In the late 2010s, the autonomous vehicle (AV) market was the subject of considerable media attention. A wide range of companies including car manufacturers (OEMs), startups, tech giants and ride hailers all grabbed headlines by announcing plans to release their own autonomous models. However, since the COVID-19 pandemic, attention has shifted elsewhere, with many companies quietly rolling back their plans for AV development. Despite this, there has been steady progress and a change in the balance of power within the AV market over the past few years, although it has not been without its challenges.
What are the key challenges facing the development of AVs?
Commercialising AV technology has proven more challenging than many expected. Missed deployment deadlines for level 41 and 52 AVs and the shutdown of high-profile AV programs (e.g. Argo AI) have contributed to industry consolidation around a smaller number of more committed players. These market trends are reflections of the challenges still facing the industry, which include:
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Complexity of city driving — Automating the vast majority of driving scenarios has been achieved with relative ease; however, the final 0.01% of accuracy has been more difficult than anticipated. Interacting with large volumes of unpredictable human drivers in complicated built environments has proven more challenging for AV technology. Data from the California Department of Motor Vehicles (DMV) shows that interactions with other road users make up roughly 60% of disengagements3 for the top six companies, by miles tested.
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Pressures for electrification — Pressure from governments on OEMs to electrify their vehicles has shifted their focus and R&D efforts away from full automation to shorter-term priorities to electrify.
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Negative media attention — A small number of accidents have continued to fuel public concern over sharing the road with AVs.
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Lack of legislation — Most countries still lack comprehensive national legislation outlining the road to full AV adoption; for example, in the US, most AV legislation is still handled at the state level.
A changing of the guard
Since 2019, many players within the AV market have scaled back their ambitions, which has allowed a small group to establish themselves as market leaders. OEMs are feeling the pressure to focus on shorter-term priorities such as electrification and lower-level automation, which can be built into more immediate releases, e.g. driver assistance technology. The decision by Ford and VW to shut down their joint venture, Argo AI, in 2022 shows that advanced AV development is no longer a top priority for most OEMs.
Ride hailers like Uber and Lyft have chosen to abandon the development of their own AV technology, instead opting to partner with AV technology firms and offer their platforms as a route to market. Uber, for example, sold their AV unit to Aurora in 2020 and in 2022 announced a 10-year agreement with AV firm Motional to provide autonomous ride-hailing and delivery services.
These developments have allowed a small number of AV firms (Cruise, Waymo and Apollo) to pull away from the pack in AV development. Waymo and Apollo are backed by Google and Baidu, respectively, while Cruise is backed by General Motors, which remains one of the only OEMs still seriously committed to developing AV technology. Over the past two years, GM and Google have expanded their testing programs with Cruise and Waymo, establishing a clear lead in terms of miles driven on public roads in California (see Figure 1).