Electronics Industry Reverts to Reality After Self-Driving Hype Fades

The Consumer Electronics Show in Las Vegas is seeing a shift from adventurous displays to those that are more realistic. In the past, the show has been known for its fantastical displays that promised a Jetson's-like lifestyle in the near future. However, this year's show seems to be focusing more on displays that are achievable in the present day.

This year's CES will focus on transportation technologies that are already in use, like autonomous tractors and electric cars. After the high-profile collapse of Argo AI in October, the former self-driving unit of Ford Motor Co. and Volkswagen AG, the emphasis at this year's CES is on profit, not potential. Car companies and startups will show technologies they expect will provide a return on investment in the near-term, not in some distant future that may never materialize.

The Consumer Technology Association has announced that the upcoming show will feature more than 400,000 square feet of exhibit space – a 70% increase from last year. With more than 274 auto and mobility exhibitors, the show is sure to be packed with products that will provide pizazz.

At CES, the focus will be on practicality and profit.

Gary Shapiro, president of the CTA, said in an interview that there has been a shift in focus from autonomous vehicles to electric vehicles under the Biden administration.

The transportation exhibitors are also debuting some impressive electric vehicles. Stellantis NV will be showing off an electric Ram pickup truck concept that is designed to compete with Ford's F-150 Lightning, Rivian's R1T, and Tesla's forthcoming CyberTruck. Electric truck startup Lordstown Motors will be unveiling its Endurance plug-in pickup, and BMW will be showcasing a digital services concept car. General Motors, Mercedes-Benz, and Volvo are also scheduled to showcase new EVs.

The future of autonomous vehicles looks bright, with John Deere's self-driving tractor leading the way. This innovative tractor promises to make life easier for farmers by tilling the fields around the clock. With this technology, farmers will be able to focus on other tasks, knowing that their fields are being taken care of.

"It's sexy realism," Gary Silberg, a global partner and head of the automotive practice for consultant KPMG, said of the future of the automotive industry. "There are great toys out there and it's going to be awesome, but we've got to be real about how we're going to use them."

The immense amount of money that automakers have committed to taking on Tesla in the emerging electric vehicle market is pushing them towards pragmatism. KPMG estimates that global automakers are making a half-trillion-dollar bet on electric vehicles. With that kind of money at stake, there is little appetite for pouring billions into autonomous vehicles every year with little hope of a return any time soon.

"People are realizing that the market for large-scale adoption of AVs is still quite a few years away because the technology is just not mature enough," said Sam Abuelsamid, principal analyst of e-mobility with consultant Guidehouse Insights. "The profits are almost certainly not going to be there in this decade."

After confronting the reality of battery shortages and soaring raw material costs, auto executives are even paring back expectations on electric vehicles.

A recent survey from KPMG found that 500 global auto executives now expect just over one-third of global auto sales to be electric by 2030, down from nearly two-thirds a year earlier. One-third of automotive leaders don’t see autonomous vehicles being commercially available this decade.

Auto executives are putting resources into EVs at the expense of AVs. Some 64% of US auto executives said they are very or extremely likely to sell off non-strategic parts of their business over the next few years to help pay for EV investments. With only so much money to spend, this means that resources are being directed away from AV development in favor of EVs.

KPMG's Silberg said that when they asked the same questions last year, everyone's answers were very positive. But now, people are more realistic about the situation.

Private money is becoming more and more real. The days of impressing deep-pocketed venture capitalists with your whiz-bang display at CES are over, Abuelsamid said.

"The investment community has decided that self-driving cars are not a near-term growth business," he said. "As a result, there is less easy VC money to be had for companies in this space."

Carmakers are redeploying the capital they spent on self-driving research into automated features that promise a quicker return. After taking a $2.7 billion writedown on the shutdown of Argo, Ford is shifting its focus to semi-autonomous features, such as its Blue Cruise hands-free driving system. Car buyers are showing a willingness to pay for these features right now.

Abuelsamid said that automakers are asking themselves where they can make profits. With systems that allow drivers to take their hands off the wheel on the highway, they know they can sell that and the cost to develop it is much more modest than full self-driving cars.

Automakers are looking to offer an a la carte menu of features that drivers can download to their car’s modem. These features, which could include horsepower upgrades and dashboard gaming systems, could generate double-digit margins for the automakers.

Stellantis and Amazon.com Inc. will both have displays at CES demonstrating how connected cars will change the in-vehicle experience. Volvo and chipmaker Qualcomm Inc. will show how they are together transforming the cockpit with infotainment and safety systems.

Many of the changes coming to car interiors are based on technology originally developed for full self-driving car prototypes. This includes sensors that can detect occupants in a vehicle.

Abuelsamid said that many of the technologies on display at the show are now becoming actual products that will launch in the next few years. This is a big step forward for the industry.