The State of the Autonomous Vehicles Industry – Q4 2018

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The autonomous vehicle industry is far from spinning its wheels. If anything, it continues to gain traction and present a clearer picture of how this technology will transform one of the largest global industries. In two ReadWrite webinars on the state of the autonomous vehicle industry, mobility expert Marc Amblard, Founder and Managing Director of Orsay Consulting, and Kailash Suresh, Research Analyst for ReadWrite, shared their insights on how far the autonomous vehicle industry has come and where it is headed in the near future.  

Autonomous vehicle technology is not mature yet.

There is a long way to go before fully autonomous vehicles (AV) are available for all. It’s understandable considering the complexity of the task on hand. There are six Levels of autonomy, progressing from fully human-driven vehicles to full automation. These levels reveal a complex, multi-layered system, including mapping and perception handled by sensors and 3D mapping capability. This is followed by prediction, motion planning, and decision-making, which are done through artificial intelligence. Finally, there are actuators, providing the robotics necessary for autonomy.

Level 1 is now mainstream and being used by many drivers. In Level 1, vehicles offer a single automated function such lane keeping assistance or adaptive speed control.

Level 2 is partial automation with two automated functions, combining steering and speed control in certain condition. This level is only found on few vehicles, such as Cadillac (Super Cruise), Mercedes-Benz (Driver Assistance Systems), Tesla (Autopilot), and Volvo (Pilot Assist).

Only the Audi A8 represents Level 3 (“eyes off”), which is considered high automation. The system can take over from the driving function in certain conditions. However, the driver must be able to re-engage in driving any time. No vehicles exist that represent Level 4 (“mind off”) or Level 5 (“driver off”). These levels offer respectively full automation in certains conditions and full driverless operation, without any pedals or steering wheels.

But, the driving forces are here to make it a reality.

There are numerous drivers and blockers involved in the AV environment. First, safety is a primary driver. In 2017, vehicle accidents led to 4.6 million hospitalizations, over 40,000 deaths, and a economic hit of $414 billion in the US. Of these accidents, 94% are due to human error.

The second driver is operating cost. More Millennials and Gen Z consumers are not interested in owning their own vehicles. Instead, they have opted for shared mobility through services like Uber and Lyft as well as other new rental models. And, with the growth in home delivery services, owning a vehicle may not be as necessary as when consumers did all their own errands. These trends are are significantly lowering

the costs of mobility and therefore the interest in vehicle ownership.

However, there are also some blockers to the advancement of the AV. Primarily, there is a lack of confidence in AVs. This includes a high percentage of people around the world concerned about safety issues. Education and experimentation will be necessary to make people feel comfortable being driven by a “robot”.

Then, a lagging regulatory framework is not keeping up with the technological and societal changes behind AV development. Currently, in the U.S., there are two perspectives in regards to this evolution. These perspectives are creating a stop-and-go/push-pull with regulations and a global scale. There is a wide range of regulatory responses, illustrating the problems being raised by this type of technologies.

The overall autonomous vehicle Landscape is already vibrant.

Even with these blockers, the autonomous vehicle landscape is very healthy and continues to grow and change thanks to startups and enterprises interested in disrupting the industry. Several markets addressing specific aspects of AVs have emerged.

For example, there are hardware companies that offer sensors and other equipment while software companies address localization and mapping, perception, prediction, path planning, simulation, and data collection. From there, applications and analytics companies tackle the data hardware and software have produced. This enables others within the industry to gain insight and help improve the AV algorithms or increase comfort and convenience for occupants.

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Together, these companies have expanded the AV industry, creating economic value and attracting considerable funding. According to the research gathered by Marc Amblard, there are at least 240 companies that specialize in AVs; these employ over 124,000 people. The startups have received $17.7 billion in funding and created eight unicorns. Overall, the AV industry has generated economic value of $111.7 billion, which is as much as the valuation of the entire car industry in the United States.

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The autonomous vehicle industry is moving forward.

Given the amount of technology needed to make a foray into the space, we see two path moving forward:

  1. Consolidation: With the rapid growth in the number of AV-related companies, the next key trend will be segmentation where two primary groups will emerge. These will include AV and mobility businesses. Along with the segmentation, there will be an increase in acquisitions as some AV companies look to bring hardware, software, application, and/or analytics in-house.
  2. Partnering when an acquisition strategy doesn’t work:  More collaborative platforms will appear as part of strategic partnerships that have formed within the industry. From these partnerships, including those between Volvo and Uber, Lyft and Magna, and Toyota and Denso just to name a few, these platforms will address some of the aforementioned blockers by speeding up development and sharing the costs involved.

As the technology matures and market opportunities appear more certain, the valuation of AV startups is expected to rise. The ability to prove what works and define viable solutions will drive interest in these companies, raising their financial value in the eyes of investors and other stakeholders.

There is progressive autonomous vehicle deployment.

With this new landscape, there is now a picture of progressive AV deployment that is emerging in 2018 and beyond. For goods, the progression will be from truck platooning and last-mile delivery to the more commonly used autonomous trucks. For people, the first application of highly automated solutions will be for ride-sharing operation in geo-fenced areas (Level 4). Alphabet’s Waymo is expected to launch such a commercial service before end 2018, and GM Cruise said they will do the same in 2019. In parallel, autonomous shuttles by Navya, EasyMile and May Mobility have started to emerge in several cities.

The next stage of technology development will involve monitoring and understanding the behavior of road users and occupants. This stage is critical for the monitoring of the driver’s awareness until we reach Level 4.  Other key benefits include providing raw data for AV simulators to better predict behaviors so vehicles safely navigate around pedestrians and human drivers, and enhancing comfort and convenience for occupants.

For those within the autonomous vehicle industry and related mobility segments, the current environment, trends, drivers, and blockers present critical challenges as well as an exciting opportunity to be part of the most disruptive change to mobility for the past 130 years.

View the full resolution Autonomous Vehicles landscape.