Is your company prepared for autonomous vehicles?

IF NEWS 4/2017 MOTOR

Autonomous vehicles are coming. They will make traffic safer, less congested and cleaner. There will be more car and ride sharing, reduced labor costs in freight transport, and greater mobility and social participation among the disabled and elderly.

Perhaps you are not in the transportation business, and as such, you do not continuously monitor the development of autonomous vehicles. In this newsletter, we examine the innovation race concerning autonomous vehicles, and its implication for our business customers.

What are autonomous vehicles?

Automation means different things to different people. It is therefore important to ensure clarity of what is discussed. A useful framework for understanding what full automation means is the Society of Automotive Engineers (SAE) International Standard J3016.

The SAE identifies six levels of driving automation from "no automation" to "full automation". The SAE base its definitions and levels on functional aspects of technology. According to the SAE, a fully automated vehicle is one that can operate effectively under any condition, regardless of weather, or regardless of potential constraints in the infrastructure in the surroundings, fully autonomously, without the intervention of a driver (see figure 1).

Human error is the main cause of road accident

Every year, nearly 1.3 million people die in a traffic accident. In addition, between 20–50 million are injured or disabled each year . Traffic accident ranks the ninth leading cause of death and accounts for 2.2 % of all deaths globally. Human error is responsible for more than 90 percent of all road accidents . Autonomous vehicles are the industries' answer to some of these problems.

How fast will we see autonomous vehicles on our roads?

The development of autonomous vehicles is no longer confiding in the room of obscure start-ups. Key car manufacturers and tech companies are involved in this race. Google paved the way with its self-driving car project in 2009(1). General Motors (GM) began testing its autonomous Chevy Bolt in August 2016(2). Ford motors has stated its intention to deliver fully autonomous vehicles in high volume by 2021. Toyota announced in 2016 that it too has invested $1 billion into developing a self-driving concept car, projected to launch in 2020.(3)

Some of the world’s richest, and most innovative companies such as Apple, Baidu, Google, Intel, Tesla, and Uber are all investing in autonomous vehicles and related technologies. With all these research and development activities, it is no wonder we begin to speculate on how soon autonomous vehicles will be on our roads.

Early this year, McKinsey & Company predicted that up to 15 percent of new vehicles sold by 2030 could be fully autonomous(4). That is for every ten cars sold; about two would be fully automated.  However, how fast we will see autonomous vehicles on our roads depends on regulation, national politics, and cost. In some countries, such as the USA, Germany, and the UK, regulators are aiding and preparing for the transition to autonomous vehicles. These regulators see autonomous vehicles as an opportunity to save money, time and lives.

In September last year, the US Department of Transportation issued its Federal Automated Vehicle Policy, which outlines how manufacturers and developers can ensure safe design of driverless vehicles and points out potential new tools for ensuring safety.(5) The UK has set up a £10m fund for driverless car researchers(6). In Germany, the transport ministry has offered €100 million in funding for testing autonomous vehicles(7). Of course, not all regulators are happy about driverless cars, in India for example, the Highways ministry has banned the testing of driverless cars completely for fear of its taking jobs for local drivers.(8)

At the supranational level, the EU, for instance, has no legislation to regulate the use of autonomous vehicles, although powerful initiatives are under way, such as the EU’s GEAR 2030 to reinforce the competitiveness of the European automotive industry. Also beginning 2018, eCall will be required in all new cars in the EU. eCall is a European service for electronically triggered distress calls from vehicles to a call center, and it effectively amounts to a requirement for all new cars to be connected.

(1) It renamed to Waymo 2016. See www.google.com for more information

(2) Ayre, J. and Ayre, J. (2017). GM Now Testing Autonomous Chevy Bolts In Arizona. [online] CleanTechnica. Available at: https://cleantechnica.com/2016/08/15/gm-now-testing-autonomous-chevy-bolts-arizona/ [Accessed 3 Aug. 2017].

(3) Anders, G. (2017). Toyota bets a billion dollars that it can regain lost ground in the race to make autonomous cars. [online] MIT Technology Review. Available at: https://www.technologyreview.com/s/601504/toyota-makes-a-u-turn-on-autonomous-cars/ [Accessed 3 Aug. 2017].

(4) McKinsey & Company. (2017). Disruptive trends that will transform the auto industry. [online] Available at: http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/disruptive-trends-that-will-transform-the-auto-industry [Accessed 3 Aug. 2017].

(5) NPR.org. (2017). Government Says Self-Driving Vehicles Will Save Money, Time, Lives. [online] Available at: http://www.npr.org/sections/thetwo-way/2016/09/19/494648888/feds-to-set-rules-on-self-driving-vehicles [Accessed 3 Aug. 2017].

(6) Gibbs, S. (2017). Driverless cars get green light for testing on public roads in UK. [online] the Guardian. Available at: https://www.theguardian.com/technology/2014/jul/30/government-driverless-car-self-driving-car [Accessed 3 Aug. 2017].

(7) Thelocal.fr. (2017). Driverless cars planned for French-German border crossing. [online] Available at: https://www.thelocal.fr/20170209/driverless-cars-planned-for-border-crossing-between-france-and-germany [Accessed 3 Aug. 2017].

(8) Gupta, M. (2017). Won’t allow driverless cars that take away jobs: Nitin Gadkari. [online] http://www.hindustantimes.com/. Available at: http://www.hindustantimes.com/india-news/won-t-allow-driverless-cars-that-take-away-jobs-says-union-minister-nitin-gadkari/story-JCDjBMoDQ4yzXrWv3ltxsK.html [Accessed 3 Aug. 2017].

Article by
Gilbert Kofi Adarkwah

Gilbert Kofi Adarkwah

Underwriter