How automakers can survive the self-driving era

Transportation as we know it would be impossible without the quantum leaps in technology that have taken place over the past centuries. It is undeniable that the next big thing will be autonomous driving, according to a report by A.T. Kearney. With this wave of innovation, traditional players in the automotive industry could wind up in the passenger seat, with new entrants sitting pretty behind the wheel.

But who will take the pole position in the $560 billion autonomous driving race? How can OEMs match consumer needs with autonomous driving solutions, while overcoming skepticism about relinquishing control of the vehicle? How will the market for autonomous driving develop and what will the associated product roadmaps look like? How will government legislation keep pace with new technologies while also addressing questions of liability? Which business models will win in the new industry? What role will partner and competitor ecosystems play in autonomous driving?

To help answer these questions, A.T. Kearney conducted more than 150 interviews with executives at companies around the world who have a strong motivation to make autonomous driving an affordable reality for consumers and for businesses. Its findings reveal crucial insights along the five key questions:

Consumer needs

– The connected consumer prefers an individual lifestyle in a big city environment

– More urbanization results in intermodal mobility; services enabled by mobile devices provide consumers with more flexibility and time

– Car ownership becomes less relevant than car-sharing services and platforms

Market and product roadmaps

– Changing consumer behavior causes a paradigm shift toward mobility as a service and a preference for lavish private transportation

– The market for autonomous driving grows to $560 billion by 20351

– The main product categories around autonomous driving include mobile apps, special equipment, autonomous cars, mobility services, and infrastructure

– Developed and mature markets, including Asian megacities, spearhead market development and a global rollout

Legislation, technology, and liability

– Until 2025, legislation is the main roadblock to autonomous driving

– The most pressing legal issue is accident liability

– Achieving economic savings is the primary reason to drive legislation

Business models

– Autonomous driving threatens the very existence of mid-level automakers as the market develops along three segments: premium, low-cost, and drones

– The industry splits in two—those that manufacture vehicles and those that provide consumer services

– Revenues from pay-per-use services outperform optional equipment revenues from 2025 onward

Partner and competitor ecosystems

– Existing players in the automotive industry collaborate with new entrants to offer value-added services

– Traditional OEMs have the first view on the consumer; the first OEM to build a value-added service network with partners wins the market

A.T. Kearney report says traditional OEMs, new entrants, and disruptors with names like Google, Apple, and Uber, are all making great technological strides in delivering a fully autonomous driving experience.

With momentum on our side, the focus turns to new laws and regulations across jurisdictions. The timing has to be right, otherwise, instead of a self-driving vehicle in every driveway, they will be relegated to test tracks and R&D centers, A.T. Kearney report says.

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