Toyota Goes All In On Safety
One of our core technology
obsessions is the rapid development of automated transportation systems --
specifically self-driving or semi-autonomous automobiles.
The big players are generating
a lot of attention in this area, from the goofy Google(GOOG) cars to the
"autopilot" software update by Tesla (TSLA) to the "Project
Titan" initiative over at Apple (AAPL).
Mobile vision capture and
processing company Mobileye NV (MBLY) has been profiled in our
Tech Trend Trader letter, and it's one of my favorite ideas right now. Based in
Israel, Mobileye provides the "eyes" and the "brains"
needed for vehicles to assist drivers and help them stay within their lanes, maintain
a safe following distance on the freeway, avoid pedestrians, and avoid rear
ending someone.
Eventually, these sensors and
processing systems will enable full hands-free driving of the type that, until
now, has been relegated to science fiction fantasies (such as car chase scene
featuring Will Smith in I Robot).
The first step is getting
making driver assistance systems ubiquitous, perfecting the technology and
driving down the cost of the components via economies of scale. That's starting to happen now.
Credit Suisse analysts led by
Dan Galves highlighted in a note to clients late last week a new initiative by Toyota Motors (TM) to make its active safety systems available on all
its vehicles by 2017 at a low incremental cost.
Galves has been arguing that
Japanese manufacturers would do this to gain a competitive advantage over
rivals by taking advantage of cost savings from the weaker yen to add new
features to its cars without meaningful increases in price to the end consumer.
Now, it's starting to happen.
The technologies to be added to
Toyota and Lexus models include a suite of active safety systems including
forward collision warning, lane departure warnings, automatic emergency
braking, and auto high-beam. Larger models will also get pedestrian detection
and adaptive cruise control.
The full package of systems
will add just $300 and $500 to a price of a Toyota (and upwards of $630 for a
Lexus) vs. the incremental cost of $900 to $2,700 on competing vehicles.
What's unique is that Toyota
will make this suite available on all its trim levels; normally, one must first
buy the highest trim level before even being able to check the options box on
active safety systems.
For example, the Chrysler 200 offers a similar package for $1,295 but you first must get the "C" trim level (adding $4,605), the Nav & Sound package (adding $1,395), and the Premium Lighting package (adding $795) before you can get it.
As a result, for eight vehicles
sampled, Galves found that the price difference between a base-priced vehicle
and one equipped with active safety systems was between $6,500 and $10,000.
He believes this move will be a
negative for vehicle manufacturers like Ford (F) since it will pressure
margins. But it will be a positive for suppliers like MBLY as these
technologies become commonplace and start savings lives -- making it hard for
new car buyers to turn these systems down.
Another way to view this is the
way personal computers first got their start in offices before people wanted
them at home, or the way Apple got people hooked on their hardware/software
synergies with iPhones and Macs before convincing people to buy an iPad. Once
semi-autonomous systems become more familiar and maybe even indispensable, the
transition to fully autonomous vehicles will be easier. This is coming much
faster than most people think. Take me home, robot.