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Autonomous traffic is coming – but maybe not the way you thought

Looking at the amount of publicity the driverless car it getting, it is easy to get the impression that the automotive industry is putting its bets on autonomous cars as the future main form of personal transport. All the main car OEMs, plus a growing group of new entrants, with Google the best known, is both investing in the required technologies, and eagerly showing the results of these investments.

The motivations of the various actors may not be equally evident, and spending some thought on these reveals a more varied picture.

The technology roadmap towards the driverless car is for the most part already known. The same cannot be said about the arguably more important business roadmap. The driverless car, together with many other factors relating to the general digitalization development, will disrupt the current business models, with new types of actors and new types of services not existing today. The automotive industry is quite understandably afraid of losing its position at the top of the value chain, and having to settle for the role of a supplier.

Also, being viewed as passive in this field would certainly hurt any car company’s success in the stock markets. Thus, for the automotive industry there is no other option than try to remain in the game, and continue investing in driverless cars.

For the new entrants, the situation is different and varies a lot. For Google, the driverless car looks like another major platform for its information services and advertising business. From this point of view, its investments in the technology look more like speeding up the opening of the market, than a serious goal of becoming a car company.

For the other big player in this field, Uber, this is a question of life and death. Its current business is making huge losses (according to some estimates, approaching $3 B last year). The driverless car looks like the main solution to the problem, as it can decrease the costs of providing rides. Uber currently allows its drivers to retain about 80% of the customer payments.

To put it bluntly, regardless of the investments being made nobody has more than guesses about how to make money with the driverless car, when the money can be made, and how much of it there is to be made.

However, there is a domain where at least some more light can be shed on these issues: goods transport and logistics. Additionally, there is the advantage of less severe technological requirements.

Taking the last issue first, in goods traffic most of the distances covered are driven along pre-determined routes. Typically, only the last kilometers may require ad hoc routing, for example in distributing goods to retail locations. Thus, it becomes feasible to for example install special equipment supporting autonomy, and set aside given lanes for driverless trucks. There is also much less people moving around in trucking routes compared to an urban setting. All this results in a less dynamic and more predictable environment, and less severe requirements for driverless trucks. The same applies to trains and, to a certain degree also to ships, when comparing to autonomous cars.

From the business point of view, driverless trucks offer several advantages compared to human driven trucks. The lower operating costs, increased reliability, and added efficiency (more time on the road) all add up to major cost savings, and results in higher profit margins. The business case is clear even with this. On top of this comes the potential of new kinds of services and revenue streams, not possible with human driven trucks. Again, the same kinds of arguments apply for trains and ships.

With this, it should be clear that autonomous goods transport already has a business logic that can be realized without major changes in the business architecture. Mostly, the current players can take advantage of the opportunities, as soon as the required technology is mature enough. And, as explained above, this should happen sooner than sufficient maturation of driverless cars for personal transport.

Instead of following the herd, it makes lots of sense for companies offering or planning to offer technologies and services for autonomous transport to spend some serious thought on the opportunities offered by the goods transport domain. There are also major questions that require focused research.

Together with major players in the maritime industry, DIMECC has started an ecosystem activity aiming to realize commercial autonomous shipping in the Baltic by the year 2025. Goods transport is here the main use case. Join us in making this happen!

 

Author:

Dr. Jaakko Talvitie
Innovation Scout
jaakko.talvitie(at)dimecc.com
in/jtalvitie

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