How long with this transformation take? Until 2025? Longer?
Most car companies will have to make a major transition within the next four years. The reason is because I believe mainstream cars will be sold at cost. There will be no profit margin for mainstream cars. The profit margin, however, will be enormously rich in software.
Why four years?
Because in four years’ time it will be commonplace for a very good car to be sold at cost for $25,000 to $30,000 and you can decide later whether you will buy some software. It will also take four years for the technology to be developed. This is the new business model. That’s why the traditional mainstream car companies must make it happen in four years. It’s imperative.
Which companies have an advantage?
It’s easier for startup companies to do this because there is no legacy to protect. It’s a very challenging transition, but the reason why it is so easy to capture the courage needed to do this is because the opportunity is so great. Let me tell you why that makes sense: Not only do you get a car, you also get to rent a chauffeur with it. They come along with the vehicle so that you can have a more enjoyable and safer driving experience.
There is a fear that this transition will result in a massive reduction in jobs. Do you agree?
The car industry will absolutely hire more people. It just has to get to the other side of this transformation because where there are great economics there is great opportunity.
How will Nvidia and other technology-focused companies benefit from this change? Will they take over more control of the car?
We have changed the way we offer our technology so that we can enable car companies to create their own fleets and determine their own destiny. The idea that the technology industry would control everything inside the car makes no sense. It won’t happen. The reason for that is very simple, the car companies are going to be fleet managers and service providers, not widget makers.
In this brave new world will Nvidia be a hardware supplier, a software supplier or a supplier of both?
Nvidia is a full platform supplier that works with the car industry however the different companies choose. For example, robotaxi companies want to develop all of their own software and operate the service themselves, but they would like to purchase Nvidia’s computing solutions, and use our AI eco system and tools. We have no trouble with that. Some customers would like us to build a whole stack so they can have the capability by 2022. We are not a carmaker. We are a technology maker that wants to bring this world of AD [autonomous driving] and AI to the automotive industry. There are many different types of companies and they have different needs. We have to be flexible.
This also requires a long-term outlook, right?
We have the benefit of being quite patient. We have been working on autonomous vehicles for six years and 2024 is another four years away. This requires a company with a lot of determination, a lot of staying power, a lot of indigenous core technology that we can leverage. But we are here for the long haul.
Many auto industry executives have privately told us that when they have visited companies in Silicon Valley that the felt looked down upon. Nvidia, on the other hand, has fostered such a great working relationship that automakers freely mention your company by name. Why is that?
Nvidia has got great admiration and great respect for what the car industry has done. The leaders of these companies are doing an incredibly difficult job. We also recognize the challenges the companies face during this transformation. Never before has this industry experienced a technology that improves exponentially. In this world, software and computing compound. Then you add artificial intelligence. That means the larger your fleet is the faster you learn. The experience improves dramatically because everything is compounding itself. Every single year it’s better than last year. To put this in automotive terms, when I bought a car in the past, the day I got it was the best the car would ever be. With a software-defined car, the day you buy it is the worst it will ever be. From that point forward, however, it’s going to be like magic.