U.S. markets open in 6 hours 45 minutes
  • S&P Futures

    -2.50 (-0.05%)
  • Dow Futures

    -34.00 (-0.09%)
  • Nasdaq Futures

    -8.00 (-0.04%)
  • Russell 2000 Futures

    +3.60 (+0.18%)
  • Crude Oil

    -0.25 (-0.32%)
  • Gold

    +2.60 (+0.13%)
  • Silver

    +0.07 (+0.33%)

    -0.0006 (-0.05%)
  • 10-Yr Bond

    0.0000 (0.00%)
  • Vix

    +0.41 (+3.05%)

    +0.0003 (+0.02%)

    -0.8680 (-0.58%)
  • Bitcoin USD

    +4,778.43 (+8.24%)
  • CMC Crypto 200

    0.00 (0.00%)
  • FTSE 100

    -58.04 (-0.76%)
  • Nikkei 225

    -41.84 (-0.11%)

The Google Car Is A Huge Threat To The Auto Industry

google selfdrivingcar
google selfdrivingcar

Google Fear it.

It's small. It's cute. It's from Google. It can drive itself.

And it's absolutely terrifying to everyone in the auto industry.

The Google Car might not look like much, but its existence as an actual production vehicle has auto executives waking up in a cold sweat.

At the moment, the Google Car is in the testing phase.

But in the middle of last year, it was in the prototype phase.

In six short months, Google fires up an assembly line and started constructing a version that can drive itself on public roads (as long as an authorized Google employee is at the wheel — and yes, the Google Car now has a steering wheel, something the prototype lacked).

This means that Google is a car company.

A car company that's developed the most radical idea about transportation since the car replaced the horse.

A tiny, slow, self-driving podmobile isn't itself a direct or immediate threat to companies that now build large, fast, expensive SUVs driven by humans.

But the idea is.


Google It looked a lot less scary way back in mid-2014.

Think about it. Right now, you typically borrow a lot of money to buy a new car, watch it immediately lose 15% of its value, shoulder the burden of maintaining it, insure it, buy gas for it, and in many areas drive it twice a day in increasingly onerous traffic. You car has a range of around 400 miles, but you drive it 40 miles a day. A couple of times a year, you go on a road trip. Or maybe you don't, and the car spends two idle weeks sitting in your garage. When you aren't driving it to and from work, it fills a parking space.

This is such a bad deal for the consumer that last year the auto industry sold 17 million new cars and trucks in the U.S. alone.

Car-makers made a lot of money. The consensus is that the industry has recovered from the dark days of the Great Recession and is now poised to reach new heights.

Not incidentally, all these car sales have created a huge amount of additional economic activity. Banks making auto loans. Investment banks packaging auto-loan backed securities and selling them to investors. Car washes washing cars. Car dealerships fixing cars. Oil change shops making oil changes. People making dangling pine-tree-shaped car deodorizers. Parking lot operators. Cities that charge vast sums to park on their streets.

And so on and so on.

The Google Car idea would change of all this.

It boils down to this: if you take the individual driver out of the picture, the first domino is pushed, and the long row of dominoes that is the global auto industry falls.

google self-driving car
google self-driving car

Google/Screenshot I don't even want to drive again!

This is Google's goal. Maybe not to do in the global auto industry, but definitely to push over that first domino.

Once the driver isn't required to drive the car, the "automobile" can finally live up to its name and mobilize autonomously. If you need to get somewhere in a car, you summon one using some type of GPS-enabled technology, a Google Car arrives, its drives you where you need to go while you do something else, and it hums away once you arrive at your destination.

Repeat as necessary.

The people who still want to drive themselves will be forced to buy vintage Ferraris at auction, brew their own gas, and drive them very fast on tracks.

They'll be sort of like people who enjoy opera or horseback riding.

horseback rider
horseback rider

AER Wilmington DE/Flickr My other horse is a car!

"No way!" you're thinking. "This will never happen!"

And I'll remind you that a vast investment had been made in the 18th and 19th century in a transportation infrastructure that relied on animal husbandry, saddles, blacksmiths, and hay.

It vanished in just a few decades. People still ride horses and occasionally in horse-drawn coaches, if they're members of the British Royal Family and have to get married.

Otherwise, the car driven by a human decisively beat the horse ridden by a human.

And if the Google Car future comes to pass, the car driven by a human will be beaten by a car driven by a computer.


Ferrari Those were the days!

Worst case scenario for the auto industry is that the Google Car advances according to plan and in 20 years no one ever buys a personal car again.


For the rest of human history.

There was a lot of talk at the Detroit Auto Show this week about General Motors unveiling a small, cheap electric-car concept that would be a "Tesla Killer," shattering the dreams of Tesla CEO Elon Musk.

There was zero talk about Google having unveiled an Auto Industry Killer in December of last year.

And that's because nobody wants to talk seriously about their impending doom.

More From Business Insider