The Fuse

Deloitte: Transition to Autonomy to Occur Quicker Than Expected in Urban Areas

by Matt Piotrowski | September 22, 2016

With the federal government now having provided guidance for the rollout of autonomy, car companies scrambling to adopt the new technology as quickly as possible, and consumers slowly learning the potential benefits of going driverless, a transition to autonomous vehicles is occurring quicker than most expected. How fast until we see their widespread adoption? What will the vehicle mix look like in the next decade? How will regulators and the auto industry, along with technological disruptors, react to setbacks or unforeseen accidents? Who will be the biggest beneficiaries of a shared and driverless society that will likely emerge?

The answers to these questions are still unknowns since we are talking about markets that don’t exist yet. But with developments occurring at dizzying strides in the autonomous space, it’s becoming clearer that the future of mobility will look completely different than today, particularly for urban areas, where penetration of self-driving cars could happen faster than expected as a result of the rise of on-demand and ride-sharing services.

“If shared and autonomous vehicles are adopted as quickly as other technologies (like smartphones, cellphones and the Internet) …significant change will begin within five years and that the market for personal mobility could transform dramatically over the next 25 years.”

In a recently published report from Deloitte on the future of mobility, the authors lay out their vision for how driverless cars may shape the tech and auto industries, entertainment and content providers, advertisers, and consumers themselves. The transformation depends on a whole host of factors, of course, including the acceptance among the public, consumer patterns, and regulatory changes. It’s important to note that Deloitte’s forecasts are “back-of-the-envelope” modeling and don’t include extensive market research, Scott Corwin, one of the report’s authors, told The Fuse. “If autonomous technology follows the adoption rate of other technologies, this is what you’d see with driverless cars,” he said.

Smartphones, cell phones, and the Internet aren’t perfect proxies for extrapolating penetration of autonomy, but they can provide a basis for discussion about what might happen with self-driving technology.

With the auto industry is in the midst of a seismic shift, there are profound implications for the vehicle mix. “If shared and autonomous vehicles are adopted as quickly as other technologies (like smartphones, cellphones and the Internet), our modeling finds that significant change will begin within five years and that the market for personal mobility could transform dramatically over the next 25 years,” say the Deloitte authors.

In their analysis, they forecast vehicle miles travelled (VMT) to rise by as much as 25 percent over the next two and half decades. This bump comes as a result of not only population growth, but also increased access to transportation for those now without it—the young, the elderly, the disabled, and low-income groups.

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The increase in VMT is worrying given that it might lead to greater congestion, pollution, and fuel consumption. On the flip side, since autonomous vehicles are expected to enhance electrification and enable more efficient use of infrastructure, these concerns may be turned on their head.

Shared autonomous vehicles may account for more than half the miles driven in 2040, with personally owned cars of today with a driver behind the wheel making up a relatively modest amount.

Based upon the Deloitte forecast, shared autonomous vehicles may account for more than half the miles driven in 2040, with personally owned cars like those used today with a driver behind the wheel making up a relatively modest amount.

The shift, while profound over time, would occur incrementally. “There are 250 million vehicles in the U.S. now,” said Corwin. “It will take a while for autonomous vehicles to reach maturity.”

Self-driving cars will start off with pilots in certain cities, similar to what is being seen in Pittsburgh currently with Uber, and then expand to full programs if events go smoothly. Then they’ll move to other urban centers, before expanding to the suburbs, and finally becoming a presence in rural areas. Simply put, autonomous vehicles will not roll out at the same pace and the same scale all throughout the country.

Urban areas to see the largest transformations

Deloitte sees the driverless revolution occurring at the fastest pace in urban centers. This makes sense since city populations have already adopted the shared approach with services such as Uber and Lyft, and many consumers see owning a vehicle more of a nuisance than a necessity. Against this backdrop, the vehicle mix in urban areas will be profoundly different than today. One of the biggest questions surrounding autonomous vehicles is how likely and how soon consumers will want to own their own. So far, surveys show that the public is hesitant to embrace the new technology as consumers are skeptical of its benefits and reliability. But the outlook may change drastically if positive experiences in self-driving cars and a better understanding of their conveniences drastically alter attitudes.

Shared autonomous vehicles could account for more than 70 percent of the total of new auto sales in urban areas by 2040.

Based on trends of the recent technological breakthroughs discussed above, Deloitte’s forecast for car sales in urban areas says that shared autonomous vehicles could account for more than 70 percent of the total by 2040. Personally owned cars like today’s and personally owned autonomous vehicles would both amount to 10 percent.

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The changes in mobility and transportation mean stakeholders will have to start thinking about what they mean now, even though the shifts are likely to take some time to fully occur. The rapid changes we’ve seen from smartphones, cell phones, and the Internet won’t necessarily predict what will happen with autonomous vehicles. But developments surrounding the new cars appear to be happening faster than most expected, and they promise to change how we get around.

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