Kevin Frayer
By Michael DiTillio, CFA
Not long ago, driverless vehicles were the stuff of science fiction. Today, the rollout of autonomous vehicles is rapidly gathering pace across the globe.
The global transportation industry appears to be metamorphosizing at speed. Driven by demand for greater productivity, improved safety, cleaner air and decreased congestion, breakthroughs in vehicle autonomy, electrification and connectivity are gradually displacing the century-old, internal-combustion-engine model.
In the U.S., Cruise Automation – General Motors’ (GM) robo-taxi unit – has begun shepherding its San Francisco employees during daytime hours and heavier traffic. (The company already offered limited public service in the evenings.) Cruise also plans to offer driverless rides in Phoenix, Arizona and Austin, Texas by the end of 2022, and is expected to expand to more cities across the US in 2023. Meanwhile, Waymo–Alphabet’s (GOOG, GOOGL) self-driving division – has received approval from the California Public Utilities Commission to launch a pilot program in San Francisco, and soon plans to test its vehicles in Los Angeles.
China is even further down the road. Baidu (BIDU), which owns China’s largest fleet of robo-taxis, is now operating in 10 cities and has given around 1.4 million rides to date. In first-tier cities like Beijing and Shanghai, Baidu’s driverless cars can provide an average of 15 rides per day – nearly the same as typical online ride-hailing services. And the lead time to deploy autonomous-driving technology in a new city is only 20 days, the company claims.
Delivery services are also exploring driverless technology, with major players announcing plans to roll out autonomous fleets. Cruise Automation believes that autonomous delivery has the potential to be a big part of its business going forward, and the company is currently testing with Walmart and other partners. In October, Uber (UBER) and Motional announced a 10-year agreement to deploy driverless vehicles within Uber’s ride-hailing and food-delivery network in multiple U.S. markets.
But there’s more to this revolution than the potential for accelerating productivity. Research suggests that autonomous cars can have a major impact on improving road safety and the environment. Given that human error contributed to 94% of vehicular crashes between 2005 and 20071, the U.S. Department of Transportation predicts that the rise of driverless vehicles will help lower traffic deaths substantially. Fewer erratic drivers and accidents are also likely to translate into less congestion and up to 60% lower emissions, estimates Ohio University2.
We believe the future of mobility is autonomous – and we appear to be speeding toward it.
1Source: U.S. Department of Transportation, National Highway Traffic Safety Administration: Critical Reasons for Crashes Investigated in the National Motor Vehicle Crash Causation Survey, February 2015
2Source: The Future of Driving in the United States | Ohio University
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