How Canada’s autonomous car sector is becoming big business

The development of self-driving cars in Canada may have experienced a few fits and starts, but a slew of new companies opening in an Ottawa suburb suggest that this up-and-coming technology is set to become big business—potentially adding over a trillion dollars to the auto industry, according to a report from global management consulting firm McKinsey. Now entrepreneurs and startups are trying to figure out how to get in on the ground floor.

Blackberry has staked its claim in the autonomous car market via its subsidiary QNX, a software company that builds products for high-performance applications like air traffic control and nuclear power plants. It invested $100 million in QNX in December 2016 with the goal of breaking into the self-driving car business early.

QNX closed out 2016 by hosting Prime Minister Justin Trudeau at the opening of its Autonomous Vehicle Innovation Centre in Kanata, Ontario (a quick 30 minutes from downtown Ottawa) and it has kicked off the new year by wowing audiences with its robotic Lincoln MKZ at the Consumer Electronic Show in Las Vegas.

Blackberry QNX is not alone in settling in Kanata North. The tech park — now the largest in Canada — has attracted big names like Nokia and Apple, as well as smaller enterprises like the Neptec group (which produces remote-sensing-using-lasers LiDAR equipment). Other tech hubs, like Waterloo, have also experienced growth related to the autonomous vehicle market.

Last year, the Ontario government was urged to invest $64 million as part of an effort to boost the manufacturing of driverless vehicles. The Ontario Centres for Excellence, a group that supports the development of innovative technologies in Ontario, pledged to match any investment the Ontario government makes in the self-driving car sector of up to $130 million.

That isn’t to say the road to Canada’s self-driving cars is clear of obstacles. Barrie Kirk of the Canadian Automated Vehicles Centre of Excellence, or CAVCOE, was quoted in a recent Financial Post article as saying that Canada is actually “late to the party” and current regulations are holding back development in the autonomous vehicle sector, compared to the other G7 nations like the U.K. that has put up to 100 million pounds towards research and development of self-driving cars.

“There have been some really good things happening in Canada recently, both federally and within Ontario, but we still have a long, long way to go to catch up and to be competitive,” Kirk told the Post.

To invest, or not to invest?

But if you are interested in putting your money into the self-driving car market, you may want to proceed cautiously.

“There’s no doubt that this is a large market with lots of opportunities and many different types of technologies,” Ian Wyatt, partner at the Business Development Bank of Canada, told VICE Money. The problem, Wyatt says, is that the rate of adoption of this technology, that is, how quickly car manufacturers will start incorporating self-driving systems into their cars, is unclear.

The timeline for self-driving vehicles has been fluid, to say the least.

Some say self-driving cars will be fully operational on a mass scale before the end of the decade. But most say it could take up to 20 years before we hit “level five” automation, the stage in which cars wouldn’t need pedals or a steering wheel to operate.

“That doesn’t mean you should shy away from the self-driving car market,” Wyatt said. But he cautions that investors and new startups should “give [themselves] other ways to win.”

Wyatt points to agriculture and industrial automation as possible markets that would also eventually contribute to and benefit from the rise of machines which don’t need a human pilot. There are also subsidiary markets that have sprouted from the self-driving car sector like sharing services and integrated apps, that could potentially be investment opportunities.

“See if you can figure out something that applies to more than one market segment to reduce your risks,” said Wyatt. “It’s important to have a strong syndicate of investors behind you, because there could be long delays in getting to market.”

Savvy investors who can see and predict challenges in the self-driving sector might be better off than those looking to dive into investing right away. Development of new control or steering technology comes with more regulatory hoops — for good reason — and those can delay and push back timelines.

“I would just say when investing, look for opportunities that cut across sectors.”