Imagine putting your six-year-old child in a car and telling it to take her to school by a push of a button. It is the future and may be coming sooner than you think.
$87 billion. That’s how much the driverless car market is estimated to be worth by 2030, according to Lux Research, a research and advisory company that specializes in technology and innovation.
It will create the new wave of billionaires and profitable businesses. Worldwide, the race has already begun.
Among the players is General Motors, which invested $1 billion in a self-driving car start-up in 2016; Baidu, a Chinese internet company which launched a $1.5-billion fund dedicated to autonomous-car development; there was a $680-million Uber deal to buy Otto, an autonomous trucking company; and $15 billion was spent by Intel deal to buy Israel’s Mobileye, which makes self-driving sensors and software.
“I am very excited about the era of autonomous cars which will bring down accidents significantly, given that about a third of crashes on US highways, for instance, is due to driver distraction… The car of the future is electrified, autonomous, shared, connected and yearly updated,” says Toby Shapshak, Editor-in-chief at Stuff magazine.
The big question is: how soon are they coming and how will they work?
According to Wayne McCurrie, a Senior Portfolio Manager at Ashburton Investments, autonomous cars are on their way but not quite as people think. He says you will not sit or sleep in the car and be ferried to your destination.
“The driver will still ultimately be in control but not actually drive the car. You will almost be monitoring the system much like an aircraft pilot when the plane is on autopilot,” says McCurrie.
Transportation writer Paris Marx agrees. He says vehicles will have semi-autonomous features, meaning they’ll be able to drive themselves in some limited situations.
Lux Research’s report, Set Autopilot for Profits: Capitalizing on the $87 Billion Self-driving Car Opportunity, also found vehicles with features such as adaptive cruise control, lane departure warning and collision avoidance braking, will account for 92% of autonomous vehicles in 2030 and no fully autonomous car will hit the market.
“Today the autonomous vehicle value chain is already starting to take root, and it involves many players new to the industry. Sensor hardware specialists, like Velodyne LiDAR, are developing products with unprecedented resolution; software and big-data powerhouses, like IBM and Google, are striking up partnerships; and even mapping and connectivity experts, like Nokia and Cisco, are throwing their hats into the ring,” says Cosmin Laslau, Director of Research Products at Lux Research.
According to Laslau, the move to autonomous vehicles will initially be led by the United States and Europe, but China will grow rapidly to claim a 35% share of the 120 million cars sold in 2030, accounting for revenues of $24 billion, against $21 billion for the US market and $20 billion for Europe.
As exciting as the prospects might be, there are many concerns.
There have been violent uproars in some parts of Africa, like South Africa and Kenya, with the introduction of Uber. One concern is driverless cars will fuel the mounting battles with the taxi industry, especially since companies like Uber, already in competition with taxis, are developing their own driverless cars.
“I hope they won’t bring these driverless buses and taxis because I may end up jobless. I am not qualified to do any other job and obviously people will prefer driverless cars because maybe computers are [smarter],” says taxi driver Mthokozisi Nkabinde.
Statistics South Africa, in its National Household Travel Survey, found taxis are the main source of transport for most households at 41.6%. According to the South African National Taxi Council, the taxi industry employs more than 600,000 people and transports about 15 million commuters per day.
“There are no jobs in this country and when they take away the only way we make money we will mobilize and fight with the government and make sure they fix it,” says Nkabinde.
Another question is how these cars will be brought into the market.
In South Africa, people are divided. In a recent study by accounting and consulting firm, Deloitte, half of consumers prefer tech companies while the rest choose traditional car manufactures. The study also found 47% of consumers want limited self-driving technology and 39% prefer fully self-driving cars.
“Tech companies tend to want to move toward a fleet model, where people wouldn’t own their own vehicles, but would use an app to request a vehicle on demand, similar to what Uber already offers; while traditional automotive companies think that people will still want to own their own self-driving cars and fleets will just be another option,” says Marx.
Overall acceptance of autonomous technology keeps growing.
“Those who settle for a reactive mindset, rather than preparing for the long term, will be at greater risk as consumer acceptance for autonomous technology further accelerates,” says Craig Giffi, Vice Chairman at Deloitte, in a press statement.
Many start-ups are working towards this future. One of them is Nuro, a company that has found a niche in self-driving vehicles designed to transform local commerce.
Former engineers from Google’s self-driving car project, Dave Ferguson and Jiajun Zhu, swapped the opportunity to make self-driving passenger cars for goods delivery services. In January, they raised $92 million to launch Nuro.
“We started Nuro to make products that will have a massive impact on the things we do every day. Our world-class software, hardware, and product teams have spent the past 18 months applying their expertise to deliver on this mission. The result is a self-driving vehicle designed to run your errands for you. It is poised to change the way that businesses interact with their local customers,” says Ferguson, in a statement made available to FORBES AFRICA.
Nuro’s new vehicle is designed specifically to move goods between and among businesses, neighbourhoods and homes. The fully autonomous vehicle is unmanned and about half the width of a passenger car.
“We aspire to lead a new wave of robotics applications that make life easier for everyone and give us more time to do things we love. We are living in extraordinary times where advancements in robotics, artificial intelligence and computer vision are making it possible to imagine products and services that could not have existed just 10 years ago,” says Zhu.
Similar to the Nuro vehicle, the future driverless cars will be furnished with cameras, radar and light detection, and ranging sensors to help them visualize and map their surroundings. All of this data will then be processed by an on-board computer using artificial intelligence to instruct the vehicle where and how to drive and whether it needs to react to any of its surroundings, such as a vehicle that hasn’t obeyed a stop light or a child running into the street.
There are challenges to the inception of driverless cars though.
Elon Musk’s Tesla, for example, is one of the few companies testing autonomous vehicles and its vehicle was involved in a fatal accident. An investigation by the National Transportation Safety Board in the US found that the feature installed in the car should have required the driver to have his hands on the steering wheel at all times and should have only worked in restricted areas. Tesla did not have these limitations in its software, so the driver used it for extended periods of time while not paying attention to the road. The vehicle eventually hit a truck and killed the man behind the Tesla’s wheel.
“Another challenge is that bad weather can obstruct or interfere with some of the sensors, which would then result in the vehicle’s computer having an incomplete picture of its surroundings, which could impair its ability to make the right driving decisions,” says Marx.
Urban areas might also be a problem. In the United States, according to Marx, there are only a few self-driving vehicle services open to the public, and they are exclusive to suburban areas with wide roads and not much traffic in southern states like Arizona and Florida, where the weather is nearly always clear and sunny. Those are the kinds of areas where self-driving cars will stay for a while.
Safety concerns also need to be resolved.
“[Driverless cars] have been observed running red lights, going the wrong way down one-way streets, and recent reports show that they have trouble detecting bicycles and putting cyclists at risk. Most companies working on self-driving cars are being cautious about testing the vehicles and putting them in situations where they could get in accidents, but there are some, like Tesla and Uber, that seem to be taking more risks. A lot of stories have been published about the accidents that Uber’s vehicles have gotten into, the times they’ve run red lights, and how they ignored bike lanes in San Francisco,” says Marx.
Marx adds that it’s unlikely that autonomous cars will become common in American or European cities in the next five years because many cities are placing restrictions on vehicle use to give priority to bicycles and to turn streets into public spaces.
“If they become common in any part of the African continent, it would likely be in wealthier suburbs or gated communities,” he says.
Driverless vehicles are presented as the solution to traffic congestion that cities all over the world are facing but, according to Marx, they’re unlikely to make a big difference.
“Simply moving people from regular cars to self-driving cars doesn’t reduce the amount of space being taken up by those vehicles, and it’s likely that if the cost of using those vehicles is low enough, more people will want to use them, increasing the number of kilometers that vehicles will travel in our cities, thus making congestion even worse,” he says.
The answer, according to Marx, is to invest in subway, streetcar and light rail system and to give buses their own lanes so they are not slowed down by traffic.
In Africa, McCurrie says certain areas could be quickly adapted to accommodate driverless cars but it will take 20 years for full autonomous cars to exist in developed countries, and longer in developing countries.
There will be consequences for the manufacturing industry. McCurrie says it could easily bring massive capital investment in infrastructure.
“The market will most likely accept some sort of premium for driver assist cars initially but eventually economics will have to rule,” says McCurrie.
In the short term, Marx suggests the biggest impact will be to goods transportation, where Nuro has seen an opportunity.
“This is already happening at mines in Australia and in the tar sands in Canada. There will likely also be more automation of transport trucks, at least for the segments of their routes on highways, in the next few years,” he says.
For many, the best outcome would be for driverless vehicles to connect suburban residents with a public transport hub and reduce the costs of public transportation.
“On services with fixed tracks, such as subways and trains, it shouldn’t be too difficult to automate drivers and reduce operating costs, which could potentially allow the transport agency to increase the level of service, meaning there would be a shorter wait time between trains. The same could be done with buses, especially if they’re given dedicated lanes where detecting other vehicles wouldn’t be an issue,” says Marx.
It seems we are a long way from sleeping while a car takes us to our destination.
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