Autonomous Cars: Ford and Tesla Have Big Plans - Market Realist

Ford (F) and Tesla (TSLA) are stepping up in the race to compete in the autonomous vehicles space. Both companies plan to launch a ride-sharing network with a fleet of autonomous cars. The vast potential market for self-driving cars is seeing automakers invest more in the space. However, Ford’s expectation that its autonomous cars will last four years has caused jitters in the industry

Ford plans to produce its self-driving cars by 2021. The vehicles will be without a steering wheel, gas pedal, or brake pedal. They’ll also have geo-fenced areas for ride-sharing services. Ford Smart Mobility plans to tap the growing transportation services market. With Ford Smart Mobility, the company aims to become a leader in the autonomous car space.

In July, it was announced that Ford and Volkswagen (VLKAY) were investing about $7 billion in Argo AI. Ford will be able to integrate the self-driving system from Agro AI into its own vehicles in the US and Europe. Last year, Ford also partnered with Baidu to roll out autonomous cars in China.Further, Ford believes that the demand and usage of autonomous cars will be so huge that it will be replaced in almost four years. Ford’s autonomous vehicles operations chief, John Rich, told The Telegraph, “We will exhaust and crush a car every four years in this business.”

Will autonomous cars reduce demand for traditional cars?

The automobile industry is rapidly changing, and self-driving cars will soon be a reality. If these cars could be controlled via smartphones to pick up or drop off passengers or goods, then the need to privately own cars would probably reduce. Instead of owning cars, people could start using autonomous vehicle ride-sharing services. This is the market automakers are targeting. Tesla Network also aims to tap this market.

Industry analysts worry that the change in trend will reduce the demand for traditional vehicles

. On the possibility of a decline in demand, Rich said, “The thing that worries me least in this world is decreasing demand for cars.”

Discussing car ownership and Tesla Network, Tesla CEO Elon Musk said, “Low-density areas will probably have customers owning their Tesla vehicles, only occasionally renting them vs. higher density areas with higher rates of rental.”

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