Following several rocky years, the automotive industry is getting its innovation groove back

Five years ago, the automotive industry appeared poised for frenetic growth, with global carmakers snapping up autonomous driving startups for billions of dollars and making rosy promises to go fully electric. Then the COVID-19 pandemic stalled the roseate advance toward a greener, more Jetsons-esque streetscape.

During the resulting fallout, many companies working on battery-electric or self-driving technology, including Ford’s Argo AI and General Motors’ Cruise subsidiaries, folded or suspended operations. But now, having adjusted to the supply shortages and other pandemic-related problems, the automotive industry is evolving at a more measured clip.

Still, the industry’s evolution hinges upon challenges such as ongoing materials constraints, piecemeal legislation governing driving technology, and the lack of an established domestic battery supply chain. Even the outfits that survived recent rocky years continue to face setbacks: In February alone, California regulators stymied the planned expansion for Alphabet’s Waymo; Ann Arbor, Michigan-based May Mobility laid off 13% of its workforce; and manufacturers continue to push back the goalposts set in rosier days.

But the theme du jour is that businesses are beginning to get their groove back, evidenced by the emergence of a variety of promising innovators, from AI-powered chatbot makers to lithium-ion battery recyclers. And it’s not just newer businesses that are preparing for an electrified industry. Bridgestone, founded 93 years ago, debuted new rubber technology to shoulder the demands of heavy, high-torque EVs, which typically wear through a set of tires 30% to 40% faster than their gasoline-powered counterparts.

Many of the latest advances in autonomous driving are enabled by Luminar Technologies’ scalable lidar (light detection and ranging) equipment. In 2023, the Orlando, Florida-based company opened a 118,000-square-foot highly automated, high-volume manufacturing facility in Monterrey, Mexico, to turbocharge its production capacity. Luminar also unveiled its long-range Iris+ sensor that helps cars see obstacles nearly 1,000 feet away.

Last year, Luminar customer Mercedes-Benz debuted its Drive Pilot technology, the first conditionally automated driving system for the U.S. market. The pair have also announced a partnership to equip the official safety car of the FIA Formula One, a crucial test bed for future consumer technology, with Luminar’s lidar.

Meanwhile, a handful of high-profile robotaxi mishaps, such as a driverless Cruise’s dragging of a San Francisco pedestrian in October 2023, have slowed the development of autonomous driving. The collisions mark “a failure less about the mechanics of driving and more about the vehicle’s lack of situational awareness about where it was and what it was doing, something that humans do inherently,” says Jason Torchinsky, author of 2019’s Robot, Take the Wheel: The Road to Autonomous Cars and the Lost Art of Driving.

“This is the wising-up period needed so that more reasonable goals can be set,” Torchinsky says. “If the pipe dream of full autonomy is set aside in favor of self-driving limited to specific locations, with some infrastructural help and agreed-upon global standards and protocols, we could have most of what we really want, which is being able to sleep on long, boring trips or in traffic.”

Explore the full 2024 list of Fast Company’s Most Innovative Companies, 606 organizations that are reshaping industries and culture. We’ve selected the firms making the biggest impact across 58 categories, including advertising, artificial intelligence, design, sustainability, and more.

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