies (hundreds of them) all working on driverless. A bet against them is a foolish bet against capitalism.

Comparing current carpooling with what’s going to happen is like comparing ancient stone huts to modern houses. Carpooling requires a number of people to get together, on the same route, for rides at the same time every day.

On-demand scheduling, point-to-point, is needed, and in the works. I rather doubt that fuel-based cars disappear by 2024, but widespread (not total) disappearance of privately owned vehicles by 2030 seems reasonable.

Lyft and Waymo Reach Deal to Collaborate on Self-Driving Cars

The New York Times reports Lyft and Waymo Reach Deal to Collaborate on Self-Driving Cars.

As the race to bring self-driving vehicles to the public intensifies, two of Silicon Valley’s most prominent players are teaming up.

Waymo, the self-driving car unit that operates under Google’s parent company, has signed a deal with the ride-hailing start-up Lyft, according to two people familiar with the agreement who spoke on the condition of anonymity because they were not authorized to speak publicly. The deal calls for the companies to work together to bring autonomous vehicle technology into the mainstream through pilot projects and product development efforts, these people said.

The deal was confirmed by Lyft and Waymo.

“Waymo holds today’s best self-driving technology, and collaborating with them will accelerate our shared vision of improving lives with the world’s best transportation,” a Lyft spokeswoman said in a statement.

The partnership highlights the fluid nature of relationships in the self-driving-car sector. From technology companies to automakers to firms that manufacture components, dozens of players are angling for a slice of an autonomous vehicle market that many believe will ultimately be a multibillion-dollar industry. To gain an edge and outmuscle rivals, many of these players are forming alliances — and sometimes shifting them.

The companies have left hints as to what the partnership could entail. Lyft, for instance, has long said it wants to match its network of passengers and drivers with partners in the transportation industry. Last year, it struck a deal with General Motors, a major Lyft investor, to help with that goal. Under that agreement, the companies plan to test autonomous Chevrolet Bolt vehicles using Lyft’s network with the general public in the next few years.

Waymo has pursued its own partnerships. It is working with Fiat Chrysler on a fleet of minivans and is in talks with Honda about a possible deal that would put Waymo technology in Honda test vehicles. Waymo also recently introduced a pilot program in Phoenix in which consumers can apply to hail self-driving Chrysler minivans and Lexuses for free rides around the city.

Capitalism at its Finest

Competition is intense. Corporations are investing hundreds of billions of dollars of their own money on technology. Deals, mergers, alliances, and lawsuits (Google vs Uber) are all in play, on a massive scale.

This is capitalism at its finest.

Some point to how few autonomous cars are on the roads. It all starts somewhere. In 1900, in New York City, there was not a car on the road. By 1920, there was not a horse in sight.

Others say they will never accept the technology. Perhaps they will when their insurance costs go through the roof. Regardless, the technology is perfect for people who live in major urban areas. Busses are not flexible enough, and taxis are neither fast enough or cheap enough.

Waymo, Lyft, Uber (if it survives), and other players will easily solve the on-demand nature. The result will be widespread acceptance.

Long-haul trucks will be first of course. Those drivers will vanish soon. A death spiral for car ownership will follow. The only thing in question is the timeline.

Disruption will be massive. Insurance companies and service stations are in for radical changes. For discussion, please consider Second-Order Consequences of Self-Driving Vehicles.