New research from The Boston Consulting Group (BCG) has forecast that by 2030, around 25% of the miles driven in the US could take place in shared, self-driving electric vehicles.
The prediction comes in research from BCG, which forecasts that the convergence of three trends – ride sharing, autonomous driving and vehicle electrification – will disrupt the automotive industry but offer big-city dwellers low-cost, convenient transportation.
The consultancy believes that these three trends together represent a far more compelling economic case than they do individually.
“Such an evolution in mobility is no longer a fantasy,” said Brian Collie, who leads BCG’s automotive practice in North America. “The technology exists and our research shows that many consumers will embrace it.
“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.”
BCG forecasts that as shared autonomous electric vehicles (SAEVs) will have the ability to cut travel costs by 60%, around a quarter of miles travelled in private cars could shift to this model by 2030.
The shift is likely to provide enormous benefits for consumers but cause significant disruption for the car industry, according to BCG.
The number of conventional cars that could be replaced each year by a combination of fully autonomous electric vehicles for use in urban fleets and partially autonomous cars for personal use.
Although total vehicle demand will be affected only slightly, by 2030 the shift will see more than 5 million conventional cars being replaced each year by a combination of fully autonomous electric vehicles for use in urban fleets and partially autonomous cars for personal use.
While the shift will mean less congestion and cleaner air, cities could lose out financially as people choose not to travel on public transport, potentially resulting in some trying to restrict the number of SAEVs on the roads.
Shared autonomous electric vehicles likely to be concentrated in large cities
BCG estimates that as journeys shift to SAEVs, between 800 and 925 billion miles could be travelled in the vehicles by 2030.
It predicts that the shift will initially take place in cities with more than 1 million people, where private car ownership involves significant pain points, such as high insurance costs, congestion and difficulty finding parking.
If consumer costs come down as a result of innovative technology and pricing models – such as driverless pods, pooled ride sharing and in-vehicle advertising – this adoption may take place faster and be more widespread, with lower price points making an SAEV service more attractive for mid-sized cities, predicts BCG.
However, there are still major technical and infrastructure challenges to overcome. BCG’s research concludes that SAEVs are unlikely to be economically viable in smaller cities and rural areas, while even in larger cities consumers may be skeptical about driverless technologies or unwilling to give up private vehicle ownership.
BCG acknowledges the massive impact such a shift to SAEVs would have on society, with implications for urban planning, the automotive industry and supporting industries such as energy, finance and insurance.
What will SAEVs mean for automakers and parts suppliers?
According to the research, automakers and parts suppliers would face the most profound challenge to their business models in a century.
Although the findings do not envisage total vehicle demand changing significantly, the types of cars required will be very different, according to the researchers. BCG estimates that in 2030, a total of 4.7 million autonomous electric vehicles will replace 5.1 million conventional cars sold in the US.
The shift could also undermine the current industry business model, opening the market to new competitors. Indeed, BCG predicts that hundreds of billions of dollars worth of industry assets could turn into liabilities.
The relevance of car dealers will decrease as fleets make up a larger share of sales, while aftermarket businesses will be hit by the lower maintenance and accident rates of SAEVs.
However, new businesses will develop to manage urban fleets and provide daily servicing, according to the research.
How will shared autonomous electric vehicles impact cities?
The new model of shared autonomous electric vehicles offers many benefits for the cities in which they will operate – from lower congestion and safer roads to cleaner air and a reduced need for parking space.
But this shift could also see cities struggle to replace public transport revenues as consumers opt for the door-to-door convenience of SAEVs.
Cities can plan for any drop in income by seeking other sources of tax revenue, believes BCG, such as fees on SAEV fleets and trips, and even investment in publicly owned shared vehicle fleets.
Implications for other industries
The consultancy anticipates a sharp drop in fuel demand – an issue it will explore in more detail in a forthcoming study.
BCG also says that the sharp reduction in accidents and injuries from autonomous and semi-autonomous vehicles could “reshape” the car insurance business, leading to potential benefits for technology companies, data providers and electric utilities.
The company warns that businesses facing the shift to shared autonomous electric vehicles need to act to rebuild their business models, develop new capabilities and create new sources of sustainable advantage.
“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, who leads BCG’s digital efforts for industrial goods companies.
“The automotive industry is on the brink of a major transformation, and it’ll be here faster than people realize,” continued Rose.
“For millions of Americans living in large cities, the next vehicle they purchase may be the last car they ever own.”