The race to be the first to deploy autonomous vehicles is on among carmakers, emerging startups, and tech giants. Amid this constant news cycle of deals and drama, the purpose of all of it can get lost — or at least a bit muddied. What exactly are these companies racing for?
A $7 trillion annual revenue stream, according to a study released Thursday by Intel. The companies that don’t prepare for self-driving risk failure or extinction, Intel says. The report also finds that over half a million lives could be saved by self-driving over just one decade.
The study, prepared by Strategy Analytics, predicts autonomous vehicles will create a massive economic opportunity that will scale from $800 billion in 2035 (the base year of the study) to $7 trillion by 2050. An estimated 585,000 lives could be saved due to autonomous vehicles between 2035 and 2045, the study predicts.
By 2050, business use of mobility as a service will generate about $3 trillion in revenue
This “passenger economy,” as Intel is calling it, includes the value of the products and services derived from fully autonomous vehicles as well as indirect savings such as time.
This is hardly the first attempt to place value on autonomous vehicles, nor will it be the last. However, Intel’s study offers a few interesting predictions for autonomous vehicles and how a combination of mobile connectivity, population density in cities, traffic congestion and subsequent regulation, and the rise of on-demand ride-hailing and car-sharing services will be the catalysts in this new economic era.
Of course, Intel has a vested interest in rosy predictions about the future of autonomous transportation. The chipmaker has promised to spend $250 million over the next two years to develop self-driving technology, and recently acquired Jerusalem-based auto vision company Mobileye for an eye-popping $15 billion. And Intel is working with BMW to put self-driving cars on the road later this year. So when Intel pays for a study that predicts self-driving cars will cause cash to rain from the sky, it should be seen as equal parts industry analysis and wishful thinking.
Autonomous technology will drive change across a range of industries, the study predicts, the first green shoots of which will appear in the business-to-business sector. These autonomous vehicles will first appear in developed markets and will reinvent the package delivery and long-haul transportation sectors, says Strategy Analytics president Harvey Cohen, who co-authored the study. This will relieve driver shortages, a chronic problem in the industry, and account for two-thirds of initial projected revenues.
One of the bolder predictions is that public transportation as we know it today — trains, subways, light rails, and buses — will be supplanted, or at least radically changed, by the rise of on-demand autonomous vehicle fleets.
People will flock to suburbs as population density rises in city
The study argues that people will flock to suburbs as population density rises in city centers, pushing commute times higher and “outstripping the ability of public transport infrastructure to fully meet consumer mobility needs.”
The pressures of mounting traffic congestion and the correlated emissions will drive regulators to include autonomous vehicles as a part of their larger public transportation plans. Some cities may choose to own the vehicle networks not unlike existing public transportation, the study says.
The bulk of the revenue generated in the new economy will be driven by this “mobility-as-a-service.”
By 2050, business use of mobility as a service will generate about $3 trillion in revenues, or 43 percent of the total passenger economy. Consumer use will account for $3.7 trillion, or 53 percent, the study predicts.
The remaining $200 billion in revenue (of the $7 trillion total) will be generated by new applications and services as driverless vehicle services expand. A key opportunity will be how to capitalize on all of this saved time people will have once they no longer have to drive a car.
Vehicles could become “experience pods”
Self-driving vehicles are expected to free more than 250 million hours of consumers’ commuting time per year in the most congested cities in the world, the study says. That’s a lot of time that could be filled with streaming video, news, and other content delivered to a captured audience.
It could also change the way cars are used. Vehicles could become “experience pods,” places where people can have their hair styled and cut, conduct a meeting, or receive a health screening.
Keep in mind, that this reimagined future doesn’t mean people will necessarily spend less time in cars. One of the great promises of self-driving cars is a reduction in congestion because these vehicles will be able share real-time traffic data and optimize tasks like finding parking.
However, in a more densely populated world, where cities rely on shared autonomous vehicles for public transit, there will be more traffic than ever before. The question is: how do people want to spend their time?