How To Supercharge The Autonomous Vehicle Industry

What will the car of the future look like? It may not be long before we know. In early February, Ford announced that it will allocate a staggering $1 billion over the next five years to develop the first fully autonomous vehicle, and almost every global automaker is working feverishly to create the ultimate self-driving machine. The consensus is that people will soon be using “Jetsons-like” cars powered not by humans but by smart computers.

But policymakers and businesses interested in the car of the future should look beyond the traditional industry hubs in Detroit, Frankfurt, and Tokyo to a place that might appear to be an unlikely location: Israel.

COMPARATIVE ADVANTAGE

Fiat Chrysler (FCAU), Ford (F), General Motors (GM), Google (GOOGL), Lyft, and Uber are testing autonomous cars in six U.S. cities. Volvo recently announced that it intends to test its self-driving cars in China, and industry experts predict that fully autonomous cars will be on the road by 2030 and that revenue from this industry will grow to $40-$60 billion by then. Israel is playing a major part in all this, developing a significant number of the technologies required to enable self-driving vehicles to run.

Future cars will use less sheet metal and iron and rely more on software. Engineers must overcome huge challenges to seamlessly integrate cutting-edge computer chips, communication devices, and data analytics, all while protecting vehicles and drivers from potential cyberattacks. Israel’s strong military and academic culture, along with its edge in information technology and cybersecurity, gives it a competitive advantage.

Israel has more than 5,000 startups and 750 venture-capital-backed companies, and the country attracts more venture money than any other country in the world relative to the size of its economy. In addition, Israel’s so-called Silicon Wadi, or valley, has the second largest number of technology startups per capita, right behind California. Even though Israel lacks a native automobile production industry, companies focusing on this global sector comprise about 15 percent of Israel’s industry sector businesses, and their numbers are growing steadily. In the last two years, Israeli automotive startups have raised $820 million, according to Yoram Oron, founder of Vertex Ventures and a member of the Singaporean sovereign wealth fund Temasek Holdings. In addition, over 500 Israeli companies are comprise on creating the infrastructure for driverless vehicles.