A study by Boston Consulting Group (BCG) forecasts that by 2030 some 25% of miles driven in the US could be in shared self-driving electric cars.
The study suggests that the convergence of three trends – ride sharing, autonomous drive and vehicle electrification – will transform the automotive industry.
The BCG study says that shared autonomous electric vehicles will offer consumers in large cities the lowest-cost, most convenient form of transportation.
Due to their ability to cut travel costs by 60%, shared autonomous electric vehicles (SAEVs) could shift about 25% of miles travelled from private automobiles, “creating enormous benefits for consumers as well as causing major disruption to the automotive industry,” BCG says.
While total vehicle demand will only be affected slightly, by 2030 more than 5 million conventional cars per year could be replaced by a combination of fully autonomous electric vehicles for urban fleets and partially autonomous cars for personal use, BCG’s analysis suggests. Cities will benefit from less congestion and cleaner air, but could be disadvantaged by falling ridership on public transit, fear of which could result in some cities proactively trying to regulate the number of SAEVs on the road.
“Such an evolution in mobility is no longer a fantasy. The technology exists and our research shows that many consumers will embrace it,” said Brian Collie, a Chicago-based partner who leads BCG’s automotive practice in North America. “Yet few players are taking the bold steps needed to position themselves to thrive in this not-too-distant future. The time to act is now.”
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SAEV fleets would save time, money and lives. BCG maintains. By using SAEVs, a typical Chicagoan who owns a car and drives 10,000 miles a year could cut the cost of travel from around $1.20 per mile to around 50 cents per mile. Over the course of a year, that could put more than $7,000 in that driver’s pocket – effectively doubling consumer discretionary income, BCG’s analysis suggests.
BCG’s ‘conservative estimate’ is that 23% to 26% of miles driven in the United States, or about 800 billion to 925 billion miles, could be travelled in SAEVs by 2030. The shift to SAEVs, which would be gradual and would begin by the early 2020s, ‘would likely occur in cities with more than 1 million people, where there is sufficient demand to keep fleet utilisation high and there are significant pain points associated with private vehicle ownership (expensive insurance, difficulty finding parking, and congestion)’.
Moreover, BCG’s study says that adoption could be even faster and more widespread if innovations in technology and pricing models reduce costs further for consumers’. Innovations could include radically different vehicle designs (such as driverless pods), new tailored services (such as pooled ride sharing), and new revenue streams (such as in-vehicle advertising). At a lower price point, SAEV service might be attractive in more mid-size cities (with populations of 500,000 to 1 million).
Nonetheless, BCG acknowledges that ‘significant hurdles remain’ and that major technical and infrastructure challenges must be solved. BCG concludes that SAEVs are unlikely to be economically viable in small cities and rural areas. And even in larger cities, their survey findings suggest that many consumers remain sceptical of the technology or are unwilling to give up the many conveniences and benefits of private vehicle ownership.
The study also says that moving up to a quarter of all miles driven would have massive impact, not only on household economics and lifestyles, but also on society as a whole, urban planning, the automotive industry, and key supporting industries such as energy, finance, and insurance.
Automakers and parts suppliers ‘would face the most profound challenge to their business models in a century’. The study suggests that while total vehicle demand isn’t likely to change materially, the types of cars required will be vastly different. BCG estimates that in 2030, a total of 4.7 million autonomous electric vehicles will replace 5.1 million conventional autos sold in the US.
Additional effects would include a sharp drop in fuel demand. “The age of shared autonomous electric vehicles is upon us and now is the time for automakers, suppliers, and cities to begin taking the bold steps necessary to thrive in this rapidly changing world,” said Justin Rose, a Chicago-based partner at BCG.
“Companies need to deconstruct and rebuild business models, develop new capabilities, create new sources of sustainable advantage, and shift assets and talent to new purposes – or risk becoming irrelevant. As with any great disruption, this transition will be risky and extremely challenging, particularly in the face of near-term investor expectations of customer demands.”
“The automotive industry is on the brink of a major transformation, and it’ll be here faster than people realize,” added Rose. “For millions of Americans living in large cities, the next vehicle they purchase may be the last car they ever own.”