Week 1 Topic: Placing Bets on the Future — Automotive R&D, Driverless Cars and Innovation as Disruption

In my original tweet, earlier today I responded to Anne Glover, the EC’s Chief Scientific Advisor, who was pointing out the importance of the automotive industry to European R&D.  She was undoubtedly referring to work of the Joint Research Centre, which in its 2013 EU Industrial R&D Investment Scoreboard describes how “For the first time since 2004, a company based in the EU leads the world R&D ranking: The German carmaker Volkswagen, with €9.5bn invested in R&D. Samsung Electronics from South Korea jumps to the second place.”

These many scorecards are good at tracking trends, but the real question is what lies behind these numbers.  In trying to explain the growth in automotive industry R&D investment, Henry Foy in the FT attributes the recent growth in R&D expenditures to “auto industry leaders […] attempting to rebrand themselves as innovators rather than manufacturers”.

In a world of seemingly inexorable growth in automobile sales, having Europe host the largest source of industrial R&D seems like a happy situation, but that assumes that we can rely on strong demand for products from the automotive industry not just in 2 years or 5 years or 10 years but in 20 years and longer.  There has been much said of late regarding perceived threats to the automotive industry’s business model and perhaps the most discussed example is that of driverless cars, with all sorts of ambitious timelines being espoused for the rollout of such vehicles.

Even if driverless cars do not undermine the industry itself, there may well be significant disruption in the way business is done.  In my second tweet, I referred to s a short piece by Stian Westlake of NESTA in CItyAM, drawing on the Morgan Stanley report on autonomous cars, which argues that even by 2020 car manufacturers will be producing far fewer cars.  As an example of government intervention to encourage the nascent industry, Stian has also highlighted the potential benefits of the UK Government’s small £10m investment in driverless cars buried deep within the £100bn National Infrastructure Plan.  Yet, we shouldn’t forget there are still some serious challenges that remain for driverless cars and there is already concern that driverless cars is mostly just hype.

Feel free to comment on any aspect you see fit, but the questions that leap out to me for this week are:

We might celebrate VW taking the pole position on the leaderboard, but what does that say about (a) the automotive industry’s strategy and (b) European R&D strategy?

What do you think about the UK government’s £10m investment in driverless cars? Money well spent? A waste of resources? Far too little to make a difference?

Whether or not you believe in the future of driverless cars, given the large industry investments in this area, where and how should governments intervene in supporting R&D with regard to passenger transport broadly defined?