Autonomous vehicle suppliers face competition and consumer sentiment

21 March 2017

Fully autonomous vehicles offer a host of benefits, from improved safety to lower fuel and insurance costs. While the mass rollout of the technology remains a future possibility, a range of more compact and context specific autonomous technologies are being embedded into vehicles. Suppliers of the technologies that underpin autonomous vehicles can expect the market to reach $26 billion by 2025. Uncertainties remain however, with consumers unwilling to pay a high premium, while multiple new entrants are set to spark a complex playing field.

Fully automated and fully electric vehicle transport systems could drastically reduce accidents, lower congestion, transform the built environment away from car parking, as well as improve overall transport net efficiency – where public transport options are impractical.

In a new report from Bain & Company, titled ‘An Autonomous Car Roadmap for Suppliers’, the consultancy firm explores the current state of autonomous vehicle technology, consumer interest in the technology as well as some key uncertainties facing supplier companies developing technologies for the market.

Assistive and autonomous driving features

Fully functioning cross context and environment independent autonomous vehicles remain some distance away – aside from the technology being expensive, and experimental, regulatory factors will limit on the road commercial rollout for the time being. Consumers do however, have access to a range of intermediary technologies, many of which are termed advanced driver assistance systems (ADAS).

These technologies allow for cars to assist their drivers in a range of contexts, from emergency breaking and adaptive cruise control, to lane detection and traffic jam assistance. While the technologies implicated in a number of these features are not without expense, the authors argue that the economies of scale will mean that on average consumers will be able to afford them without considerable additional expense.

Global market for autonomous driving and assistive safety and comfort features

As the technology matures, and OEMs and other parties continue to roll out propositions to consumers, the B2B market is projected to see considerable growth in the coming decade. The technology that underpins ASAD, including software, hardware and services sold by suppliers to automakers, is set to hit $26 billion by 2025 by achieving a CAGR of between 12% and 14% from today’s market of $8 billion.

The largest part of the market is predicted to result from ADAS development and sales, representing around 90% of the total market.

Buyers are very interested in new auto technologies

Key ADAS features

While technology innovations in the coming decades are likely to be focused on ADAS technologies, rather than full automation, the technology will need to be of interest to consumers for them to pay a premium for it in vehicles. To better understand consumer sentiment, Bain & Company surveyed 4,200 consumers in eight main automotive markets about the ADAS features they want most.

The research notes that the majority of consumers surveyed are likely, today, to use an existing ADAS feature. One area in which consumers are more concerned than in general about ADAS features is fully autonomous parking, although they say that in 10 years they will be keener than they are today. In terms of going fully autonomous in specific situations, around 50% of consumers would consider doing so today.

The top benefits, according to the consumers surveyed, are ‘safer driving’ as cited by around 70% of respondents saying it is at least a moderate benefit, followed by ‘saving fuel’ cited also by around 70% of respondents. Lower insurance premiums and more comfortable driving followed, which was noted by consumers in the upper sixty percent range as at least a moderate benefit.

The top concerns of consumers are the high price of the technology, cited as a strong concern by around 50% of respondents, followed by failing technology, at around 45% of consumers with strong concerns. Other areas of concern are ‘systems not working in every situation’, ‘vehicle can be hacked’ and ‘unclear liability situation’.

Buyers are not willing to pay much more for advanced features

Change coming to supplier market

The consulting firm found that there are two major uncertainties shaping the market for suppliers: the speed of adoption of the technology and the entry of new players into the market. The former of the two uncertainties reflects a difficulty faced by companies, as consumers want the technology but few are willing to pay a high price for it. Adaptive cruise control for instance, is seen as standard, while for fully autonomous driving in specific situations consumers are only keen to pay 2% more. The only area in which consumers are keen to spend more is for fully autonomous parking, at around 116% of the vanilla price.

The second area of concern is new entrants from cross border entities, such as technology players Apple, Google, Tesla and Uber, and computer hardware players, Intel and Nvidia. Another area of concern is from government funded projects, with funding from, for instance the Chinese government, able to accelerate innovation in the domain.

“The autonomous driving market will be slow in developing, but that doesn’t mean the auto industry should take its foot off the gas,” says Hans Joachim Heider, Bain partner and co-author of the study. “We anticipate continued strong interest in autonomous driving among consumers around the world, particularly as the cost and complexity of driver assistance technologies decrease.”

According to a recent analysis by The Boston Consulting Group, the size of the autonomous car market will hit $42 billion by 2025.


More news on