BCG: Autonomous car market to hit 42 billion by 2025

01 June 2015

The autonomous car market will hit $42 billion by 2025, projects the Boston Consulting Group. The firm’s research shows that consumer sentiment for partially autonomous and fully autonomous vehicles in the US is at 55% and 44% respectively. Of those interested in the partially autonomous vehicles, 14% would be willing to pay a premium of $5,000 for a car that drives itself on highways. 

Autonomous cars
Autonomous vehicles of several kinds are well on their way onto our roads, with R&D resources being poured into the technology spectrum from multiple players, including car giants like Toyota, Volkswagen and GM, as well as technology giants like Google. The technology is expected to release fully autonomous cars, that are able to navigate themselves in most contexts, as well as partially autonomous cars that are able to take a variety of functions over from human controllers. This may include driving itself in traffic jam situations, single-lane highway autopilot and urban autopilot.

In a recent report from the Boston Consulting Group (BCG), titled ‘Revolution in the Driver’s Seat’, the consulting firm surveys the sentiment among 1,500 US consumers regarding their willingness to buy autonomous cars, as well as the future deployment of the cars as demand for them starts to affect market share.

Willingness of US consumers to buy autonomous cars

Consumer sentiment
When asked whether a respondent would buy a partially autonomous vehicle, 25% indicate they are very likely to and 30% say that they are likely to. 22% say they are unlikely or very unlikely to buy into the technology. For fully autonomous vehicles there is slightly less interest, with 23% saying that they are likely to invest in such a vehicle, while 21% say that they are likely to. The very unlikely group in this category is up considerably on the partially autonomous group, with 20% saying that they are very unlikely to buy into the technology.

Concerns from the survey group for the technology are broadly related to reliability, cyber security, and uncertainty about the autonomous vehicle’s interactions with other vehicles on the road. 

Willingness to pay more

Not only are many of the respondents interested in the technology, but many are willing to pay a considerable mark-up to take their foot off the pedal. For instance, of the 67% of respondents somewhat or very interested in the partial autonomous vehicle that drives itself on the highway, 54% willing to pay more for it, with 14% willing to pay more than $5,000 for the feature. While for the feature that would see a car park itself, of the 67% of respondents interested in the technology, 8% would pay more than $5,000 while 28% would pay $999 or less.

The top three reasons to buy a partially autonomous car

The reason for adoption of the technology various between the types of vehicle, however the most prominent reasons for both levels of automation are relatively close, with lowering insurance premiums and increasing road safety seen as key reasons. Improvements in efficiency came in fourth for partially autonomous vehicles and seventh for fully autonomous vehicles.

The top three reasons to buy a fully autonomous car

Autonomous riding high
Given the positive consumer sentiment, and the drive to get the technology on the road, BCG finds that early adopters, those willing and able to pay, are set to drive sales over the coming decade in both partially and eventually fully autonomous vehicles.

Partially autonomous vehicles are set to begin taking market share in the coming decade, with an around 12.4% share by 2025, climbing to 15% in 2035. While the technology for fully automated vehicles is still some time off, by 2025% the consultancy projects 0.5% of cars on the roads will be driven by themselves, while by 2035 this will reach 9.8% market uptake. The (partially) autonomous cars market share will reach 13% of all vehicles on the road by 2025, with a worth of $42 billion*, and reach $77 billion by 2035, accounting for 25% of all cars.

Global market for autonomous cars

Commenting on the results, Thomas Dauner, a Senior Partner in BCG’s Stuttgart office, the Global Leader of the Automotive Practice, and a co-author of the report, says: “OEMs should act now to capture this massive market opportunity. They should make investment in software their priority. Software accounts for almost 40% of the cost of autonomous features, which is nearly equal to the cost of the necessary hardware.”

* Recently Roland Berger also executed a research into the autonomous cars market and foresees the market share to grow to between $40 and $60 billion by 2030.