Few technologies were as hyped as autonomous vehicles over the last decade, but momentum for that hype is fading fast. Many a conference talk have been filled with visions from futurists over how our lives would be upended from the impacts of autonomy; these predictions have failed to materialize, and today the technology remains in pilot purgatory as no companies are putting autonomous vehicles into the hands of consumers at scale.
Progress in autonomous vehicles is slower than anticipated.
There are numerous barriers to autonomous vehicle commercialization that have slowed its progress toward commercialization. Two commonly cited ones are the maturity of the technology and regulatory compliance. We’ve seen progress — albeit much slower than expected — in each area. Waymo, Cruise, Baidu, and other developers operating robotaxis have expanded their geographical reach, operate during more hours per day with more vehicles, and have begun charging revenues for their services — all enabled by advancements in both technical capabilities and regulatory approvals.
As technologies mature, new barriers inevitably emerge. For instance, consider electric vehicles and the batteries powering them. Ten years ago, major questions lingered over whether battery prices could fall fast enough, or if cycle life and charging rates would be suitable for consumers. Today, those barriers have been addressed, but new barriers have emerged, such as the supply of key minerals to reduce prices and scaling infrastructure to keep up with a growing fleet of electric vehicles. To answer the question posed in the title, we must consider what barriers will emerge and how likely they are to be addressed. In this blog post, we will focus on the next barriers autonomous vehicles will face to scaling their operations: a lack of profitable business models, a lack of consumer trust and acceptance, and a lack of impact on emissions.
- Robotaxis may displace existing taxi and ride-hailing services, but costs will remain too high to displace car ownership.
This is arguably the biggest barrier to widespread deployment of robotaxis, as there are serious questions lingering over just how cheap the unit economics of a robotaxi operation can be. It’s tempting to assume costs will be low; there’s no driver to pay, and if they are electric, their operating costs are quite low. However, a closer analysis suggests considering practical costs makes this number quite a bit higher.
After analyzing the predicted costs associated with robotaxi operations across three regions, North America (U.S.), Europe (U.K.), and Asia (China), the per-mile costs of operating a robotaxi service range between USD 0.29 and USD 0.46. This number includes vehicle and infrastructure costs, though these are collectively less than half of all costs; the majority are composed of costs associated with maintenance, insurance, and crucially hiring teleoperators to oversee the vehicles. In reality, costs per mile will be higher considering general overhead costs, marketing, and R&D, which weren’t considered in this analysis. The margin of error is not considerably large as ride-hailing today ranges between USD 1/mile to USD 2/mile. Ultimately, these robotaxi operations could undercut costs of conventional ride-hailing but won’t usher in the disruptive changes to transportation networks once promised.
2. The public embrace of autonomous vehicles is far from clear, with concerns over safety and operations.
To answer these questions and understand the demand side of the story, we used Lux MotivBase Trends: an AI-based anthropology insight platform (and recent Lux Research acquisition). The platform draws data from platforms that enable pseudonymity and long-form conversation, including forums, blogs, comments under YouTube videos, news sites, etc. In this study, Lux identified five different contexts through which consumers view autonomous vehicles: enjoying the road by transforming driving from a chore to a fun pastime, increasing accessibility for populations with mobility limitations, improving sustainability through reduced emissions, seeking clearly guidance for regulations, and trusting autonomous technology.
Going forward, consumer sentiment will remain highly tied to technological developments. For example, if robotaxi companies like Waymo and Cruise are able to consistently operate their autonomous vehicles with zero incidents, consumers’ (especially those in the areas of operation) concerns will begin easing. It must be noted that with the number of autonomous vehicle miles being driven, incidents are almost certain to occur. The keys to progress are keeping these incidents to a minimum and being cautious about how to communicate with the public when they do occur. Governments will undoubtedly be crucial to this process and dictate how quickly this can go.
Read The Road Toward Consumer Acceptance of Autonomous Vehicles Report to learn more about consumer sentiment about the autonomous vehicle industry.
3. The industry will miss out on a flurry of investment in climate tech, as autonomous vehicles make no meaningful impact on emissions.
One theme Lux has heard several times throughout this wave of interest in automated driving is the potential for reducing emissions. This has usually come in a couple of different flavors; some claim autonomous driving algorithms will simply use less fuel than humans due to consistently operating the vehicle more efficiently. There is some truth to this; an MIT study devised a control algorithm for autonomous vehicles approaching traffic lights to reduce idling and, by simulating it on a single intersection, showed that it leads to a 25% reduction in CO2 emissions if every vehicle were autonomous. Others claim effects from the impacts of autonomous vehicles on passenger density will lower systemwide emissions — for example, robotaxis can carry several people and thus eliminate trips that would otherwise be taken in a single vehicle. Crucially, these emissions benefits can only be accessed via electrification, according to a Union of Concerned Scientists report in which the only pathway to lowering per-mile emissions compared to privately owned vehicles was through electrification.
The autonomous vehicle space is on the verge of a major shakeup, with more exits looming
The slow and consistent expansion of existing robotaxi operations from leaders like Waymo, Cruise, and Baidu should not be taken as an indicator that autonomous vehicles will be successful in the future. While technological and regulatory barriers gradually fall, developers will struggle to raise money in the face of challenging unit economics and a public that is wary of the technology. A lack of funding — which may be a startup failing to raise funding or a larger corporate backer pulling funding as was the case with Argo AI — will catalyze more consolidation in the industry.
So, should you care about autonomous vehicles? Most of us shouldn’t, unless we are in the automotive industry, though there are pockets of promising activity. For one, logistics is a space where many regions are seeing an aging workforce plagued with driver shortages. While their largest costs arise from labor, autonomy along highly constrained environments like highways is a promising use-case for autonomy.