Self-Driving Vehicles, Robo-Taxis, and the Urban Mobility Revolution

Self-Driving Vehicles, Robo-Taxis, and the Urban Mobility Revolution

          
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Self-Driving Vehicles, Robo-Taxis, and the Urban Mobility Revolution

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    A Consumer Perspective: Excited and Ready to Try SDVs

    A potentially big barrier to self-driving vehicles—consumers’ acceptance of a car that drives itself—turns out to be a shrinking obstacle and one that will likely dwindle with experience and familiarity over time. As part of our work, in 2015, The Boston Consulting Group and the World Economic Forum (the Forum) conducted qualitative and quantitative research among more than 5,500 consumers in 27 cities in ten countries—to date, the largest survey fully dedicated to autonomous driving. From New York to Kolkata, Berlin to Beijing, consumers are surprisingly and remarkably knowledgeable about SDVs and their potential benefits, and, by and large, they are more than willing to give them a try.

    (Mostly) Ready to Ride

    Overall, 58% of respondents said they would take a ride in an SDV, and 69% said that they would take a ride in a partially self-driving car. (See Exhibit 1.) Willingness is highest among younger consumers—63% of those aged 29 or younger are willing to ride in an SDV compared with 46% of consumers aged 51 or older. This is one reason why we expect acceptance of SDVs to increase over time. Consumers in Asia—home to half of the world’s 100 largest cities—are among the most ready. Willingness among Indian and Chinese consumers, for example, is high: 85% and 75%, respectively, are prepared to ride in SDVs. This might be because currently high levels of traffic congestion, less-developed traffic infrastructure, and high accident rates lead urban consumers in these countries to hope for significant benefits from SDVs. Consumers in Japanese, Dutch, and German cities are the most reluctant (36%, 41%, and 44%, respectively).

    exhibit

    Consumers like convenience, and the biggest single attraction of SDVs is not having to find a parking place. More than four in ten consumers said that the number one reason for using an SDV is that it “drops me off, finds a parking spot, and parks on its own.” (See Exhibit 2.) Other attractions include being able to multitask or be more productive while traveling, the sheer novelty of SDVs, and the ability of the car to switch to self-driving mode in heavy traffic.

    exhibit

    Consumers are quick to identify several possible uses for SDVs, among them, providing mobility for the elderly and others who cannot drive, functioning as a mobile office, enabling longer commutes, and taking over or facilitating daily tasks such as transporting children to school or running errands.

    To be sure, consumers also have concerns, and safety tops the list. Recent news of accidents involving autonomous cars, such as the first fatality resulting from a failure of highway autopilot, could strengthen this concern futher. Half of all consumers said that they “do not feel safe if the car is driving itself.” (See Exhibit 3.) Only 35% of parents would let their child ride in a self-driving car alone, a figure that drops to 12% in the Netherlands, 17% in the UK, and 21% in Singapore. Some 45% of drivers want to be “in control at all times,” and 30% would not want to give up driving, an activity that they enjoy.

    exhibit
    Consumers Look to Automakers for Electric or Hybrid SDVs

    Our findings include good news for the auto industry. Consumers are looking to established car manufacturers rather than tech companies and others to manufacture SDVs. (See Exhibit 4.) Almost 50% of survey respondents cited automakers as the ideal manufacturers of SDVs, although almost 70% of them think that automakers should work in collaboration with tech companies.

    exhibit

    While consumers expect car companies to produce reliable, high-quality, and safe vehicles, they also believe that tech companies should bring in their expertise. Apple and Google are top-of-mind possibilities; a number of tech startups were also mentioned.

    Consumer trust in traditional automakers with respect to SDVs is highest in France, Germany, and Japan. (See Exhibit 5.) Consumers in India, the US, and China, are most likely to see a tech company as an ideal manufacturer of the entire SDV. One reason may be the importance and visibility of the tech industry in these economies. US consumers, for example, have been exposed to countless media and company reports on Google’s ongoing testing in Austin, Texas, and Mountain View, California.

    exhibit

    Although very few consumers have even seen an SDV, their expectations for how SDVs will differ from traditional cars are quite specific. Take engine types. More than 35% of consumers expect SDVs to be hybrid vehicles, and another 29% anticipate that they will be electric. (See Exhibit 6.) Only 9% expect self-driving cars to have a conventional internal-combustion engine. These expectations are substantially consistent across countries.

    exhibit

    Majorities—more often than not, substantial majorities—are willing to pay a premium of $5,000 or more for an SDV. (See Exhibit 7.) In fact, consumers justify the price premium with a rational business case: If I use an SDV, I can live farther from the city. That means that I will save in other areas such as rent, parking fees (since the car can park itself far from where I need to be), and insurance premiums (since an SDV is less risky to drive). It bears noting that consumers’ $5,000 threshold is not far from our bottom-up estimate of the $6,500 premium that automakers would need to charge, at least initially, to cover the cost of manufacturing an SDV.

    exhibit
    Mixed Feelings About Ride Sharing

    The one-driver-one-car issue has bedeviled urban policymakers for years, and while various solutions—high-occupancy-vehicle lanes and congestion and peak-period pricing, for example—have made modest progress, their overall impact has been muted. If SDVs are to affect urban life significantly, ride sharing almost certainly has to be part of the deal. With fewer vehicles on city streets traveling fewer overall vehicle miles, emissions will be lower and space will be freed for alternative uses.

    Although people in many cities already share taxi rides—and services such as uberPOOL and Lyft Line successfully offer shared rides as a way to save money—consumers, especially women, remain much less than enthusiastic about the idea than they do about SDVs generally. In our survey, 37% of consumers said that they are likely to share a ride in a self-driving taxi with strangers. For women, the figure was 33%. Ride sharing encounters the least resistance in Asian markets (China, India, and Singapore), where informal and impromptu taxi sharing is relatively common, and the most in Europe (the UK, Germany, and France). As with views of SDVs generally, however, there is a generational divide—45% of those under 30 are willing to share their taxi, compared with only 22% of those over 50—a split that is roughly also seen among users of Uber. Reluctance does not, however, mean refusal. Willingness to share rises dramatically with price. The percentage of respondents who prefer sharing a robo-taxi to paying $20 for a solo ride in a traditional taxi is only 11% when the price is the same. Willingness rises to 37% for the robo-taxi at $10—a 50% discount off the original taxi fare—and to 52% at $5, a discount of 75%. Furthermore, design attributes such as glass partitions, cameras, and other security features could help alleviate safety and privacy concerns and further increase willingness to share rides.