Auto Consultant Lawrence Burns Dishes the Dirt on Waymo 28 Aug

Photos: Left, HarperCollins; Right: Hite Photo

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Google Has Spent Over $1.1 Billion on Self-Driving Tech

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The genesis of the modern self-driving car across three Darpa challenges in the early 2000s has been well documented, here and elsewhere. Teams of universities, enthusiasts and automakers struggled to get cars to drive themselves through desert and city conditions. In the process, they kick-started the sensor, software and mapping technologies that would power today’s self-driving taxis and trucks.

A fascinating new book, “Autonomy” by Lawrence Burns, explores both the Darpa races and what happened next—in particular, how Google’s self-driving car effort, now spun out as Waymo, came to dominate the field. Burns is a long-time auto executive, having come up through the ranks at GM and spent time championing that company’s own autonomous vehicle effort, the impressive but ill-fated EN-V urban mobility concept.

Burns began working with Google’s Project Chauffeur in 2010, just as New York Times journalist John Markoff was about to reveal the program to the world. (Incidentally, the book tells us that Markoff discovered its existence through a tip from a disgruntled former safety driver). But Burns’s role actually started earlier, when he turned down a request from Urban Challenge victors Red Whittaker and Chris Urmson to fund a joint venture between GM and their Carnegie Mellon team.

Burns writes that at the time (2008), even GM, which had supported Urmson’s team in the DARPA competition, believed autonomous cars were half a century away. What’s more, the company was preoccupied with its mere survival during the Great Recession.

Fast-forward to 2010, when Google’s program, led by Darpa veteran Sebastian Thrun, suddenly realized it needed someone to bridge the gap between Silicon Valley and Detroit. “They were looking for the grey-beard auto executive to help on many different fronts,” Burns told me in a telephone interview. “They were looking for an executive that had a vision for the technology but also knew how the OEMs [car makers] and regulators work.”

Burns’s book provides a wealth of detail and anecdotes about Google’s program, both technological and social. There’s a description of how Google co-founder Larry Page recruited Thrun (and what Burns calls his “lieutenant,” maverick engineer Anthony Levandowski) to the company in the face of multi-million dollar offers from venture capitalists to work on maps, and then self-driving cars.

Where the book really shines, though, is in illustrating the complex dynamic between Thrun, Urmson, and Levandowski, the three critical figures in making robot cars a reality. “We see a lot of heroes in this story,” says Burns. “Anthony is just an extraordinarily creative guy… with unbelievable energy. [But] he was disruptive, hard to trust and unpredictable.”

Although Burns’s sympathies clearly lie with Chris Urmson, the solid, dependable Canadian, his anecdotes often depict a smart and effective group solving problems together. On one occasion, Levandowski rented dozens of cars to supercharge Google’s mapping effort. On another, engineer Dmitri Dolgov (now Waymo CTO) faced off with a police officer while testing a prototype in a Mountain View car park.

There’s great reporting around 510 Systems, Levandowski’s stealthy start-up that provided imaging units and the first self-driving car to Google. Page eventually saw the firm as a conflict of interest for Levandowski. Thrun considered making Levandowski CEO of Chauffeur, but backed off when some team members threatened to leave if that happened. Another solution would have been for Levandowski to leave Google, going back to 510 or moving to a new company. Burns said Levandowski had even wooed several key engineers to join him there—an accusation he would later face again, with the formation of Otto. Under that scheme, Urmson would’ve been named CEO of the new company, if he had gone with them.

But Urmson wanted to stay put, reports Burn. “We built this thing here,” Urmson recalls saying. “This is going to take a lot of resources to build, so [Google] seems like the right place to do it.” As it turned out, Google bought 510, placating Levandowski with a hefty bonus plan for staying in Mountain View.

The group’s first tests on a public road involved a nerve-wracking rolling barrier of normal cars driven by Google employees in front of and behind the self-driving car, for safety. There’s also a fun section where the engineers struggle to complete a list of 10 difficult self-driving scenarios presented by Larry Page in order to earn a hefty pay-out. SPOILER ALERT: They succeed, enabling Urmson to make a down payment on a house.

Burns’s reactions to the team’s antics perfectly illuminate the difference between the Detroit auto companies and Google. “I was amazed that they were testing the vehicles on public roads. No automotive company would ever, ever have done that,” he tells me.

He also marvels at what Google accomplished in its $1.1 billion Chauffeur program (first reported in Spectrum). “GM spent about the same amount developing fuel cells during my 11 years as their vice president of R&D,” Burns recalls.

But even long after Markoff’s flattering story hit newsstands, Burns says that the Google team got the cold shoulder from Detroit, with reactions including amusement, disinterest, condescension, and anger that the engineers would take such risks. “I guess we’re not working with those guys,” Burns remembers Urmson saying after a particularly patronizing meeting.

Of course, things would change in the years that followed—especially after respected Detroit auto executive John Krafcik was brought on board. But there the book draws a veil. Burns has some discussion of Waymo rivals Uber and GM-Cruise, among others, and a fair bit on the infamous Waymo vs Uber trade secrets lawsuit. But none of his sources, nor he himself, delves into Waymo’s growing list of partnerships or future plans.

The book finishes with off with financial and economic analyses of the impacts of autonomous automotive mobility services (nothing on bikes or scooters), brief treatments of some high-profile crashes, and sparse details on Chris Urmson’s latest start-up, Aurora.

Burns ends on the optimistic note that we are inevitably heading for a tipping point where cheap, safe, and reliable self-driving vehicles will dominate transportation. “There’s going to be a moment where it’s crystal clear that the value offered by the convergence of autonomous and electric vehicles with transportation services to individual people is really compelling,” he tells me. “That point is when a lot of businesses are going to go into it… and that’s when things will scale, and scale fast.”

Anyone after a less rose-tinted view will be disappointed. There is little discussion in “Autonomy” of the possibility of increased congestion as we transition to an all-autonomous future, nor any reference to concerns about security, hacking, or potential societal risks around access and employment.

“Autonomy” is also partisan, to say the least. Although the book is not an official Waymo publication, Burns continues to be employed by the company. He is also a director at self-driving truck technology company Peloton. Burns also says he gave an early copy of the manuscript to Waymo, and made some very minor corrections or redactions at its request.

But these are minor quibbles. “Autonomy” does not claim to be a scholarly history of self-driving vehicles, nor a scientific paper to help regulators craft policy. In the hands of accomplished ghost writer Christopher Shulgan, it is rip-roaring story of one team’s exploits in reinventing the motor car. Now if only Anthony Levandowski would publish his account of the same events….

“Autonomy” by Lawrence D. Burns and Christopher Shulgan is published today by Ecco Books. $27.99

Editor's note: This story was updated on 28 August 2018.

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Tesla’s real problem isn’t its shareholders

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Elon Musk

Elon Musk made a wise decision when he withdrew his proposal to take Tesla private. While Musk's external advisors showed him a viable path to privatization, the complexities of the process would have been a great distraction from the real issue facing Tesla: its lack of an experienced leadership team to run the company.

Musk may be the most exceptional entrepreneur of this generation, but he has a long way to go from being a creative innovator to building an organization that can run a global automobile company.

In recent months Musk has become increasingly frustrated with his shareholders and the questions they were asking — so much so that he issued a simple tweet on August 7: “Am considering taking Tesla private at $420. Funding secured.”

After a flurry of activity with bankers, investors and the Tesla board, Musk announced last Friday that he had changed his mind and Tesla would continue to be a public company.

All this investor focus has been a giant diversion from Tesla's real problems. In fact, Tesla's investors have been its biggest supporters, running its market valuation to $53 billion, higher than either General Motors ($52 billion) or Ford ($40 billion). Meanwhile, Tesla continues to lose billions of dollars with a dwindling cash balance.

In the recent past Musk has lost 40 key executives, including his heads of product development (Doug Field), sales and marketing (Jon McNeill) and finance (Susan Repo), plus Solar City's Peter Rive and Lyndon Rive. As a result, Musk is trying to do it all himself, even sleeping at the factory to try to get the Model 3 up and running.

No one can run a big company like Tesla alone. Leading a global automobile business is an extremely complex task requiring a strong, diverse team of executive leaders at all levels. Building the top team is precisely what Mary Barra has done in restoring General Motors following its 2009 emergence from bankruptcy. That's what Alan Mulally did to lead Ford through the 2008-09 recession.

The playbook that Barra and Mulally each used fostered teamwork, promoted healthy collaboration and created cohesion around one team implementing one plan for the entire company's success.

Musk should stop worrying about beating the short sellers and focus entirely on rebuilding Tesla's depleted leadership ranks. Most importantly, he should recruit a partner with extensive automobile experience to run the business on a day-to-day business.

An ideal candidate would be Mark Fields, who was CEO of Ford from 2014 to 2017 and who has been in the auto business for 29 years. With his vast knowledge of the business and his proven leadership capabilities, Fields in turn can recruit top performers from auto companies all over the world to get Tesla's operations back on track.

In addition, Tesla needs a very strong CFO who can put the company's finances in order. That means stopping the cash drain and getting the company profitable. Doing so will require correcting Tesla's rampant operational problems, getting Model 3 production up and running and bringing down the cost of its vehicles.

Finally, the Tesla board needs to be upgraded to provide wisdom and insights to Musk and his team about the intricacies of the global automobile business. Tesla's current board consists of Musk, his brother, the former CFO of Tesla's Solar City acquisition, three venture capitalists, the COO of Telstra and James Murdoch, CEO of Twenty-First Century Fox. None of these board members has any experience in the automobile business.

Tesla should add two to three experienced executives who understand the business and can advise management as Tesla ramps up and prepares for the next generation of vehicles.

Elon Musk is often compared to Steve Jobs, an equally brilliant entrepreneur with the vision and drive to creative transformative products. Jobs was forced out by the Apple board in 1985 for his erratic behavior. While he was building Pixar, he learned a great deal about leadership from two extraordinary innovation leaders, Ed Catmull and John Lasseter. When he returned to Apple 12 years later, he teamed up with Tim Cook who helped him build the company and turned Jobs' vision into the world's most valuable company.

In the middle of his journey, Musk now finds himself a dark wood. Executive departures continue. The stock price gyrates. The media piles on. In these difficult times, Musk needs to transform himself, much as Steve Jobs did in the 1990s.

There are other examples of entrepreneurs teaming with superb business leaders to create great enterprises; most notably, Google's Larry Page and Sergey Brin recruited Eric Schmidt as CEO and Facebook's Mark Zuckerberg brought in Sheryl Sandberg as COO. In an earlier era, the teams of David Packard and Bill Hewlett of Hewlett-Packard and Intel's Gordon Moore, Bob Noyce and Andy Grove created the signature companies that pioneered Silicon Valley.

Only if Musk is prepared to recruit a partner to build Tesla's leadership team and strengthen his board will he be able to transform Tesla from a breakthrough entrepreneurial company to a rapidly growing automobile company with an enduring legacy.

Commentary by Bill George, a senior fellow at Harvard Business School, former Chairman & CEO of Medtronic, and the author of “Discover Your True North.” He has taught in Unilever education programs in the past decade. Follow him on Twitter
@Bill_George
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The Jaguar I-PACE Is Not Living Up To Its ‘Tesla Killer’ Moniker [Opinion]

The Jaguar I-PACE is many things, but a 'Tesla Killer' it is not.

There are many electric cars that have been branded as a “Tesla Killer,” but the one closest to hitting the mark (apart from the Chevy Bolt, which GM is strangely not aggressively selling to compete against the Model 3) is the Jaguar I-PACE. A crossover all-electric SUV, the I-PACE is powerful enough, and it even has a decent range of about 200 miles per charge.

But is it a Tesla Killer? Not really.

There is no doubt that the I-PACE is a great electric car. Its performance is not bad either, with a 0-60 mph time of 4.5 seconds, which is quicker than the Tesla Model X 100D. Size-wise, the I-PACE is quite a bit smaller than the Model S and X, being closer in size to the Model 3. Starting at $69,500, the Jaguar I-PACE sits right at the same price point as the entry-level Model S, the 75D, according to WIRED. That said, inasmuch as the I-PACE’s cost is justifiable considering the price of its competition, it falls a little bit when compared to a Model 3 of the same price.

The Tesla Model 3 starts at $35,000, though the base variant is not being manufactured by Tesla as of yet, according to a Top Gear report. The Model 3’s top-tier variant, the Model 3 Performance, is in the same price point as the entry-level Jaguar I-PACE, costing $64,000 before any options. For that $64,000, the Model 3 has roughly the same space as the I-PACE, but with superior speed, range, and performance.

The Model 3 Performance is designed to beat high-performance cars like the BMW M3 and the Audi RS5. Its acceleration is pretty brutal, allowing the electric vehicle to sprint from 0-60 mph in 3.5 seconds. The Tesla’s range is also 315 miles per charge, and it is supported by the company’s Supercharger network, which is growing by the day. As noticed by these specs, the Model 3 Performance before any options actually outperforms the Jaguar I-PACE, and it travels farther per charge too.

While it is easy to market a new EV as a Tesla Killer, it should be noted that the more accurate term for this new line of electric cars is a “fossil fuel car killer,” in the way that they boast specs and performance figures that surpass that of gasoline-powered vehicles. Thus, instead of trying to “kill” Tesla, a company that exclusively manufactures electric cars, it would be far better to compare the I-PACE to competing gasoline cars instead.

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Car shoppers could snag fat discounts during Labor Day sales push

Anyone thinking about a new car might want to plan a trip to the showroom over this three-day holiday weekend.

The combination of softening sales and dealers' annual Labor Day sales to make room for next year's models is expected to put consumers in the driver's seat when it comes to snagging good buys on a various makes and models.

“We're seeing some pretty fat discounts on some pretty cool cars,” said Matt Jones, senior consumer advice editor at Edmunds.com, an online automotive research guide. “Sometimes, in the past, we've seen them only on certain segments, but this time it looks like they're fairly spread across the board.”

Ty Wright | Bloomberg | Getty Images
A customer browses through rows of cars for sale at the Jack Maxton Chevrolet dealership in Columbus, Ohio, U.S.

U.S. consumers spent an estimated $86.5 billion on new vehicles in July, about $2 billion less than in July 2017, according to research firm J.D. Power. And although the latest estimates show that the average manufacturer incentive decreased to $3,665 in July — down $204 from last July's $3,869 — the forecast also noted higher discounts were likely soon on their way.

Indeed, some of the current discounts are far above that estimated July average. For example, for the popular Chevrolet Silverado 1500 crew cab, which has a sticker price ranging from about $40,000 to $56,000, some dealers are offering discounts of $12,000 to $15,000 or more.

“That's a big amount of money for a vehicle like this,” Jones said. He added that the savings are available because a 2019 model is coming out, which pushes the value of the existing version down.

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Generally speaking, though, it's best not to focus only on the dollar amount of the discount, Jones said.

“That amount can be eye-popping,” he said. “But you have to put it in the context of the price.”

For illustration purposes: While $5,000 off of a $30,000 car is close to a 17 percent discount, that same amount applied to a $20,000 car is a 25 percent discount.

It's worth noting that if your need for a car isn't pressing and price matters most, you might find deeper discounts later in the year. However, the selection of cars that come with special pricing will be more limited, Jones said.

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Additionally, it remains uncertain how trade wars between the United States and other nations will end up affecting car prices. So far, threats from President Trump to impose additional tariffs on imported autos has not materialized.

If you do plan to head to the dealership, here's how to prepare for your trip.

Compare prices in advance

If you know what make and model you're interested in, do some research before showing up at the showroom. There can be differences in pricing and incentives among your local dealerships.

“Each dealership is individually owned,” Jones said. “The manufacturer might be running a special and that's great, but there might be other deals at the dealership level.”

Get pre-approved financing

Unless you plan to pay for your new car with cash, it's smart to get pre-approved for a loan from a bank or credit union. While there's no obligation to use the pre-approval, you'll at least be armed with a comparison when the dealership offers its best loan terms.

“If what a dealer can offer beats your pre-approval, then great,” said Jones. “If not, you still have the pre-approved loan with the better interest rate.”

Gather your paperwork

Before you head to dealership, be sure to gather the information you might need to do a transaction, such as your license, proof of insurance and down payment.

Automakers breathe a sigh of relief at Trump’s approach to renegotiating NAFTA

STR | AFP | Getty Images
General Motors Buick cars being assembled at Wuhan auto plant in Wuhan, China.

As the Trump administration sought trade concessions from Mexico in recent weeks, automakers and their suppliers feared that manufacturing costs could increase by billions of dollars. Now, they are breathing a sigh of relief.

The auto industry is still waiting to learn details of the preliminary agreement that President Trump and Mexican leaders announced this week and whether Canada will join the deal. Car companies are also watching to see if anything will come of a European Union proposal to eliminate tariffs on vehicles and other industrial goods if the United States agrees to do the same. Mr. Trump on Thursday told Bloomberg News that offer was ''not good enough.''

But analysts and consultants say most companies would be able to comply with the conditions in the agreement with Mexico that have been disclosed so far. Many of the changes that automakers would have to make — like hiring more workers in the United States — were in their plans anyway. But other changes, like requiring automakers to use more parts made in North America and an agreement to cap imports from Mexico, could raise costs and hurt some companies.

Companies ''are glad they now have some certainty on what the new requirements are,'' said Mark Wakefield, global co-head of the industry and automotive practice at AlixPartners, a consulting firm. ''Now they can plan around them and go forward.''

The preliminary deal would require that at least 75 percent of an automobile's value be produced in North America in order for a company to import it into the United States duty free. That is up from 62.5 percent under the North American Free Trade Agreement, the 1993 deal that Mr. Trump has called the ''worst trade deal ever made.''

Automakers would also have to use more local steel, aluminum, glass and other parts. In addition, 40 to 45 percent of vehicles would have to be made by workers earning at least $16 an hour — a provision meant to preserve and create jobs in the United States and Canada, where wages are much higher than in Mexico.

These terms would force automakers to buy more parts made in the United States — and possibly Canada. That should modestly increase employment at suppliers like Delphi Technologies and Johnson Controls, analysts said.

''The main takeaway so far is there is no giant influx of jobs coming into the U.S.,'' said Kristin Dziczek, vice president for industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich.

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'A solution in search of a problem'

The auto industry has been adding jobs in the United States for several years. In July, more than 972,000 people worked for car and parts companies, 40,000 more than a year earlier, according to the Bureau of Labor Statistics. Manufacturers have added more than 300,000 jobs since 2009, when General Motors and Chrysler needed a government bailout to survive.

And while a half-dozen auto plants have been built in Mexico in the last decade, new plants are going up in the United States, too. Volvo, the Swedish carmaker, is building a factory in South Carolina that the company says will employ 4,000 people by 2021. Toyota and Mazda recently agreed to jointly build a plant in Alabama.

''In some ways,'' said Charlie Chesbrough, a senior economist at Cox Automotive, the new trade rules amount to ''a solution in search of a problem.''

But some industry associations are not as sanguine. The Motor and Equipment Manufacturers Association, which represents parts makers, is worried about a side agreement that the Trump administration reached with Mexico that could be used to cap duty-free auto imports from that country in the future.

That side deal ''may serve to decrease American manufacturing jobs and exports and put U.S. businesses at a global disadvantage — all while increasing costs to consumers,'' the association said in a statement.

The Mexican government has said about 30 percent of the cars now exported to the United States do not meet the requirements of the new agreement. They include popular compact models like the Honda HR-V, the Volkswagen Jetta and Golf, the Nissan Sentra, and the Ford Fiesta and Fusion.

If manufacturers can't find enough North American parts for those Mexican-made cars, they could still import them into the United States by paying a 2.5 percent tariff. That would force companies to either raise prices or accept smaller profit margins, or some combination of the two.

Another option is to stop selling those noncompliant vehicles in the United States. Some small cars are already set to go away.

With American consumers flocking to roomier sport utility vehicles, Ford will stop selling the Fiesta, the Fusion and other sedans in its home market. On Friday, the company said it would also cancel plans to import a Focus crossover from China because the Trump administration was considering imposing tariffs on an additional $200 billion of imports from that country. The president has also said he wants to place a 25 percent duty on cars and car parts.

Other companies might not have that choice. Although sales of the Jetta and the Golf have fallen about 40 percent this year, they are two of Volkswagen's top-selling models in the United States. Honda has a lot riding on the HR-V, which is built in an $880 million plant in Mexico that opened in 2014.

''The HR-V is doing really well for us,'' said Adam Silverleib, vice president of Silko Honda, a dealership in Raynham, Mass. Losing the model ''would definitely hurt.''

Some companies could find it harder to meet fuel-economy standards if they got rid of smaller cars. The Trump administration is trying to roll back those standards, though court challenges could prevent a resolution of the issue for years.

While fears about the scrapping of Nafta have eased somewhat, automakers are still concerned about Mr. Trump's plans for higher tariffs on cars and car parts. The president has argued that auto imports pose a threat to national security, a rationale he used to raise tariffs on steel and aluminum imports.

Ms. Dziczek of the Center for Automotive Research said those higher tariffs would significantly increase costs and would thus be much more damaging than the terms of the preliminary agreement with Mexico. Even vehicles made in the United States would be affected because many include imported parts.

Her firm estimates that a 25 percent tariff on imported cars — excluding those made in Mexico and Canada — would increase prices of vehicles made in North America by $1,135; imported models would cost $3,980 more.

As a result, the center estimates, annual auto sales would fall by 1.2 million vehicles and the industry would lose 197,000 jobs.

F

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