We are in uncharted territory
As cars become ever more sophisticated in terms of technology and performance, a new market segment is emerging - the autonomous, or semi-autonomous vehicle. The roadmap and timeline to the fully autonomous vehicle remains far from clear. As does the question of who will control the future value chain in an urban transportation landscape being transformed by advanced technologies that promise the smarter and more sustainable movement of people and goods.
The technology for vehicles that drive themselves is here today, but at a cost that is far from what is required for it to become an economic reality. Furthermore, if autonomous driving is to become a reality massive investment both at a national, regional and local level will be required in the infrastructure and systems necessary for its implementation.
Whether governments and politicians have the resources or the political will required to make such investment, and see this market develop in the short term, remains to be seen. However, there are clear signs that all interested parties are testing the water and trials are being run to test the technology and systems required. Indeed, Google has been one of the first to run trials of its technology on a self-driving vehicle in California, USA. Many of the vehicle manufacturers are running similar trials to a greater or lesser extent.
Active safety and connectivity - both the vehicle's and the individual's - are areas of technological progress that provide plenty of uncertainties, especially on the speed of innovation to market. Carlos Ghosn put a stake in the ground in 2013 when he said that Nissan would be ready with multiple, commercially-viable autonomous drive vehicles by 2020.
There's always the question of how this technology will evolve, how it will look in the market. Advanced Driver Assistance Systems (ADAS) that are here today point some of the way and there are cars on the market already that allow limited autonomous control in certain situations (like parallel parking, or traffic jam assist).
How does the technology roadmap look? Past experience would say that we'll see a gradual extension of advanced technologies, expensive to begin with, but with unit costs declining over time as they cascade down to mass market segments and volumes rise.
Dual control is something else we're starting to hear more about. Cars will come with a degree of autonomous control alongside driver control. It's that 'degree' of autonomous control that will be shifting, gradually. In certain situations, you will be able to hit a button and read your newspaper. But the fully autonomous car, all situations, driver redundant - that is much further away from real application. As Tesla's Elon Musk has remarked, it's that last bit that enables you to safely do away with the human element in all situations that will be difficult for engineers to square off completely. The human element is actually quite sophisticated in terms of processing information quickly to make decisions and a human eye with a brain can interpret in a way that a machine cannot. Similarly, the fully safe road traffic environment vision will take time to achieve as the parc will be populated by a mix of automated and human controlled vehicles. To come back to today, you might have a clever collision avoidance system on your car, but that doesn't stop a vehicle without the latest ADAS systems colliding with your vehicle.
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Levels of autonomy?
The terms ‘autonomous’ and ‘driverless’ are often used to mean the same thing, but there are nuanced differences between the two terms. Autonomous functions in vehicles will require a driver remaining onboard, while ‘driverless’ means a vehicle that has no driver and, therefore, needs to be able to do everything by itself – without a steering wheel - hence fully automated. That suggests a level of automation hence the SAE’s levels of automation. These levels are also referred to as key stages towards automated driving, namely feet-off, hands-off, eyes off, and brain off. Regardless of claims by automakers, it will be many years before truly ‘driverless’ cars become a reality and one can swivel one's chair to face the back seat passengers. Sure, cars will be able to drive themselves but it will still require – and remain legal in many parts of the world for many years – for a human to take back control of the car if required.
Fully autonomous vehicles are not expected in any substantial volume until around 2030, but the early part of the 2020s will see more 'highly autonomous' vehicles coming to market. In summer 2016, Ford boldly stated its plans to produce a fleet of SAE Level 4-capable cars for ride-sharing services, such as Uber and Lyft, by 2021. The carmaker subsequently used the 2017 CES to insist that it will have a fully autonomous car, without a steering wheel, on the road by 2021.
Although much of the technology needed to operate self-driving cars has been developed, the laws that allow such vehicles on our roads are some way behind. While some automakers are predicting fully autonomous cars by 2030, there is a still a lot of red tape to wade through before then. It will take some time to convince regulators – and gain the public’s trust – that it’s OK to hand over control of a car to a computer while driving at 70mph.
QUBE's own research has highlighted the difficulty in formulating a defined view on the market. Already, BMW has announced that its iNext autonomous vehicles, due in 2021, will offer level 3.5 autonomy. BMW’s blurring of the boundaries of the SAE’s 5 levels of autonomy backs our research into the driverless car sector. Due to difficulties in pinpointing what level 3 entails, which looks very much like a temporal staging post to level 4, we found that many original equipment manufacturers (OEMs) will look to make the leap directly to level 4 from level 2 because the balance of incremental investment required versus the consumer and competitive positioning benefits makes it a worthwhile step. Consequently our forecast sees level 3 autonomous light vehicles going from a position of dominance in 2021 in the level 3 through to 5 category, with a 88.7% share of a 536,000 market, to being the least represented in the category by 2031. By then the category will have grown to some 11.7 million vehicles and level 3’s share will tumble to 7.3%.
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The societal dimension
We are at a point in the evolution of the car - and its societal impact - where a number of changes and significant fragmentations to the personal transport market are coming:
- Global urbanisation and the emergence of megacities. This will mean that urban mobility will increasingly embrace other modes and their integration for sustainable solutions (not just environmental, but to avoid chronic traffic congestion that constrains economic growth and makes cities less 'liveable')
- Enhanced personal connectivity means that modal integration via apps on smartphones will increase modal mix and make journey choices much more dynamic (eg the bus has broken down, but my journey time optimising app tells me to take a 10 minute walk and catch a tram that will be waiting)
- Car sharing is emerging as an increasingly attractive option for some groups who are deterred by high costs of car ownership. There is a 'streaming generation' who are perhaps less fixated on actually owning things than previous generations, more interested in life experiences and being constantly connected with their friends via digital platforms and social media.
- Electric vehicles may be off to a slow start, but batteries will get better and niches will evolve, in part because electric vehicles offer some big environmental benefits when it comes to urban mobility.
- Vehicles will become increasingly connected to each other and to road infrastructure for safety reasons and for intelligent transport systems that can optimise traffic flows, reduce emissions.
- People are living longer. Automated vehicles overcome physical limitations applying to growing elderly population cohorts.
So, into that mix, we also have the idea of the highly autonomous vehicle. Does a concept like Google's driverless car have a role to play? Once the legal issues have been overcome, I would imagine that it most certainly would. The technology is available and a 'Google car' would fit the narrative of key trends described above: it could fit snugly into the future modal mix for intra-urban mobility. Inter-urban? That is less clear as it means longer distances that might be better for 'grouping people' in rail carriages or road coaches, but there is perhaps a slightly different opportunity there, too (platooning vehicles on highways are one vision).
Would people own driverless cars? Maybe, but unlikely. Transport will increasingly become a commoditised good and experience, consumed on-demand when needed. You dial one up and it comes to your door. Maybe this vehicle has an electric powertrain and you selected that when you booked it (for carbon credits). But why would you want to actually own one of these, or personalise it? It's a commodity item, a pod, a box engineered to move you from A to B at the lowest cost and with maximum operational efficiency.
Automotive companies need to think about how they are going to address this whole area so that they are not marginalised and people are still drawn to their core brand values. Make no mistake, some of what is being talked about could be very disruptive to existing business models. Car companies may like to dip their toes into car sharing, but if that concept really takes off and people stop owning a car (which, remember, sits there economically inactive for most of the time), the annual market for new cars will inevitably shrink. Google is a very, very big brand that thinks outside of the box. You can imagine some very senior people inside that company plotting a long-term strategy to disrupt a 'dinosaur industry' that is ripe for change.
Do you like to drive a car? The answer may well be yes to that. But do you always like driving a car? Is it always pleasurable? Are there times when you would like to hit a button and let someone/autopilot take over? The driverless car will be a very compelling proposition to many, especially as our creaking bodies carry on for longer.