Fourth Industrial Revolution

Which trends are driving the autonomous vehicles industry?

An autonomous vehicle by Silicon Valley based maker Nuro is seen in this undated handout image received by Reuters on November 1, 2021.

An autonomous vehicle by Silicon Valley-based robotics company Nuro. Image: REUTERS.

Ran Laviv
Fellow, Centre for the Fourth Industrial Revolution & Director, Innovation and Entrepreneurial Affairs, Israel Government
Maya Azaria
Lead, Automotive and Autonomous Mobility, Centre for the Fourth Industrial Revolution, Israel
Vandana Menon
Lead, Government Affairs, Centre for Fourth Industrial Revolution, World Economic Forum, Geneva
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  • The Autonomous Vehicle (AV) industry has seen unprecedented levels of technological advancement.
  • Regulators around the world have been tasked with creating policy and legislative frameworks for this fast-moving industry.
  • We outline the latest trends to consider when developing mobility policies as the industry works towards post-pandemic recovery.

The transformational changes of mobility that have inspired academic scholars and fiction writers alike are steadily progressing to become part of our reality. The Autonomous Vehicle (AV) industry’s rapid development has encouraged regulators around the world to introduce policy frameworks and legislation to enable the safe experimentation and development of the technology. As they navigate this unprecedented pace of technological advancement, we reviewed and mapped the latest developments on the AV industry post-pandemic.

Have you read?

Here are five key global trends of the AV industry that need to be considered while developing mobility policies in post-pandemic recovery efforts.

1. Market is shifting from robo-taxis to automated trucks and delivery vehicles

Increasingly, companies have begun to pivot their development and resourcing efforts towards delivery vehicles and automated trucks amid difficulties in commercializing Mobility as a Service (MaaS). The vision of go-anywhere robo-taxis has proved to be more challenging than expected, caused by market demand and technological hurdles. The COVID-19 pandemic has further exacerbated this with a sharp decrease in the demand for ride-sharing services due to social distancing requirements and reallocation of road space and modal priority, in favour of pedestrians and cyclists.

The AV industry is going through an “autonomous disillusionment” after suffering setbacks and delays, causing investors to search for more profitable avenues. While investors are still interested in autonomy, the focus has shifted towards practical services such as grocery delivery and restricting autonomous functions only for highways.

Autonomous vehicle investment. Source: Alixpartners/FT.
Autonomous vehicle investment. Source: Alixpartners/FT.

The trend reversal is also visible in companies like Waymo (Waymo Via) and Aurora, who are developing separate freight trucks production and testing them in Arizona and California in the US.

2. Increase in deployment in dense urban cities

While most of the current pilots are done in suburban neighbourhoods, the success of the AV industry’s future is dependent on deploying last-mile MaaS driverless operations in dense urban areas like New York, San Francisco, Tel Aviv, London, or Beijing. Most of the current pilots are limited to expansive urban landscapes, like in Phoenix Arizona or the Bay Area (excluding San Francisco), that allow easier testing conditions, and the ability to cover longer milage. However, suburban areas alone cannot maintain a profitable AV market due to limited demand and lower economic incentives.

Companies, therefore, are competing to be the first to deploy commercial services in one of the dense and big cities. For instance, Cruise, Zoox and Waymo have focused their testing on the busy streets of San Francisco. Mobileye announced testing in New York City and are planning to operate a driverless commercial on-demand service in the streets of Tel Aviv. Furthermore, firms like AutoX, Baidu and Didi Chuxing are accelerating their testing through cities in China.

3. No company has yet reached large scale commercialization

At the time of publication, estimations state that widespread deployment of autonomous driving systems with no safety driver on board will take at least a decade to come to fruition. Expansion of AVs will likely be gradual and will happen region-by-region in specific categories of transportation and in wide variations in availability across the world.

For the time being, there are few examples of smaller-scale commercial adoption. Waymo One is one of the only commercial ride-hailing services that offers fully autonomous rides in Phoenix Arizona in the US. Cruise is also to start testing commercial ride-hailing services in San Francisco in the near future. Another company called Nuro are running driverless testing on California’s public roads, paving the way for the rollout of statewide commercial operations.

4. Collaboration and consolidation are sweeping the AV industry

Autonomous vehicles are a complex, capital intensive technology and demand funds and investments in continuous R&D. COVID-19 has amplified this reality while making the feasibility of shared autonomous mobility solutions unclear. Lack of funds from big investors along with the unforeseen future and technological hurdles have thus led to greater acquisition deals, new partnerships, and consortiums.

Examples of this include the acquisition of Zoox by Amazon, Uber selling its AV division to Aurora and Toyota’s purchase of Lyft’s autonomous vehicle division. The new “Autonomous Vehicle Computing Consortium” (AVCC) includes Arm, Bosch, Continental, GM, Toyota, Nvidia, NXP and Denso, collecting top automakers along with some of the leading chipmakers and tier 1 suppliers in automotive.

5. Need for a harmonized approach for data sharing between diverse stakeholders

Mobility companies that have substantial data from testing capabilities, operations, and customer behaviours are often averse to sharing it with other stakeholders for numerous reasons such as concerns on privacy, cybersecurity, and maintaining a competitive advantage. However, such data when merged and analyzed could create significant value for the entire ecosystem. Companies, therefore, need to be sufficiently incentivized to share data in a manner that justifies the resource required to do so and outweighs perceived risks.

Sustainable Mobility: Policy Making for Data Sharing. Source: Sustainable Mobility for All.
Sustainable Mobility: Policy Making for Data Sharing. Source: Sustainable Mobility for All.

To enable a harmonized approach to data standards adoption, it is not only important to develop a set of rules, but they also need to be understood, accepted and implemented by the industry. The later part on wide-spread data standard adoption is often hindered by obstacles such as voluntary adoption not reaching critical mass due to competitive market forces and misaligned interests.

However, in promising illustrations, firms like Waymo, Lyft and Argo AI have rolled out their open-source datasets, followed by the Ford Autonomous Vehicle Dataset and Google’s open-sourced Android Automotive OS, among others.

What’s next for the AV industry?

The effects of the pandemic on mobility also present an opportunity to realize the ambitious vision of sustainable and inclusive urban mobility. To achieve this, it is essential to coordinated efforts between the private sector and governments across the local and federal levels to develop strategies that maximize benefits. We see this effort being undertaken globally with one of the latest additions being Israel.

Israel has completed the first step in approving its new legislation for the trials and operations of driverless autonomous vehicles on public roads. Israel is home to $35 billion worth of mobility innovations that are reshaping the global industry, with over 600 mobility-related startups. C4IR Israel, backed by the World Economic Forum and the Israel Innovation Authority, is supporting the Israeli Ministry of Transportation in connecting with global stakeholders from around the world to better understand the needs and challenges of the industry. It also helps in creating an agile and enabling regulatory framework that enables Israel to be an attractive destination for trials and operations of autonomous vehicles from all around the world.

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