They may not have the most horsepower or torque, but they’re the mightiest thing in the automotive world.
Autonomous vehicles have the power to revolutionize our entire concept of driving, leaving in their wake a long trail of industries no longer needed in the new age of transportation.
But just as every forest fire clears a pathway for new growth, the destruction of our current systems will prove fertile soil for new technologies—and the businesses supporting them.
As our cars have gotten better at driving, we’ve begun to replace hands on the wheel and feet on the pedals with computerized alternatives, creating an entirely new market for autonomous vehicle wares, including a tidal wave of new software and hardware, specialized sensors, and laser technology.
All told, once fully realized, the self-driving industry could add as much as $7 trillion to the economy each year. The number may sound monumental, but some economists say it’s a realistic testament to just how huge of a societal impact the vehicles could have.
And the more people who get on board with the concept, the more money the cars will have the potential to generate.
By the Numbers
The staggering $7 trillion figure was calculated by Intel, in a report the company released this June.
The study documents the potential rise of what it calls “the passenger economy,” which will run on the products and services borne of a fully autonomous environment, including the softer calculations of time and resources saved by the technology. The imagined timeframe for such a takeover begins in 2050, by which point, 50% of all vehicles sold will be autonomous, the report predicts.
Three main sources are identified as potential areas to drive the market’s explosive growth: consumers; freight businesses; and the new types of businesses derived from the cars.
The technology could reduce public safety costs related to car accidents by an estimated $234 billion between 2035 to 2045, according to the report.
“Mobility-as-a-service,” according to the report, would bring in the most revenue. The idea of summoning the cars on-demand—and paying for them on a per-ride basis—would bring an estimated $3.7 trillion annually, or about 55% of the total market.
All that time spent in cars capable of piloting themselves would also free up 250 million hours per year otherwise spent on commuting, leading to a potential boon of business hours, the study predicts.
Generating nearly as much for the self-driving industry would be the companies already primed for exploiting such technology, worth 43% of the passenger economy—or $3 trillion in yearly revenue—according to the report. It names everything from fleet services to freight-based businesses to sales and delivery sites as potential beneficiaries.
Most of the remaining money would come from new applications and services that can be offered through the cars. Hotels and hospitality, entertainment, restaurants, and even health care are named as potential areas that could adapt around newly autonomous autos—to the tune of a collective $203 billion each year.
And the cars won’t just make money—they can help save it.
The technology could reduce public safety costs related to car accidents by an estimated $234 billion between 2035 to 2045, according to the report.
Still, those developments rely upon a world that has fully absorbed a driverless society. Whether or not that totality comes to fruition, the mere process of building the vehicles will nurture a number of new lucrative ventures.
Once You Pop...
Overall, the emergence of sophisticated new computer technology—and any industry generating the supplies to create it—have been pegged as big winners in the new market money grab.
Semiconductors, in particular, have been named a hot commodity for investors, with J.P. Morgan estimating the total value of the computer chips at as much as $7.3 billion in the U.S. alone by 2025, after riding a projected compounded annual growth rate of about 62.5% starting in 2017, the company said.
Demand is already on the rise globally, with the total world market for the conductors growing to $30.3 billion last year, and expected to reach $41 billion by 2020, according to MarketWatch.
The predictions are great news for a number of tech world behemoths already producing the products, including Qualcomm, STMicroelectronics, and Intel itself.
All three have recently made moves to muscle into the burgeoning market, including the nearly $47 billion acquisition of NXP Semiconductors by Qualcomm, a $15 billion deal giving Intel ownership of the camera sensor technology produced by Mobileye, and the diversification of services offered by STM.
And the chip industry isn’t the only one projected for rapid growth.
Sixth Sense
Our cars won’t be able to feel out driving conditions on their own. They’ll require an extensive network of sensors and cameras to form their vision of the world.
Three types of technology are currently competing to be the guiding light for our future vehicles: lidar, radar, and cameras.
Most common and commercially available already, cameras are best for adding finer details and textures to the vehicles’ perceptions of the world, allowing the cars to more easily classify objects. Radar shines in giving the autos a measure of motion, while lidar—short for light detection and ranging—offers a sense of depth and distance, letting the cars see as far as 100 meters away.
Our new vehicles have already shown a trend toward becoming more high-tech: As of 2015, the total cost of the electronics added to each car accounted for 40% of its total value—up from 20% in 2004, according to a study by the Boston Consulting Group.
Sensors can range widely in price, from $15 to more than $8,000. All told, putting together a fully autonomous car would add $10,000 to the vehicle’s final price, the Boston Consulting Group report estimated.
But despite the financial boon they stand to bring to some industries, the rise of the cars will eliminate an incalculable experience from our lives: The thrill of driving.
