Segmenting the autonomous vehicle market
There are many ways to look at the emerging autonomous vehicle market landscape. I like to keep my own view of it as simple as possible by breaking it down into three segments.
The segment that grabs the lion’s share of the attention is the one for new-build vehicles. This is of course no surprise given the huge investments that all the world’s auto manufacturers are making into integrating semi-autonomous driver assistance and features into their latest models and developing fully-autonomous vehicles in the future. Then of course there’s Tesla, the big daddy of them all. Despite its miniscule market share, it certainly leads the rest of the industry in terms of consumer perception because of the superior user experience its vehicles deliver.
The new-build market stands at roughly 90 million units, comprising around 70 million passenger cars and 20 million commercial vehicles. While intelligent driver assistance and safety features can generally only be found in higher-end models or sold as add-ons, it’s a reasonable bet that they will become standard over the next decade due to a combination of lower costs, stricter road safety laws, and intense competition. Indeed by 2030, the electronics for myriad driver assistance, safety, engine control, environment, passenger comfort, and infotainment applications will account for 50% of the overall cost of a vehicle — compared to 35% in 2020.
Figuring out the size of the segment for next-generation ADVs (Autonomous Delivery Vehicles) and LSEVs (Low-Speed Electric Vehicles) for last-mile goods delivery and people carrying applications is next-to-impossible at this stage given that it’s still in the nascent stage. However, judging by the large investments being made by major online platforms such as Meituan and Cainiao in China and Amazon in the US in the development of driverless last-mile logistics services, the potential is huge. The dynamic of this segment will also be very different to the traditional auto industry because it will primarily be based on the provision of services rather than individual purchases.
As an additional data point, around 1.75 million LSEVs were manufactured in China in 2017. Given the growing demand for cheap and environmentally-friendly replacements for heavily-polluting tuk tuks in the congested cities of SE Asia, India, and Africa, the growth potential for this new class of vehicles is very exciting. Other opportunities for growth include rural areas underserved by public transportation and urban areas in which the use of traditional cars is banned.
The third and final segment of the market comprises on-the-road vehicles that will require the integration of intelligent driver assistance systems to boost vehicle safety, maneuverability and efficiency — not to mention reducing insurance costs by preventing “cash for crash” scams. This segment is highly-fragmented, covering everything from low-cost dashcams to highly-sophisticated ADAS and Surround View systems for inner city buses and mining rigs. It’s also one that’s ripe with opportunities as governments worldwide roll out ever stricter laws to reduce injuries and fatalities caused by road accidents and businesses and consumers realize the efficiency and safety benefits that these smart new autonomous driving technologies will bring.
Given the massive size of the auto market and the disruptive impact that advances in battery, autonomous driving, and myriad other technologies are having on it, it’s no surprise that so many different companies from multiple industries are targeting it from many different entry points — or that a legion of analysts, journalists, consultants, and sundry other experts are issuing a constant stream of reports examining the implications of this seismic shift not just on the industry itself but also on the global socio-economic fabric.
My goal with these posts is more modest: to share our experiences at VIA as we accelerate the roll-out of our VIA Mobile360 systems and platforms into this incredibly dynamic market.