Note: The following is an excerpt from the white paper "The Emerging Autonomous Vehicle Ecosystem: Who Will Be the Stakeholders, and How Can They Win?" by BIS Research, a global market intelligence, research, and advisory company that focuses on emerging technology trends that are likely to disrupt the market.
The advent of autonomous vehicles will bring a change in how the automotive marketplace works. It will not only be the playing field of major OEMs and distributor partners who will have a stake in the market but new and emerging players of different sectors will too form a role in shaping the new autonomous vehicle market.
1. Manufacturing of vehicles will not be limited to only the traditional OEMs, as technology companies will enter the marketplace as a major player.
Major tech firms are manufacturing and producing vehicles of their own, initially for a commercial mobility option and later also for personal usage. The other tech firms will act as technology providers at a supplier level for both software and hardware, through collaborations with the vehicle manufacturers.
The level of collaboration will also have a different impact, such as one tech company can provide the software in exchange for a large payout and share in the business, while others can provide the software for free to OEMs in exchange for access to their vehicle’s user data, to be used later in analytics and marketing purposes. Many OEMs have also started actively developing their own software and technical capability as a way to compete rather than co-operate with other tech companies.
2. Vehicle OEMs will play a crucial role in the arrival and production rate of autonomous vehicles.
Their strategic approaches will be important on how soon autonomous vehicles will replace traditional car models. Major OEMs will take an incremental approach towards autonomous vehicles, introducing vehicles of Level 2, then Level 3, and onwards.
Some OEMs with technological partnerships can also target to launch Level 5 fully autonomous vehicles directly. The timing of launches may vary, but implying Nash equilibrium, eventually every OEM will enter into manufacturing autonomous vehicles of some level.
3. The crucial cog in the wheel will be the Mobility-as-a-Service providers, who will act as an end-service integrator and mobility provider to the customers.
These companies will provide mobility in various forms, either shared or personal, and will be crucial for an intelligent transportation system, where a commuter can avail a ride anywhere, at any time, and according to the person’s travel plans.
4. Mobility and related services providers will play a major role in the market.
The rise of autonomous vehicles will also facilitate the ease of using various services for a passenger. A person can do various things such as enjoy a movie, shop online, work and have a teleconference, among others, all while sitting in their self-driving vehicles without the need to focus on driving. These ancillary services give rise to a new business model, where companies can partner with mobility providers and deliver their services to the customers in the form of a bundled package. Companies will provide these monthly or custom price-plans similar to that of the current telecom and television network companies.
5. To facilitate all this, an important aspect which will also evolve along with autonomous vehicles will be the vehicle insurance, autofinancing and banking companies.
Traditionally, these services have been a major source of revenue for auto dealerships and insurance companies, but with self-driving vehicles and Mobility-as-a-Service, these aspects are bound to change. Earlier, insurance was bought individually and was based on a premium-based payment. Autonomous vehicles will lead to safer roads and fewer accidents, which will lead to less revenue from premiums, and hence the insurance companies will also have to change their business models to adapt.
Insurers may introduce new coverage models for risks that will come with the rise of autonomous vehicles such as cyber security risk, software, and hardware malfunctioning risk, road infrastructure risk, and operational risks related to maintaining a fleet of robo-taxis, among others.
Auto financing is another aspect which will drastically change with autonomous vehicles. Banks and financing companies would have to find new models which will be able to provide financing programs on a pre-approved credit sharing and leasing model for private vehicles and also have financing programs for fleet operators and related services. Both the aspects, insurance and financing would have to be flexible, quick, and easy to obtain for the consumers.
6. An important part of the ecosystem would be the sensor and component providers for the autonomous vehicles.
The self-driving vehicles would require a lot of different variants of sensors such as LiDARs, RADARs, ultrasonic sensors, and image sensors, along with many different subcomponents such as semiconductors, chips, actuators, V2X components, among others. Partnerships or collaborations with these companies will be crucial for vehicle manufacturers to reduce the costs of the vehicles.
A significant revenue will also arise for these companies from aftermarket and servicing businesses. Many OEMs and technology giants have already started to acquire such component companies or are producing their own components. The market for these components will grow significantly and will be an important stakeholder for the autonomous vehicle ecosystem as the cost of manufacturing the self-driving vehicles will decrease with cheaper sensor and subcomponent costs and calibration and retrofitting costs.
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