Skip to main content

What will a driverless future actually look like?


There is a growing consensus that autonomous vehicles (AVs) will soon be a reality. The debate today centers not on whether, but how soon, AVs will be commonplace on our roads. But for all the buzz surrounding AVs, many details about what a driverless future will look like remain unclear.
Which business models will work best for the commercialization of AVs? Which AV usage models will be most appealing for consumers? Which companies are best positioned to win in this new market?
These are big questions, and no certain answers can be given at this stage. Nonetheless, it is valuable to reflect, in a concrete way, on how this transformative technology might develop. This article will present some conjectures.

The end of private car ownership?

At a high level, two possible paradigms seem most likely for how society will use AVs. The first is private AV ownership. Under this model, individuals or families would continue to own their own vehicles and use them to get around. As the cars would be self-driving, exciting new possibilities exist for their use.
Individuals could be more productive while in transit. Children, the handicapped, the elderly and others not previously able to drive themselves could commute alone. People could earn supplemental income by sending their cars, when otherwise not in use, to transport other people or goods (a future version of on-demand services like Uber or Instacart).
This option would, in a way, be the closest thing to a continuation of the current status quo. Little would have to change about carmakers’ core business models: individual consumers would still make purchasing decisions and would own and operate their own vehicles.
Many different types of companies will succeed in and add value to the autonomous vehicle space in different ways.
The second paradigm for AV use represents a more radical reconceptualization of how people get around in society. Under this model, a shared fleet of autonomous vehicles would exist that individuals could summon on demand to get from Point A to Point B. After dropping off one passenger, the vehicle could then pick up and transport the next passenger. Individuals would have no need to own their own cars; rather, they would receive mobility “as a service.”
There are many details about a “mobility as a service” model that are intriguing to consider. The most straightforward version of this model is one in which individuals summon AVs on a one-off basis when they need to get somewhere, paying per ride or per mile — effectively, a driverless version of how Uber or Lyft work today.
It is also possible, however, to imagine the development of more sophisticated subscription models. Under a subscription model, individuals would pay a flat fee on a monthly or annual basis for unlimited access to a given fleet of vehicles, to be used whenever they need a ride — loosely analogous to a SaaS model.
One interesting question is the amount of segmentation that would develop among subscription offerings. It seems likely that, as with most other consumer products, a wide range of AV subscription types would become available that offer different benefits and features depending on price. These differently priced subscription offerings could vary in terms of the types of vehicles in the fleet, the average required wait time for a ride, the electronics and other features available inside the vehicles and so forth.
The issue of segmentation closely ties to the equally important question of which player or players would own and operate these AV fleets. One possibility is that auto manufacturers — at least those that choose to enter the AV market — could offer subscriptions to fleets consisting entirely of their vehicles. Thus, as an example, one could choose to subscribe to Ford’s AV fleet in a given city for a certain rate, or alternatively to pay more to subscribe to Mercedes’ fleet.
Alternatively, these shared AV fleets might be operated not by the carmakers themselves but rather by fleet providers that aggregate various makes of vehicles. To create a profitable role for themselves in the market, these providers would have to add value to the experience in some way beyond vehicle manufacture (e.g. sophisticated mapping or passenger-matching algorithms). One could speculate that Uber, which recently has invested heavily in autonomous technology, envisions itself playing a role along these lines.
One last issue worth contemplating regarding future AV use is the optimal size and capacity of vehicles. The majority of drives in the U.S. today are solo trips, meaning that vehicle space is significantly underutilized and fuel usage is needlessly high. It is statistically rare that all five seats in a standard sedan (much less all eight seats in an SUV) are in use.
Autonomous vehicles’ impact on the way we live will be nothing short of transformative.
Given this, it is plausible to imagine single-occupancy pods making up a significant portion of future AV fleets — thus increasing fuel efficiency, economizing on materials costs and taking up less space on roads. Perhaps vehicles with a wide range of different capacities (from single-occupancy pods all the way to small buses that can fit 20 or 30 people) will all exist on the road, in proportion to their demand, and customers can indicate their desired vehicle size when summoning a car.

Winner take all?

In speculating about these possible AV business and usage models, it is important to keep in mind that this market will not necessarily be “winner take all.” It is altogether possible that more than one of these models — and others that have not yet even been imagined — will all coexist profitably in the market.
One need look no further than the current transportation market for an instructive analogy. Today, people get around in their daily lives in many different ways. Some people own their own cars. Some people rent cars when they need them (either through traditional car rental companies or newer models like Zipcar). Some people get everywhere through ride-sharing services like Uber or Lyft. Some people use public transportation or simply walk. People commonly switch from one of these solutions to another over the course of their lives depending on life’s changing circumstances.
On a similar but broader note, many different types of companies will succeed in and add value to the autonomous vehicle space in different ways. It is highly unlikely that any one company will own the entire end-to-end AV experience (though if any company were to try, a plausible candidate would be Apple and its mysterious Project Titan). Instead, the AV experience is likely to be modularized across many different players.The same will likely be true in the driverless future of tomorrow. For instance, shared fleet models may become prevalent, rendering the concept of private car ownership obsolete for many. At the same time, those who prefer may continue to own and operate their own AVs. Personal transportation is and will continue to be a massive market. There is room for many different models and companies to thrive, and it is unlikely that any one approach will win outright.
For instance, profitable businesses will be built around producing: LIDAR sensors and other physical components for the vehicles; cybersecurity software to keep connected cars safe; high-performance computing chips to power the cars’ decision-making processes; consumer electronics for the cars’ interiors; mapping and geolocation software to enable the car to navigate; and much more. In this sense, AVs should be thought of not as a single new product but rather as an entirely new ecosystem in the economy.

Time will tell

The possibilities laid out above are, of course, speculative. As AVs continue to develop in the coming years, there will be many technology, product and business model advances that surprise us all. One way or another, autonomous vehicles’ impact on the way we live will be nothing short of transformative. It will be an exciting ride.

Comments

Popular posts from this blog

How ad-free subscriptions could solve Facebook

At the core of Facebook’s “well-being” problem is that its business is directly coupled with total time spent on its apps. The more hours you pass on the social network, the more ads you see and click, the more money it earns. That puts its plan to make using Facebook healthier at odds with its finances, restricting how far it’s willing to go to protect us from the harms of over use. The advertising-supported model comes with some big benefits, though. Facebook CEO Mark Zuckerberg has repeatedly said that “We will always keep Facebook a free service for everyone.” Ads lets Facebook remain free for those who don’t want to pay, and more importantly, for those around the world who couldn’t afford to. Ads pay for Facebook to keep the lights on, research and develop new technologies, and profit handsomely in a way that attracts top talent and further investment. More affluent users with more buying power in markets like the US, UK, and Canada command higher ad prices, effectively...

South Korea aims for startup gold

Back in 2011, when South Korea won its longshot bid to host the 2018 Winter Olympics, the country wasn’t widely recognized as a destination for ski and snow lovers. It wasn’t considered much of a tech startup hub either. Fast forward seven years and a lot has changed. For the next 10 days, the eyes of the world will be on the snowy slopes of PyeongChang. Meanwhile, a couple of hours away in Seoul, a burgeoning startup scene is seeing investments multiply, generating exits and even creating a unicorn or two. While South Korea doesn’t get a perfect score as a startup innovation hub, it has established itself as a serious contender. More than half a billion dollars annually has gone to seed through late-stage funding rounds for the past few years. During that time, at least two companies, e-commerce company Coupang and mobile-focused content and commerce company Yello Mobile, have established multi-billion-dollar valuations. To provide a broader picture of how South Korea stacks ...

Trump cites Facebook exec’s comments downplaying Russian ad influence on election

You’d be forgiven for missing Donald Trump’s multiple retweets of Facebook executive Rob Goldman over the weekend. Perhaps you were spending time with family, watching Black Panther or just attempting to forget politics for a moment by ignoring the manic flurry of social media updates from the leader of the free world. But in amongst a deluge of tweets that blamed Democrats for failing to preserve DACA, called out the FBI over the recent school shooting in Florida on the FBI and affectionately referred to a member of congress as “Liddle’ Adam Schiff, the leakin’ monster of no control,” the President cited Facebook’s VP of Ads as evidence against claims that his campaign colluded with Russia. “The Fake News Media never fails,” Trump tweeted over the weekend. “Hard to ignore this fact from the Vice President of Facebook Ads, Rob Goldman!” Trump was citing Goldman’s own Twitter dump over the past week, responding to Special Counsel Robert Mueller’s recent indictment of 13 Russian...

3D printing company New Matter is shutting down this month

Perhaps 2014 wasn’t the ideal time to get into the 3D printing game. After years of hype, the even the biggest names have been struggling to stay afloat. Pasadena startup New Matter is joining the growing list of companies who’ve unsuccessfully made a go at it, announcing that it will be closing up shop by the end of the month. It’s not for lacking of trying — and the company’s MOD-t printer was met with decent reviews when it launched in 2016. In his writeup, John praised the pricing ($300 or $400, depending on where you picked one up) and ease of use, though added cautiously, “you get what you pay for.” Initially funded on Indiegogo, the company went back to the crowdfunding well last year, this time taking to Kickstarter to pay for a Model 2. The project managed to exceed its goal in five days, but New Matter still pulled the plug. The company says it ultimately wanted to go back to the drawing board. “We have always strived to listen closely to our customers’ feedback, and...

Here’s how to keep track of Elon Musk’s Roadster and Starman in space

Elon Musk’s Starman, the mannequin driver of the Tesla Roadster SpaceX launched aboard its Falcon Heavy rocket, is taking a trip around our solar system, in a large elliptical orbit that will bring him relatively close to Mars, the Sun and other heavenly bodies. But how to track the trip, now that the Roadster’s onboard batteries are out of juice and no longer transmitting live footage? Thanks to the work of Ben Pearson, a SpaceX fan and electrical engineer working in the aerospace industry, who created ‘Where is Roadster,’ a website that makes use of JPL Horizons data to track the progress of the Roadster and Starman through space, and to predict its path and let you know when it’ll come close to meeting up with various planets and the Sun. The website tells you the Roadster’s current position, too, as well as its speed and whether it’s moving towards or away from Earth and Mars at any given moment. It’s not officially affiliated with SpaceX or Tesla, but it is something Elon...