Investment bank UBS believes Waymo will dominate the driverless car market by 2030, reports Sooraj Shah. However, Internet of Business believes they may be wrong. Find out why in Chris Middleton’s separate report, beneath.
Waymo will be the clear leader in autonomous vehicle technology by the end of the next decade, and this will force many of the world’s carmakers to use its technology or become obsolete, according to a report from Swiss investment bank UBS.
It predicts that Waymo will own 60 percent of the global self-driving market by 2030 – a market that the report says will be worth up to $2.8 trillion. According to the bank, Waymo, the autonomous driving subsidiary of Google’s parent Alphabet, will itself be worth between $75 billion and $135 billion, with up to $114 billion in revenues by 2030.
“We see Waymo as the early leader by a solid margin in the emerging field of autonomous driving,” says the report. More, UBS believes that Waymo will become such an critical part of Alphabet that it could have a bigger impact on the company’s stock than YouTube or the Google Cloud Platform.
The automotive journey
The bank interviewed self-driving car developers, technology groups, and academics for the report, and predicts that only the likes of General Motors and a handful of others will be able to develop and operate their own systems well enough, and at sufficient scale, to compete with Waymo’s technology.
In the West, Waymo has been in head-to-head competition with Uber, Tesla, traditional automotive manufacturers, and others, for dominance of the self-driving sector – moves that are mirrored in China, where the likes of Baidu, Tencent, and Alibaba are locked in a similar race for dominance on the country’s roads.
“Unlike most auto players, Google focused on [full self-driving technology] from the very beginning – more than five years before the auto industry started working on it,” says the report.
To date, Waymo claims to have clocked up more than five million miles of physical testing, along with five billion miles of virtual testing on its computers, without any of the serious problems that have damaged Uber’s and Tesla’s ambitions this year.
The company has been loaning out cars to beta testers in Phoenix, Arizona – the same state where Uber’s fatal accident took place in March. Earlier this week, Waymo announced plans to start an autonomous taxi service in the same city later this year.
UBS believes that 12 percent of cars sold in 2030 will be for autonomous taxi fleets, with around 26 million driverless taxis in operation worldwide. This will have a detrimental effect on private car sales, with a five percent decline expected.
The report predicts that demand for self-driving taxis will finally take off around 2026, but there will be challenges along the way. The most significant of these will be winning public support for the technology, especially in the wake of recent fatalities.
• Waymo rolled out the first stages of its self-driving truck programme earlier this year.
Internet of Business says
UBS is right to predict a dominant position for Waymo – in the West, at least. However, the role that China will play in the driverless transport world cannot be overlooked. Indeed, Internet of Business believes that driverless technologies will take off in China sooner than in the US, which would hand the real power to companies such as Baidu.
China has four advantages on the world stage. First is its colossal size and human population, which, at nearly 1.4 billion people, is four times larger than the US. That’s a lot of labour power and roads, combined with an economy that is automating faster than any nation on Earth.
Second, is the related fact that China’s ability to devote its vast human and robotic labour resources to manufacturing cars means that it will be able to export those technologies to the West at considerably lower cost. After all, this is why many US tech companies rely on China, and the Republic of China (Taiwan), to make their hardware.
Third is China’s ability to develop AI algorithms from a vast pool of data, largely unencumbered by the data privacy and security regulations within which Europe – and soon the US – have to operate.
This is a complex issue, and not without its ironies. In the West, citizens are far better protected from national surveillance and commercial snooping, and yet are less trustful of data-gathering technologies.
Which brings us to the fourth advantage – the major one: public sentiment about driverless technologies.
A survey released in February this year revealed that Chinese citizens are much more supportive of autonomous vehicle technology, and are far more likely to trust it. For example, sixty-three percent of Chinese respondents said that driverless cars will increase safety, versus just 34 percent of Americans. Seventy-one percent of Chinese interviewees said that they trusted carmakers’ cybersecurity competence, versus just 41 percent in the US.
The cultural dimension of this debate is enormous, and often overlooked. The US is a car-owning, driver-based culture more than any other nation on Earth, and certainly far more than China, where mass car ownership is a relatively new concept.
The idea of the lone driver out on the highway is deeply rooted in the American psyche and pop culture – and in its economy, where over 3.5 million people earn a living as drivers. In many states, driving is the most common job; that’s a lot of latent hostility to autonomous vehicles, particularly in the current political climate.
The figures speak for themselves. In 2015, it was reported that car ownership in China had hit 172 million; an impressive figure, but significantly less than the 263.6 million vehicles registered in the US, in a population that is one-quarter the size of China’s. Put another way, there are 20 million more cars in America than there are adults to drive them, while in China only one in eight people owns a car.
That spells an enormous business opportunity for Waymo in the US and elsewhere, of course, but also a vast cultural challenge that China simply doesn’t face, with no comparable history of cars as status symbols or badges of independence.
Deliveries aside – which will inevitably be transformed by autonomous vehicles and drones to keep costs down, and speed and agility up – driverless cars’ journey onto US roads will not be a smooth one. In crowded cities, autonomous, on-demand services will erode the need for private car ownership over time, but that process will take much longer than a decade – particularly as electric vehicles recharge the private market with greener, more affordable options.
While the average American consumer may be more able to afford a car, and may be inclined to hail an autonomous cab in New York or San Francisco, these figures suggest that driverless technologies may become more central to the Chinese way of life much more quickly. And as the middle-class grows in China’s fast-expanding cities, the driverless vehicle may become a status symbol that millions of US drivers will find much harder to aspire to.
And there is another issue with the driverless concept, and it was raised by former BMW chief executive Olaf Kastner earlier this year. He said, “The system won’t work perfectly until all vehicles on the roads are driverless. Safety will be an issue for as long as they have to share the space with traditional cars.”
In other words, the biggest obstacle to driverless cars’ progress on US roads can be summed up in a single word: Americans.
All of this suggests something surprising and perhaps counter-intuitive: the real transformation in American transport culture may come from its skies, and not from its roads – if Uber, Airbus, and others, succeed in building safe, affordable air taxis for the masses. But as we explore in our recent reports, below, those programmes face very different sets of challenges.
- Read more: Uber partners with NASA, US Army on air taxis
- Read more: Uber Elevate: Air-taxi service still grounded by earthbound problems
- Read more: Uber relaunching as Amazon-style hub for connecting all transport
- Read more: US government announces 10 drone pilot schemes – omits Amazon, DJI
- Read more: Ford, Renault, GM, BMW, IBM co-found MOBI blockchain consortium