Why ‘Autos Plus Tech’ Is the Best Path for Automated Vehicles

As automated vehicles (AVs) inch closer to entering the mainstream, observers and analysts are divided as to which players will come out ahead: established auto manufacturers or new entrants from Silicon Valley. However, PVMI director John Paul MacDuffie and David R. Keith, professor at MIT, believe a better framing is not “autos versus tech,” but “autos plus tech.”

In an article for MIT Sloan Management Review, MacDuffie and Keith explain why the future of AVs depends on collaboration between the two industries. Each has strengths that the other lacks, the authors point out: “Auto companies will never be good at running service-based businesses or monetizing data; technology companies are unlikely to enter the complex and low-margin business of vehicle manufacturing.” MacDuffie and Keith envision “a new and more advanced supply chain” which will effectively integrate suppliers providing hardware with the producers of software and data processing capabilities.

“Exactly which AV business model will prosper in the coming years is an open question,” acknowledge MacDuffie and Keith. Collaboration does open the door to tricky issues, such as the question of who own the data that AVs generate. Nevertheless, the authors contend, the likeliest path to success is the one that OEMs and tech companies travel together.

Read the full article here.