Pandemic Reshapes Autonomous Vehicle Landscape

Article By : Egil Juliussen

The Covid economy has already impacted the auto industry negatively and more changes are on the way along with a large dose of uncertainties...

The Covid economy has already impacted the auto industry negatively, and more changes are on the way, along with a large dose of uncertainties. We can use what we have learned from the last few months to give perspectives on the likely future. The first table below summarizes a few things we have learned.

The “Egil’s Eye” Column

Global auto sales dropped like a rock and will remain well below recent yearly sales for five years and possibly longer depending on region. 2020 will have the largest yearly sales drop at 22% to 69.6M units versus 89.4M in 2019 according to an IHS Markit press release on April 30, 2020.

Lower auto sales and revenue will create significant impact by lowering R&D funds for autonomous vehicle developments. However, the impact magnitude will vary between auto OEMs, suppliers, high-tech and VCs. The leading AV high-tech players are doing well in the Covid economy and will continue to invest in AVs. High-tech leaders are also known for continuing R&D spending during recessions.

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On the road AV testing was halted for several months for multiple reasons and will be slow to return. Much lower traffic makes it harder to get useful information to improve the driving software.

Covid Impact

 (Auto sales source: IHS Market press release April 30, 2020)

Virtual AV testing has been growing lately, and Covid provided another surge in computer-based testing to improve the driving software. Virtual AV testing is also much more valuable for finding and learning to safely drive more of the edge-cases that remain unknown.

Covid economy
The next step is to explore the future impact of the Covid economy on the various segments of the AV industry.

The table below divides the AV industry into 12 segments according to their diverse characteristics, varied complexities and different deployment timeframes.

Perspectives on near-term (1 to 3 years) and long-term (3 to 10 years) impact are summarized with projected deployment included when a year is listed.

We are currently using R&D AVs and maybe a few can be classified as prototype AVs. AVs for future deployment have to go through extensive software and hardware design improvements and exhaustive testing to be ready for production and safe usage.

Robo-taxi testing and trials will probably see delays of 6-9 months due to Covid impact. Robo-taxis will see limited city-by-city deployment without safety drivers starting in 2024. There will probably be large earlier trials that may be touted as deployments by some companies. Shared rides with strangers are not expected until a Covid vaccine is completed across the majority of the regional population.

Goods AVs [vehicles that deliver goods] had a positive impact by delivering Covid-related supplies in several countries. The impact was miniscule since there are only a handful of test versions available. Even so, this is likely to position goods AVs receive larger investments than pre-COVID. Goods AVs will also have earlier deployment than robo-taxis.

Sidewalk AVs — developed by Starship — operating on the University of Wisconsin (Madison) campus for food delivery. (Image: EE Times)

There are two types of goods AVs — sidewalk AVs and road goods AVs. Since both transport only goods, that simplifies safety requirements somewhat. Sidewalk AVs move at human walking speed or slower and are in large test runs at delivering groceries to consumers and dropping off restaurant meals at colleges (when colleges were open). Goods AV that drive on roads may be regular autos now, but half-car sized versions are likely to be the winning formula.

Both goods AV types could be ready for deployment in 2023.

Hub-to-hub autonomous trucks have advanced their trials and testing experience mostly in the U.S. and China. Covid created a large demand for trucking services that is expected to help fund continued investments in autonomous trucking. AV trucks in closed venues and fixed routes are also on the AV investment list.

Both these truck categories could start deployment around 2024.

Fixed route AVs were doing well pre-Covid and had seen hundreds of small trials and tests transporting small groups of passengers on pre-set trips. This shared people use was quickly halted in the Covid economy. A Covid vaccine will be needed before fixed route and shared AVs will recover.

A few fixed route AVs were used as goods AVs during the Covid pandemic, but current versions are probably too expensive to compete in this market segment.

Personal L4 AVs are far away and have lots of uncertainties on future evolution. The best-case scenario is that personal L4 AVs could leverage the software driver platforms developed for robo-taxis and could serve a similar area for personal use. Best guess is that this will happen five years after robo-taxis are deployed in a given city.

Personal L5 AVs are much further in the future and not within the 10-year time frame for this article.

Many of AV software and lidar startups will be in for a rough time and a significant portion will be gone or acquired in a few years. Most of these startups will not get funded in their next financing round and will be acquired or go out of business.

The leading startups such as Argo & Aurora will receive continued funding from VCs and OEMs. Thinning out the ranks of AV startups would have happened sooner or later but the COVID economy is making it sooner.

Click the table to enlarge. (Source: Egil Juliussen)

— Egil Juliussen is a consultant on auto tech trends at IHS Markit.

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