This article first appeared in The Edge Malaysia Weekly on November 28, 2022 - December 4, 2022

IN the science-fiction movie, Back to the Future, which first hit cinema screens in 1985, followed by Part II and Part III in 1989 and 1990 respectively, eccentric scientist Dr Emmett Brown and teenager Marty McFly time travel on a flying DeLorean sports car to 2015. Futurologists who helped the movie’s script writers imagined a flying car that was not autonomous, so Doc Brown’s car for McFly was written in with a steering wheel.

When the first stories about the imminent arrival of driverless cars started appearing in mainstream media in 2015, the timeline for self-driving vehicles was seven to 10 years between 2022 and 2025, with flying cars, without a steering wheel, arriving before the turn of the decade in 2030.

Over the last seven years, readers of this Tech column have read my take on driverless or autonomous vehicles, or robots on wheels, on a range of stories from Internet of Things (IoT) to electric vehicles (EVs). Sometimes, I have been guilty of being a tad too optimistic about the timeline of such a seismic change and, on other occasions, I have carefully hedged, citing lots of caveats such as regulatory factors, which can slow down adoption of self-driving vehicles. The reality is that the driverless riding experience is slowly making its way, though completely self-driving cars without a steering wheel are still years away.

On Oct 26, chipmaker Intel Corp listed its auto chips subsidiary, Mobileye Global Inc. The firm, which Intel bought in 2017, is a key player in the advanced driver assistance systems, or ADAS, as well as autonomous vehicle, or AV, applications. Among its customers are Germany’s BMW and Volkswagen, Japan’s Nissan Motors, South Korea’s Kia Motors and Hyundai Motors as well US auto giants General Motors and Ford Motor Co. In the four weeks since its IPO, Mobileye’s stock is up nearly 40%, at a time when semiconductor stocks have been hammered and many investors remain sceptical about driverless cars.

Mobileye offers advanced driving, or Level 2, features such as point-to-point driving that can be hands-off but still requires a driver’s supervision. Apart from designing chips for advanced driving systems, Mobileye also develops its own proprietary software solutions for ADAS and AV applications.

I wrote about the six levels of an automated driving system in this column a few years ago. The US Society of Automotive Engineers came up with the list nearly a decade ago. Here is a quick recap:

Level 0 is like the old cars you see on the streets in your city. There is no driving automation whatsoever. The car is driven and controlled at all times by a human even if it has an enhanced active safety system installed. Even fairly sophisticated features such as autonomous emergency braking, blind spot warning and lane departure warning installed in older BMW models and Audi are all essentially Level 0 automation.

Level 1 is very basic Driver Assistance. Vehicles feature a single automated system. Many of the luxury model cars have had basic functions such as lane centring or adaptive cruise control for many years now. Level 2, or Partial Driving Automation, includes vehicles that can perform steering and acceleration. Drivers still monitor all tasks and can take control of the car any time.

There is also the slightly advanced Level 2+. It is a sort of bridge between L2 and L3 that builds upon Level 2 ADAS-like features that offer more functionality and safety potential but keep the driver in the loop. L2+ cars have features such as autopilot on the highway or urban point-to-point. Tesla’s mislabelled full service driving, or FSD, and Mobileye’s SuperVision are some examples. A good characterisation of Level 2+ is “Hands free, eyes on”. Some of the high-end Ford models such as Ford’s Mustang Mach-E have Level 2 and Level2+ features.

Level 3, or Conditional Driving Automation, is currently the next new thing. Level 3 vehicles can perform most driving tasks but human override is still required. Mercedes Benz’s top-of-the-range S-Class and EQS models in Germany have the “Drive Pilot” system with Level 3 features. Once you are on an autobahn outside Frankfurt, all you have to do is click a button and the autopilot Drive Pilot turns on. It takes charge of the steering, acceleration and deceleration. As the driver, you are then free to answer email, watch a YouTube video or make a few calls. If the car senses something amiss, it alerts you with lights and sounds so you can then take control. If you do not do so quickly, the Drive Pilot slows the car down and stops on the side of the road with lights flashing. Tesla has its own equivalent of Level 3 with its FSD, but it is still early days with this level. It will be another 18 months or two years before Level 3 features improve and get wider adoption in a range of cars rather than just a couple of Mercedes and Tesla models.

The biggest promise in recent years has been Level 4, or High Driving Automation. Vehicles on Level 4 perform all the driving tasks under specific circumstances but there is a human driver in the car, which has a steering wheel, and the driver can assume control anytime he wants. In 2018, Tesla CEO Elon Musk made an audacious announcement saying Level 4 features would be available for Tesla models by end-2020, which would help turn a million Teslas into robotaxis. Well, we are at the end of 2022 and Level 4 is still not a reality. If you ask Musk, he will say the Level 4 software is ready and we should soon have those robotaxis picking us up from one place and taking us to the other side of town. Musk said earlier this year that Tesla was developing a robotaxi without pedals or a steering wheel. Make no mistake, the technology is here. Some believe robotaxis will benefit most in a “controlled environment”. It still needs to fine-tuned and tried and tested before regulators and passengers get comfortable with it. It will be at least two to three years before they get going and perhaps five years before they get enough traction for more widespread adaption.

Finally, there is Level 5, or the holy grail of autonomous vehicles: Full Driving Automation. Driverless cars have no steering, no driver and can operate on-road anywhere in all conditions, autonomously. No human interaction or attention is required for the vehicle to go from one point to another. Some analysts believe Level 5 driving will first be tried in controlled environments. Apart from Tesla, SpaceX and Twitter, Musk, the world’s richest man also owns tunnel construction firm The Boring Co. One use for intercity or intracity tunnels might be autonomous robotaxis that drive themselves around, picking you up from a suburb and taking you to another side of town. But do not look for Level 5 cars on any street near you anytime soon.

In the aftermath of the 2008 global financial crisis, which forced the US Federal Reserve to cut interest rates to nearly zero, pioneering electric car maker Tesla emerged and attracted investors’ attention. Armed with cheap capital, Musk upended the global auto industry. Now, every traditional car maker, from General Motors to Nissan and Hyundai, is racing to make a range of electric car models. But electrification is just a piece of a greater puzzle in what is dubbed as transportation-as-a-service, or TaaS. The other pieces are car sharing and autonomous driving. The goal is to make electric robotaxis, or a car that you might be able to hail on your phone app.

Indeed, the entire intercity and intracity transport is undergoing a transformation as electric, shared and autonomous vehicles take hold. UBS estimates that global electric vehicle market will exceed US$1 trillion in 2026, or about 10 times the size it was just two years ago. The ride-hailing market is projected to nearly triple over that same time frame to US$545 billion. And US investment bank Morgan Stanley expects electric sky taxis, or electric vertical takeoff and landing, or eVTOLs, which are still several years away, to eventually grow to become a US$1 trillion market by 2040. The flying cars are seen initially only as a replacement for short-range flights for the wealthy but will get broader adoption as service gets more affordable.

A number of tech companies and a few traditional automakers are working on their own autonomous vehicles. The oldest of the self-driving project is Google’s Waymo, which runs a small self-driving taxi service in Phoenix, Arizona. For now, Waymo taxis have steering wheels and human supervisors who are able to immediately take control if something is amiss. Waymo began testing a similar service in San Francisco a few months ago and expects to launch a robotaxi service Los Angeles soon. Online news website Axios reported recently that California had given Waymo the go-ahead to transport passengers in San Francisco without anyone behind the wheel. The Google’s robotaxi subsidiary still needs a separate permit to begin charging fares as it does in Arizona. Waymo has also teamed up with China’s Geely Automobile Holdings Ltd to launch a dedicated robotaxi service with its subsidiary Zeekr.

General Motors Co owns a self-driving car firm, Cruise, which has been testing an autonomous taxi service in California. It plans to expand robotaxi services to Phoenix, Arizona, and Austin, Texas, next month. But others are exiting long-gestation projects such as self-driving cars. In early October, Ford and Volkswagen pulled the plug on their AV joint venture, Argo AI. “Profitable, fully autonomous vehicles at scale are a long way off,” Ford CEO Jim Farley said after Ford announced it was exiting Argo AI.

Last month, another AV delivery start-up, Nuro, laid off 20% of its workforce. Other tech giants plan to enter the fray. iPhone maker Apple Inc has its own Project Titan, which is developing autonomous vans; Amazon.com Inc is funding its self-driving robotaxi project Zoox. China, a global leader in EVs, plans to keep its lead in AVs as well. Baidu unveiled its Apollo RT6 — the sixth generation of self-driving EVs built for riding hailing in July. It is poised to start plying Chinese roads late next year.

A lot has changed over the last few years. For one thing, we are no longer in the near-zero interest rates world. The terminal rate, or the peak spot where the federal funds rate comes to rest before the US Federal Reserve starts trimming it back, is now 5.25%. By the time the Fed is done raising rates in the first quarter of next year, the cost of capital would have gone from zero to 5.25% in just 12 months. That is the fastest and steepest rise in cost of capital in recorded history. When capital is too cheap, everything can get funded — even wild dreams and imaginations. When capital is as expensive as it has been in nearly three decades, long-gestation projects struggle to get traction because few are willing to fund them.

Technologies such as self-driving vehicles are not being prioritised by venture capital firms, bankers and investors the way they used to be. AVs are still on track. Cash-rich tech giants like Google, Apple, Amazon will still be able to fund their own AV projects, but others will have to pare their self-driving ambitions.

Assif Shameen is a technology writer based in North America

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