Though autonomous driving -- or rather, the promise of it -- has been making headlines for years, 2016 might go down as the year the auto industry got self-driving religion. The year that nearly every big automaker, as well as some other notable industry players, decided autonomous driving is a matter of "when" rather than "if," and that they needed a serious strategy to guarantee they aren't caught flat-footed.
This of course doesn't assure the efforts of newer entrants will pan out. It's entirely possible that a decade from now, self-driving pioneer Alphabet (GOOGL - Get Report) will have a role in the autonomous driving market similar to the one Intel (INTC - Get Report) and Microsoft (MSFT - Get Report) have long held in the PC industry.
Working in Alphabet's favor: The company launched its self-driving car project roughly a decade ago with the help of some very smart Stanford and Carnegie Mellon engineers, and since then, its cars have logged more than 1.5 million miles in autonomous mode in California, Texas, Arizona and elsewhere. That's given Alphabet a big lead in collecting real-world info on how self-driving cars function, one that could grow further as more miles are logged.
The Google parent has also made big investments in Lidar and other technologies used by its prototype cars to understand the world around them, and in algorithms that decide how a car should act in various situations. Google's broader investments in machine learning help out with the latter.
Alphabet has insisted it has little interest in being a fully-fledged automaker, but rather wants to act as a technology supplier to existing ones. For now, the company has a goal of bringing self-driving cars to market by 2020.
It's unlikely Tesla Motors (TSLA - Get Report) will be one of Alphabet's partners: Elon Musk's company has arguably made bigger strides towards autonomous driving than any other existing automaker, courtesy of the well-received Autopilot features supported by its Model S sedan and Model X SUV. In addition, Autopilot use is helping Tesla narrow Alphabet's driving data lead.
On Wednesday, Musk promised that "major improvements" to Autopilot's software will soon be announced, and -- with the caveat that Tesla has often missed deadlines for launching new products -- said in December 2015 his company is two years away from providing fully self-driving cars. Autopilot uses a mixture of cameras, radar and ultrasonic sensors.
Working in Alphabet and Tesla's favor as they try to stay ahead of auto industry giants: Both companies have long had a knack for hiring elite engineering talent. For many a talented engineer, the allure (and quite possibly also the financial payoff) of working for Google or Tesla remains much greater than that of working for, say, GM or Mercedes-Benz.
Still, the list of companies devoting huge resources to autonomous driving is a lot higher than it was a year ago. Ford (F - Get Report) recently proclaimed it wants to bring a self-driving car to market by 2021 -- the product will target ride-sharing fleets -- and announced a string of acquisitions and investments meant to help realize that ambitious goal. BMW announced last month it also wants to launch an autonomous car in five years, and that Intel and top advanced driver-assistance system (ADAS) processor vendor Mobileye (MBLY) will aid its efforts.
Mobileye is also working with auto parts giant Delphi (DLPH - Get Report) to create an off-the-shelf self-driving system for third parties by 2019. The investments made by Mobileye over the years in computer vision algorithms for its ADAS processors, along with the data taken in by those processors, could help it play catch-up.
Then there's Uber, which has been experimenting with self-driving cars for a while but recently dialed up its efforts: This month, the company bought self-driving trucking startup Otto for $680 million, and announced a $300 million partnership with Volvo to field self-driving cars by (drumroll...) 2021.
In an interview following the Otto deal, Uber chief Travis Kalanick underscored the seriousness of his company's self-driving push by declaring the technology to be an existential threat, should a third party deliver superior offerings to power its own ride-sharing fleets. Analyst Ben Thompson observes the routing algorithms Uber has developed for its fleets of human drivers could be a big competitive advantage once autonomous ride-sharing fleets become a reality.
Baidu (BIDU - Get Report) is a notable dark horse: The Chinese search giant just showed off a new self-driving car prototype, and has been doing road test for its self-driving systems via modified BMWs. Like Google and Tesla, Baidu has a history of recruiting elite engineering talent. It also has the backing of a Chinese government that's actively supporting local self-driving car projects.
Last but not least, there's Apple (AAPL - Get Report) , whose widely reported electric car initiative is believed to include autonomous driving investments. Bloomberg reported in July Apple's project, codenamed Titan, is now "prioritizing the development of an autonomous driving system," thus leaving the company's options open if it decides to partner with an existing automaker.
Needless to say, the race to commercialize self-driving cars is still in its early innings. Chances are bringing cars to market that can fully take over for humans will be much tougher than creating ones that can often do so, as Tesla has done.
That could give Uber, Mobileye, Apple and the rest a decent amount of time to catch up to Alphabet and Tesla. But it still won't be easy.