Autonomous driving creates billion-dollar market
Autonomous driving will change the automotive industry fundamentally, the consultancy finds – be it through new usage models like "mobility on demand" or through innovative technologies. In their study "Autonomous Driving", the Roland Berger experts express their belief that by 2030 cars will be capable of driving without interaction from the side of the driver. This will result in a huge market potential for the entire automotive value chain.
In detail, the study estimates the value of hardware components for autonomous driving will have a value of $30 to 40 billion of sales. Included in these figures are sensors, cameras, communications systems and other electronic devices like ECUs. Another $10 to 20 billion can be generated through the advanced software that makes act autonomously. According to Wolfgang Bernhart, Senior Partner at Roland Berger, autonomous driving initially will be introduced gradually, but after 2030 it will cause a "real revolution" in the industry. "That’s why carmakers should now start to consider which role they intend to play in this market and align their business model accordingly."
Today’s driver assistant systems like adaptive cruise control, congestion assistant or parking assistant will further evolve, enabling highly automated driving on motorways by 2020, within cities by 2025. By 2030, driverless vehicles will be commercially available that can be sent to a destination selected by the user.
Though many technological hurdles are already taken, carmakers still are facing significant challenges. For instance, autonomous driving requires the development of specific sensors, cameras and radar systems. These components can be manufactured either by large suppliers or by the automotive OEMs themselves. The development of the software solutions required for autonomous driving however is a more complex challenge. With algorithm that, for example, enable vehicles to decide whether to stop or to go by analysing the behaviour of surrounding traffic participants, OEMs as well as traditional suppliers enter unfathomed territory. They thus have to decide whether they develop these functions themselves – or whether they cooperate or even acquire technology companies that possess the respective expertise. In particular, the automotive industry will have to invest heavily into the field of machine learning – a technology currently mostly dominated by large Internet groups.
Since in highly automated vehicles many disparate functions will be combined in one central controller, the supply chain will see massive shifting. The Roland Berger study recommends that large system supplier (like Continental, Bosch, ZF, or TRW – although the study does not quote any names) should develop these software technologies in house or acquire by selected takeovers. However, the high investment need related to these project will lead to a market consolidation. In the long run, only three to four vendors will prevail in this market, warns Roland Berger.
Small suppliers already involved in the development of selected assistant systems will be forced to refocus the business, for instance by offering cost-effective assistant systems for emerging markets. Suppliers with focus on technology innovations could expand their leadership position by adopting specific software technologies such as neuronal networks to enable themselves to supply cost-effective solutions worldwide.
Mobility on demand solutions, based on autonomously driving systems are another challenge that likely will shake up the automobile market. For instance, automated taxis could pick up their passengers wherever they are; rental vehicles could autonomously drive up to the customers eliminating the necessity to pick them up at the branch office. This trend will greatly affect the vehicle design. Roland Berger considers four scenarios possible:
- Scenario 1: Traditional carmakers and suppliers jointly develop the required technological building blocks; OEMs offer specific mobility solutions. In this case, the business model does not change significantly.
- Scenario 2: New mobility suppliers prevail in this market. Several large automotive OEMs and suppliers provide the software solutions necessary for the complex automated decision-making during the ride. In this case, the economies of scale will strengthen the market positions of these vendors; smaller competitors will be crowded out.
- Scenario 3: Carmakers will dominate the market for mobility solutions and leave the development of specific software to large technology groups. This will result in a situation where a few software vendors can control market prices; the OEM’s margins will come under pressure; their competitiveness will drop.
- Scenario 4: Providers of innovative mobility solutions dominate the product spectrum; technology providers supply the related software. Traditional OEMs and suppliers alike significantly lose market share.
"The analysis of these scenarios highlights chances and risks for the industry", comments Bernhart. "In the light of these scenarios, OEMs and suppliers should define early the role the intend to play in these promising markets. Only with a well-defined strategy and a sophisticated business model they will be able to benefit from the market chances in automated driving."
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