With smart cities and technologies such as artificial intelligence (AI) and machine learning (ML) increasingly contributing to our way of life, estimates indicate that the global autonomous (semi and fully) cars market is expected to reach nearly $62 billion by 2026 from $21 billion in 2020, at a CAGR of 22.75%.
How autonomous vehicles have developed till now
Autonomous vehicles (AVs) technology is implemented in several types of vehicles fulfilling both commercial and personal transportation needs globally. They rely on AI and ML to increase the level of intelligence used by understanding human participation. With advancements in technology of autonomous vehicles (AV), high definition (HD) maps with the ability to decipher map objects and make logical conclusions are being integrated into vehicles. HD maps give visibility beyond the driver’s field of view, thereby providing an accurate representation of the road ahead and information on the surrounding environment. The degree of intelligence in AVs is attributed to the billions of map data points that are fed into the AI and ML system of the vehicles, which gives them the ability to take decisions while navigating. The accuracy of the map inputs in turn depends on the array of sensors, cameras, and radar systems. However, the ability of the AV to successfully comprehend the path and respond appropriately depends on the proficiency of the AI built into the system.
The level of automation to enable self-driving can vary from 1 to 5 — 1 is where the driver controls most of the driving functions and the vehicle may be able to adjust cruise control speed or stay in a lane. Level 5 is where the car is fully autonomous and requires no human input to operate in all driving conditions. Advancement in these technologies has enabled companies such as Tesla and Waymo to achieve significant testing and deliver promising results in levels 3 and 4. A level 5 means there is no need for a human to drive; this is a desirable state to achieve universally.
The current market has seen advancement in level 2 and level 3 AVs where rapid growth and wider customer acceptance is expected by 2030. Fully autonomous vehicles at level 5 will not have a wider acceptance unless extensive testing affirms the cyber-risk-free technology and compliance to country, regional and global safety standards. Global economies understand that AV technology has a huge potential and presents economic and social benefits, and hence the support from the industry and governments is most likely to continue. Currently, the industry has invested an estimated $50 billion in this technology with 70% of the funding coming from outside the automotive industry.
Global adoption and benefits of the AV technology
The Americas is expected to be the dominant market due to the established automotive industry, presence of tech startups, and available funding. Also, several testing approvals and field cases have been conducted in the US. Various testing milestones have also been achieved. Cruise LLC completed 2020 by doubling the figure of how far its cars can go before a safety driver needs to take over, and Apple Inc. completed road testing of its self-driving cars in 2020. Apart from companies in the US, many companies from other countries have entered this market. For example, in February 2021, Vietnam's domestic automaker, Vinfast, announced that it had obtained a permit to test autonomous vehicles on California's public streets.
APAC follows next after the Americas in seeing a positive growth rate given that China is the largest automotive market, fueled by the manufacturing capabilities of countries like Japan, South Korea, and emerging economies like India.
Fleet companies play a critical role in this developing lifecycle. Many automakers are tying up with local ride hailing companies to deploy their vehicles in the fleet. In April 2021, Volvo Cars and DiDi Autonomous Driving signed a strategic collaboration agreement on autonomous vehicles for DiDi’s self-driving test fleet.
The huge potential in this technology has also raised the interest of several hardware and software companies for partnerships and collaboration. In early 2021, automotive technology companies Veoneer Inc. and Qualcomm Technologies Inc. signed an agreement to collaborate on the delivery of scalable Advanced Driver Assistance Systems (ADAS) and collaborative and Autonomous Driving (AD) solutions. Other significant collaborations include Volvo Group and NVIDIA who will jointly develop the decision-making system of autonomous commercial vehicles and machines. Aurora’s strategic collaboration with Toyota and Denso will build and deploy self-driving cars on a large scale. Another significant development includes Baidu receiving permit from the California Department of Motor Vehicles (DMV) to test driverless vehicles on public roads in the state.
Industries likely to benefit from the EV-AV shift
It is assumed that a shift from level 1 to level 5 of AVs will ensure a huge reduction in global traffic fatalities. The combined technologies of EV (electric vehicles) and AVs means a far cleaner environment, reduced air pollution, and a significantly lower rate of accidents and road congestion since the AVs will be networked and connected to the traffic management systems and can plan the speed and routes accordingly. This will save countless hours of commute and the value of such developments is virtually unquantifiable.
The very nature of vehicle ownership could change as well, where resources can be allocated to a more “use-when-you-need-the- AV-service-and-pay” model. Such a model reinforces the ride-sharing market’s existence and growth of existing ride sharing companies. In addition, savings on fuel and maintenance from the EV engine coupled with AV technology allows for higher utilization, and this will bring down transportation costs.
While the movement to EV and AVs can have a far reaching impact across the global economy, some industry segments are envisaged to benefit more with this trend and adoption. These include,
- Autonomous vehicle technology and service companies, which consist of both hardware and software developers, such as those involved in sensors, mapping, artificial intelligence, advanced driver assistance systems, ride-share platforms, and network-connected services for transport.
- Electric vehicle producers, including those involved in fully electric and hybrid vehicles.
- Producers of components for electric/hybrid vehicles, including makers of lithium-ion batteries and fuel cells.
- Raw material producers for electric/hybrid vehicle, including miners of lithium, cobalt, and other key resources.
Risks and challenges in the adoption of EV and AV technologies
Despite the potential benefits, the rapid pace at which the adoption of EV and AV technologies are transitioning could lead to job displacement in the transportation segment – both on the manufacturing and delivery side. Fleet drivers and the driving community could face job losses in a driverless world.
Cybersecurity risks have posed challenges that can potentially hinder the growth of the autonomous cars market. The risks of hacking into the technology and taking control of the AV continues. Unless a foolproof cybersecurity plan to keep both the vehicles and their passengers safe is not rolled out, there will be resistance to full adoption.
A recent study conducted by the American Automobile Association (AAA) found that only 16% of respondents would trust a self-driving car. Customers are currently skeptical about driving a fully autonomous car in all situations and weather conditions without the need to intervene. The confidence of the AV to be able to self-drive in unpredictable conditions and dynamic situations posed by weather and humans will need to be tested and proven.
In addition, applicable laws and regulations of the country, region and regulatory compliances, insurance coverage etc. will also govern the potential adoption globally.
Do autonomous vehicles have a future?
The autonomous vehicles of the future will do more than move humans around. One major area of impact is the full automation of the delivery and shipping industry. In the United States, this year was significant when a company received the first federal safety approval for an autonomous vehicle designed to deliver groceries.
The estimated timeline for the commercialized use of autonomous cars has been extended owing to certain setbacks in the final years of the past decade leading to speculations that level 5 autonomous vehicles might be arriving later than expected. As a result, low-speed autonomous vehicles designed for short trips will be the first autonomous vehicles to be used widely. However, despite several challenges, analysts and industry experts believe that level 5 autonomy could be closer than we thought.