Are Autonomous Vehicles the Key to Electrification?

 In EV Industry

The world of autonomous vehicles (AVs) are on the horizon, a noticeable discussion is taking place around the impact of jobs, the economy, what happens in the event of a crash, and how ancillary markets will capitalize on the time spent driving. One thing is certain, AVs are the future of the global transport industry.

Auto-manufacturers have made sizeable investments in research and development of autonomous technology, and in some cases teamed up with automation technology companies best placed to bring AVs to market.

In February this year, Ford announced a $1 billion investment over a five-year period into autonomous technology, furthermore, committing to a driverless fleet by 2021. Similarly, BMW has promised the production of AVs by 2021, and Audi has teamed up with Nvidia to bring AVs to market by 2020. General Motors have made a number of investments, including that of Lyft (a ride-hailing company) for $500 million and Cruise Automation (autonomous technology start-up) for $581 million in anticipation of AVs.

Extensive testing of AVs is taking place, most noticeably by Google’s autonomous car project, which became Waymo in 2016. Their program has over 3 million self-driving miles in the US under its belt, making over 25,000 miles a week. In addition, Waymo early rider program is on trial, it allows ‘early riders’ to use autonomous vehicles to go to the places you would frequently visit such as school or work. Uber has also been trialing their autonomous technology on the roads of Pittsburgh since last September.

Google self driving vehicleThere are a number of reasons why auto-manufacturers and technology companies are committed to the mass deployment of AVs. While it is still difficult to know the full extent of AVs, many imply the benefits will far outweigh the drawbacks.

Here are three ways in which AVs will advance the current transportation network. The first is road safety, some ninety percent of road incidents are due to human error and therefore replacing the human element by computers should drastically improve road safety. Second, traffic flows and fuel efficiency will improve, a network of AVs will have the ability to drive in closer proximity, and, ride-hailing could reduce the need for road space considerably. Furthermore, AVs are designed to optimize efficiency in acceleration and braking, according to McKinsey, the adoption of autonomous cars could reduce CO2 emissions produced by cars by as much as 300 million tons per year. Finally, fully autonomous vehicles will increase the free time for drivers, allowing them to engage in other activity.

Electrification plays a vital role in autonomous connected vehicles, not only do electric vehicles serve regulatory pressures towards meeting emissions targets, it is also key to providing the autonomous vehicles of the future.

Electric and autonomous vehicles are often discussed in parallel, mobility-as-a-service and ride-hailing companies focused on developing AVs see electric vehicles (EVs) as easier to maintain because of the less moving parts an EV has, in comparison to an internal combustion vehicle. It is also considered that battery-powered EVs (which are currently the mainstream power source of EVs) will power the connected vehicles onboard technology.

Auto manufacturers are currently focused on building fully autonomous connected vehicles, with the ambition to serve in a network of cars that no longer require human input. Autonomous technology and connectivity are intertwined, as a result, this will create a new technological dynamic to vehicle transportation and potential new revenue streams.

If drivers are now deemed as customers, ancillary markets are likely to be created to exploit this potential. A recent study from Strategy Analytics and Intel, calls this market the ‘passenger economy’ that is estimated to be worth $7 trillion by 2050.

Intel estimates this new revenue will come from three primary areas. Mobility-as-a-service is the first, worth $3.7 billion, $2.9 trillion from business-to-business mobility-as-a-service, this includes freight transportation and autonomous delivery services. Finally, $203 billion from pilotless vehicle services, this area requires imagination, it could be anything from mobile restaurants and coffee houses to mobile entertainment services.

We know that autonomous technology is backed by industry to be the next breakthrough in the passenger vehicle market. The benefits of mass deployment are extremely attractive not only to the industry through new revenue streams, but also to consumers with safety, less time having to drive and policymakers meeting emission targets.

Electrification is driving the commercial viability of AVs, powering the connective and autonomous technology, but also provides a pathway towards a sustainable, low/zero emission transport network. Tesla recently announced that they are 2 years away from a fully autonomous vehicle without any human assistance, as testing boundaries expand and technology continues to rapidly develop, the age of autonomy in transport may be closer than currently anticipated.

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