The Rush to Automated Driving: Why?

Automakers, suppliers, and tech startups are pushing the development of highly autonomous vehicles harder than ever, but what exactly is the market destination so that companies can make money? In order to answer this question, we first need to explain the industry’s technology roadmap, because without a strategy and an infrastructure in place, it’ll be easy for automakers to lose their way.

The Society of Automotive Engineers (SAE) defines six levels of driving automation ranging from 0 (fully manual) to 5 (fully autonomous). These levels have also been adopted by the U.S. Department of Transportation.  Let’s focus on levels 2 through 4, as they are the key areas of development over the next 10 years.

• Level 2 (Partial automation) – Vehicles at Level 2 contain technologies better known as “Advanced Driver Assistance Systems” (ADAS).  The vehicle can control both steering and accelerating/decelerating, but ultimately a human driver may take control at any point. Tesla Autopilot and General Motors Super Cruise systems both qualify as Level 2. OEMs like Ford, Hyundai and Subaru are planning on Level 2 systems to be launched in the next few years.
• Level 3 (Conditional automation) - Level 3 vehicles can make informed decisions, such as accelerating past a slow-moving vehicle, but they still require human override. The driver must remain alert and ready to take control if the system is unable to execute the task. This technology is segmented into four main use cases: parking, traffic jams, highway driving, and urban conditions.  The simplicity of the first three mean they’ll be the first solutions to market; urban driving, however, offers far more complex scenarios and challenges for autonomous driving and its development. A few automakers are currently preparing to launch Level 3 systems, and more than a half a dozen other prominent automakers are planning their own launches within the next six years.
• Level 4 (High automation) - The key difference between Level 3 and Level 4 is that Level 4 vehicles can intervene if something goes wrong. These automobiles do not require human interaction, but a human still has the option to manually override.  Until legislation and infrastructure evolves, Level 4 systems can only operate within a limited area (usually an urban environment at a low speed). As such, most Level 4 vehicles have been designed for ridesharing. This is where organizations like Cruise Automation (GM), Argo AI (Ford), Tesla, and several others are focusing their efforts.

How will companies make money?

The big automaker push for higher-level automation systems stems from the strategic need to make sure that technology companies like Waymo, Apple, Lyft, and Uber don’t completely disrupt the automaker business model.  Being early to market is critical.  However, as one OEM executive explained to me, they don’t see mass adoption of these systems for at least a decade due to the high costs of development and a weak business case.  Another executive put it this way, “In the urban setting, this adds a lot of cost to the typical vehicle.  It could be as many as 100 sensors for urban pilot systems – not to mention redundant systems such as braking, steering, etc.” 

So where does the market settle on making money?  Industry experts are now focusing on what’s described as “Level 2+” that offer a hands-off feature, as seen with the GM Super Cruise and BMW’s systems.  Large volume OEMs (like GM, Toyota, Ford, Hyundai, and Renault-Nissan) will be focused on Level 2+ systems, with the human driver as the supervisor.  These systems don’t require redundancy in braking and steering but include map features and predictive ACC (which observes curvature of the road): this will be part of the Level 2+ or advanced functionality.  These systems will feel fully automated, but will be available at a fraction of the cost of Level 3 or 4 systems. I predict that this is the destination of the majority of the market over the course of the next 10 years.

As these markets are developing at a high speed, automotive companies of every size need to develop scenarios for market development and manage their precious resources diligently.  This diligence is critical for long-term success and survival — making sound, responsible strategic moves may be the single biggest thing these organizations can do to keep themselves afloat in the new automotive market. Without this diligence, they will undoubtedly be left in the dust of their more intrepid peers.