Autonomous Vehicles (AVs) Represent A Major Innovation For The Automotive Industry

Autonomous vehicles (AVs) represent a major innovation for the automotive industry, but their potential impact with respect to timing, uptake, and penetration remains hazy. While high levels of uncertainty currently surround the issue, the ultimate role that AVs could play regarding the economy, mobility, and society as a whole could be profound. In an effort to look beyond today’s rapidly changing predictions on AV penetration, we interviewed more than 30 experts across Europe, the United States, and Asia and combined these findings with our insights to arrive at ten thought-provoking potential implications of self-driving cars.

The widespread use of AVs could profoundly affect a variety of industry sectors. To explore these implications in depth, we focused on three time horizons of AV diffusion: before such vehicles are commercially available to individual buyers, when they are in the early stage of adoption, and when they become the primary means of transport.

1. Industrial fleets lead the way.

While it’s unlikely that any on-road vehicles will feature “fully autonomous” drive technology in the short term (for instance, by 2020–22), AVs are already a reality in selected applications that feature controlled environments, such as mining and farming.

2. Car OEMs face a decision.

Automakers worldwide will likely define and communicate their strategic position on AVs in the next two to three years.

3. New mobility models emerge.

While OEMs are developing autonomous vehicles, a variety of other transport-mobility innovations are already hitting the road. Many of these take the form of pay-per-use models such as car sharing, carpooling, “e-hailing” taxi alternatives, and peer-to-peer car rentals.

4. The car-service landscape changes.

The proliferation of AVs could represent an opportunity for car OEMs. As of 2014, for example, roughly 80 percent of the car-service shops in Germany were “independent” from OEMs.

5. Car insurers might shift their business model.

Car insurers have always provided consumer coverage in the event of accidents caused by human error. With driverless vehicles, auto insurers might shift the core of their business model, focusing mainly on insuring car manufacturers from liabilities from technical failure of their AVs, as opposed to protecting private customers from risks associated with human error in accidents.

6. Companies could reshape their supply chains.

AV technologies could help to optimize the industry supply chains and logistics operations of the future, as players employ automation to increase efficiency and flexibility.

7. Drivers have more time for everything.

AVs could free as much as 50 minutes a day for users, who will be able to spend traveling time working, relaxing, or accessing entertainment. The time saved by commuters every day might add up globally to a mind-blowing one billion hours—equivalent to twice the time it took to build the Great Pyramid of Giza.

8. Parking becomes easier.

AVs could change the mobility behavior of consumers, potentially reducing the need for parking space in the United States by more than 5.7 billion square meters. Multiple factors would contribute to the reduction in parking infrastructure.

9. Accident rates drop.

By midcentury, the penetration of AVs and other ADAS could ultimately cause vehicle crashes in the United States to fall from second to ninth place in terms of their lethality ranking among accident types. Today, car crashes have an enormous impact on the US economy.

10. AVs accelerate robotics development for consumer applications.

The broad penetration of AVs will likely accelerate the development of robotics for consumer applications (including humanoid robots), since the two share many technologies.

Published in partnership with McKinsey & Company.