Reach for the skies

“Mark my word: a combination of airplane and motorcar is coming. You may smile, but it will come.”

So said Henry Ford in 1940.

Since then, the idea of a flying car has featured heavily in science fiction. Yet as many tech journals are reporting, the concept is looming ever closer to ‘science fact’ as well. Techcrunch says the truth is that “we’re almost there” and it predicts that passenger drones will be criss-crossing overhead within the next decade.

Such drones could deploy exactly the same technology as autonomously driven cars. And the firm which could end up bridging the gap between the roads and the heavens might be Shenzhen-based DJI, based on recent noise from the unlisted tech firm.

All of the necessary technologies for pilotless flight are based on obstacle-avoidance systems, relying on digital mapping and sensors in lasers or cameras that steer goods and people around. Industry experts also believe that 5G data networks will overcome the remaining connectivity barriers between machines and controllers, while solar power could even facilitate in-flight recharging.

As we wrote in WiC357, Dubai is pioneering autonomous air transportation and the emirate wants to ease congestion by transporting 25% of its population via drone by 2030. So far, it has signed agreements with Chinese and German partners, although Uber also wants to test its own fleet of vertical takeoff and landing aircraft (VTOL) at the World Fair in Dubai in 2020.

China’s eHang has been testing its eHang 184 drone since the beginning of the year (the one-man machine can fly for 30 minutes at up to 60 miles per hour). In late July, co-founder Derrick Xiong told Forbes the company is close to gaining operational approvals for its fleet, which runs on 4G LTE technology through a command-and-control centre based in Guangzhou. All users need to do is tap their destination into a control pad.

In June Dubai also signed an agreement with Volocopter, a German start-up backed by Mercedes, for a five-year testing of its second generation unmanned aerial vehicle (UAV). In fact, there will initially be a pilot on board too, which is probably just as well after a recent survey reported that half of all respondents would not feel safe being transported in an unmanned vehicle (WiC agrees).

UAV proponents say autonomous flying is a lot less complicated than autonomous driving as there are fewer obstacles to avoid. But that only really holds true in a world where the skies are empty, save for the traditional aircraft and birdlife. Yet there have already been apocryphal stories of birds attacking drones. Even scarier is the prospect of peopled-UAVs dropping out of the skies, not only for the passengers, but also for the people below them. The eHang 184 has a flight control algorithm which lands passengers at the nearest safe spot in the event of a propeller malfunction, but reports of malfunctioning drones haven’t eased the safety concerns. One of DJI’s main competitors, GoPro, recently had to recall the GoPro Karma drone after reports of technical difficulties (falling out of the sky) and DJI told Fortune in July that it was “aware of a small number of reports” about its entry-level Spark drone losing power mid-flight.

These kinds of safety issues, not to mention privacy concerns and the complications of policing the aerial highways, make regulation a fraught issue. In China, DJI founder Frank Wang recently warned against the consequences of an outright ban on drone flying. “Most places will adopt a sweeping approach that comprehensively bans them,” he said. “This will curb technological development and severely limit their usages.”

Huxiu.com reports that DJI is also moving into autonomous driving. It says the Shenzhen-based company has been developing an ‘intelligent travel related business’ after hiring Tesla’s autopilot technology expert Darren Liccardo and Apple’s senior antenna engineer, Rob Schlub, in 2015.

The two men are based at the company’s Silicon Valley research hub. “Everyone assumes DJI is a drone company,” Huxiu.com concludes. “But really it’s an artificial intelligence (AI) company with visual recognition technology at its core.”

DJI is also one of China’s most successful unicorns and many wonder when an IPO will take place. At its last funding round in 2015, it was valued at between $8 billion and $10 billion (current investors include Sequoia Capital, Accel Partners, GIC and Lighthouse Capital according to S&P Global Market Intelligence).

DJI is the world’s leading commercial drone manufacturer with a 70% share and arguably China’s most successful tech company on a global basis. Robohub says it achieved this status by emulating the business strategy and production methods of the world’s most successful tech company, Apple. The firm’s factories and sub-contractors are all based in Shenzhen and from there DJI, “controls the supply chain and can produce new drones every six months, thereby whipping the competition – very Apple,” as Robohub puts it.

Quartz says that DJI has emulated Apple in a second respect, by cornering the top end of the market with the release of new products “at such a fast rate that it’s kept most others fighting a price war in a race to the bottom”.

Drone technology is one area of the tech world where the manufacturers in the United States and China started at a similar time. DJI’s success means that China is now beating the US. Indeed, one of DJI’s competitors, 3D Robotics, has given up developing its own UAVs and opted to partner with DJI instead, using its Site Scanning software.

Gartner estimates that global drone sales will grow about 34% this year to $6 billion. About 90% are currently sold to hobbyists, but the future lies with commercial UAVs that carry packages and, later, people. EHang, for example, has signed a $1 billion agreement with Maryland-based Lung Biotechnology to transport “organs to patients who need immediate surgery or doctors to patients”.

Last year Ford Motor also teamed up with DJI to create software allowing cars and drones to work in tandem so that in the event of a natural disaster, first responders could deploy drones to survey the damage.

DJI also boosted the surveillance capabilities of its drone fleet this February with the release of its Matrice 200 series, which can inspect bridges, electricity towers and other difficult-to-access sites.

But if the commercial implications of drone technology are clearer, so are the military ones. And DJI ran into trouble with the US military earlier this summer after reports that its drone surveillance data could be downloaded onto servers in Hong Kong and China. DJI responded with a soon-to-be-launched stealth or privacy mode, which clients can deploy to stop data being transmitted over the internet.

Other voices from America have also turned twitchier about AI technology transfers from the US to China, with Baidu’s acquisition of computer vision start-up xPerception getting plenty of column inches in April.

Two months later, Reuters cited an unpublished Pentagon report advocating broader controls from the US government on seed investments and minority stakes that Chinese companies might be using to avoid fuller takeover reviews.

Likewise, the Chinese have responded by limiting the amount of mapping that foreign companies can complete, thereby restricting some of the self-driving ambitions of foreign tech firms and promoting the positions of Chinese companies such as Baidu, Alibaba’s AutoNavi and Tencent-backed NavInfo.

One company that appears to have escaped the mapping moratorium is HERE, which is part-owned by the German troika of Audi, BMW and Daimler. Last December, a group of companies including Tencent’s NavInfo and GIC took a 10% stake in the venture.

“We’re going to have a bifurcated market for self-driving,” Brian McClendon, one of the creators of Google Maps and until recently the head of Uber’s mapping division, told the Wall Street Journal. “China will do China and the US will do the US and the rest of the world will quickly choose one or the other.”

If DJI scales its driverless vehicle business as fast as it did its drones, then the rest of the world may end up with the Chinese option…

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