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When an autonomous vehicle becomes a reality, it will allow the current revenue model to evolve, opening up new revenue streams for the product and service providers.
• There is a need to include new levels in SAE defined automation
• The electric vehicle will be the only successful autonomous vehicle in the future
• The first generation autonomous vehicle will operate on a different path
• Government earnings will drop by a huge amount
• The first generation autonomous vehicle will be first commercialized as a taxi service
• Collaboration between ICT and automotive players
• New revenue streams
The future and redefining moment for mobility will be the day when the Autonomous Vehicle is commercialized. Every player in the industry is focusing on sensors and software that can enable a vehicle to provide sensing capabilities. There are many other things which the OEMs are not fully focusing on. This article aims at enabling the existing players and government institutions to rethink about their strategies with respect to autonomous vehicles.
Automation replaces human labor with mechanical and electronic devices. At present, the application which showcases automation are anti-lock braking system, electronic stability control, traction control system, blind spot monitoring, emergency braking assistance and others. According to the Society of Automotive Engineers (SAE), the driving automation system (autonomous vehicle) can be distinguished in 6 levels, that is, from level 0 to level 5. The SAE has defined these levels by keeping in mind the driving scenario and not the vehicle: “level 0 indicates no driving automation; level 1 indicates driver assistance; level 2 indicates partial driving automation such as anti-lock braking system, electronic stability control, traction control system, blind spot monitoring, emergency braking assistance and others; level 3 indicates conditional driving automation; level 4 indicates high driving automation; and level 5 indicates full driving automation.” These 6 levels are not enough to define the entire driving automation system. The SAE has missed the most important point while defining 6 levels — replacing human labor in all instances. One of the most important scenarios where either a driver, passenger, or the third party needs to be involved is while refueling/recharging the vehicle. If the driver or a passenger needs to connect the vehicle to the charging point or align the fuel pipe with the petrol tank, it means the human labor is still intact and the driving system is still not fully autonomous. There is a need to add level 7 to the SAE defined driving automation system, where no human should be involved not just while driving but also while refueling/charging a vehicle. If this point is further omitted, then it will be really difficult to achieve a fully autonomous vehicle without human intervention. The automotive industry is expected to reach a point where no human assistance is required and autonomy is an actual norm. If the assistance finds itself in a pivotal role, then it is not a definite autonomous vehicle.
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Vehicle refueling or recharging is the base for a fully autonomous vehicle. While technical expertise and physical capability can go a long way, these factors are rendered almost useless if the autonomous vehicle is unable to charge itself without human support. In the case of an autonomous vehicle, vehicle refueling is perhaps more important.
All the automotive OEM’s are currently offering ADAS features such as anti-lock braking system, electronic stability control, traction control system, blind spot monitoring, emergency brake assistance and others. Everyone, including Mercedes, Renault, Audi, and Apple is chasing Waymo (Alphabet), in the race to drive the first human-less vehicle. Alphabet has acquired a fleet of Chrysler Pacifica minivans to test its Level 4 driving automation system. The van operates on an ICE engine and needs to be refueled with human assistance. While GM is testing its self-driving capability with the help of electric powertrain, it still needs to be recharged with human assistance. There is a need to identify a solution which will enable the vehicle to refuel or recharge itself. Automo predicts that the first generation of the autonomous vehicles will be commercialized as robot taxis.
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At present, there are no developments in place for autonomous refueling of ICE enabled vehicles, whereas for electric vehicles, Tesla has developed a robotic conductive snake charger which automatically connects with the charging board on the vehicle. If Tesla is able to develop a supercharger that can charge the complete battery within a few minutes, it might help to commercialize the autonomous charging device. But the real breakthrough can be achieved only when the vehicle is capable of charging on the run because the time spent of Level 2 charging device will make the vehicle stationary for a few hours, which will be equivalent to the time not spent on earning money by the fleet owners. Once the first generation autonomous vehicle is commercialized as a robot taxi, uptime will be the most important characteristic, as Level 2 charging device will significantly eat into utilization.
According to the Automo analysis, the first generation autonomous vehicle will not share the same road with human drivers over the next 7 to 10 years. In the first stage of commercialization, mixed traffic is not possible even after the successfully real-world test scenario, as the governments would still be interested to see the operational behavior of the vehicle on a specified road. It will take a certain time for the governments to approve vehicles without drivers on the road with mixed traffic. This will further trigger the new road concept for autonomous vehicles, which will be enabled by dynamic inductive charging, that is, vehicles will be autonomously charged during their regular operations. The robot taxi will provide only an express ride and not home delivery service. This is expected to be an industry norm in the short to medium term. The autonomous vehicle is also expected to fail with mixed traffic because of the challenge in setting up the required infrastructure for charging or identifying new autonomous methodologies to recharge the vehicle.
Governments across the world derive a significant amount of funding from different traffic-related activities such as parking penalties, fuel tax, license registrations, transport-related fees, and others. With the commercialization of autonomous vehicles, these revenue mediums for the government will be soaked up. For developed municipalities, inner city parking contributes to a serious amount of money. In addition, due to the rising demand for EVs and improving fuel economy standards, the demand for fuel will go down and so will the fuel tax. In the medium to long term, more people will opt for shared rides. This will see a fall in driver license registration and vehicle registration fees. Traffic fines will also drop drastically as autonomous vehicles will operate on zero error basis. The huge disruption will be witnessed in city transportation. In the medium to long term, the current level of automation defined by SAE will not act as a benchmark and need to be redefined. Furthermore, governments need to start the thinking process now before their revenue pool starts to dry up in the future.
ICT companies such as Google, Apple, and others have identified the potential in the automotive market by considering the current offerings which can be controlled by software such as anti-lock braking system, electronic stability control, traction control system, blind spot monitoring, emergency braking assistance and others. Thus based on the usage of software in the automotive market, the ICT companies are prepared to take a stake in mobility. But the industry is not yet sure on the complete offerings by the ICT companies. ICT companies could stick to their core business model — connecting people — or they could venture into car manufacturing, mobility services, and others. The recent activities by these companies in the autonomous driving system showcase their significant interest in the mobility market.
If the ICT companies launch a car, it will be a direct competition to the traditional OEMs. But the automotive industry customers always go for the brand and the related product. The customers also want to be sure about the comfort and convenience being provided by that brand before investing their money. According to Automo, brand value will play an important role, and for the ICT companies, it will take a certain time to gain customer trust with respect to manufacturing car hardware, and at the same time, providing comfort and convenience.
Automo expects that in the initial stage, ICT companies will work in cooperation and will not compete with the OEMs in-car hardware manufacturing. The two industries will converge to provide an efficient solution and competition will come into the picture in the medium to long term.
When an autonomous vehicle becomes a reality, it will allow the current revenue model to evolve, opening up new revenue streams for the product and service providers. With the integration of ICT, OEMs will generate revenue from the data. OEMs will witness a huge amount of data and it will be just the first step towards value creation. The companies also need to analyze the raw data to make it sensible and usable for promotional purpose, for an insurance purpose (pay per usage or the way you drive), or for other services. Data will be the key enabler for new revenue opportunities. Furthermore, to monetize the data acquired from the car, the car manufacturers or the OEMs need to employ their own operating system. If the operating system is employed by the third parties, the data value will be realized by the third parties and OEMs will receive the cut of the share and it is also expected that a few important data revenue streams will be lost based on data collection. According to Automo, it is imperative that the OEMs launch their own operating systems or systems to collect data from their respective vehicles.
About Automo: Automo’s global consulting team is exclusively positioned to identify and assess opportunities related to growth but also empowers our client to create strategies for the future which further enables them to convert goals into reality. Automo brings AI based Market intelligence to the Automotive Industry, in an easy to use dashboard format, to always keep track about the markets you care about on a daily basis. Any other custom requirements can be discussed with our team, drop an e-mail to firstname.lastname@example.org or reach us at (+1) 113025664665 to discuss more about our consulting services.