• Nick Turner

The Digital Driving Age: A Bumpy Road Ahead?

Key Challenges to Adopting the Next Generation of Driving Technology

Hardly a week goes by without a new exciting announcement in the world of driving technology. However, having worked over the last 12-18 months to explore the future of mobility with major technology firms, leading European car manufacturers and government transport ministries, I have come to the conclusion that we have many significant challenges ahead.

Challenge 1: Who's in the driving seat?

Autonomous cars are "the future", so we are told. The number of autonomous vehicles (AVs) on the roads of California has doubled in the last 2 years, as traditional and non-traditional manufacturers alike, race to test and bring into the mainstream their self-driving cars. 27 companies are now licenced to test their prototypes on California's roads (including Uber, who have also somewhat belated applied for permission!). Up to 180 vehicles are being tested at any one time, 77 of those belong to Alphabet's Waymo alone.

There are a number of benefits touted for the adoption of autonomous cars, from increased safety, optimisation of crowded road infrastructure, reduced energy consumption, to enhanced productivity for time-poor passengers. However a survey by the Kelley Blue Book last year, highlighted that drivers in the US are torn between the desire to be in full control of their vehicles (51%) vs. those who were willing to give up at least some control (49%) in order to have a safer roadway.

Some of this reticence can of course be blamed on a combination of a lack of familiarity and trust in new technology (it has ever been thus!). However, a 2015 Guardian / Opinium survey pointed out that 75% of people also believed that they are better drivers than a computer. An interesting statistic, notwithstanding the possible cognitive biases at work here, given that most of us believe we are "better than average" drivers!

So trust is an issue, but so is life-style and and in particular driver experience. A number of car manufacturers (BMW most notably) have sold their products on the basis of a superior driving experience for years. Consumers have bought into this paradigm and paid the premium. Both parties may struggle to move on. Many people actually do enjoy driving; will they be willing to give up this pleasurable freedom?

At least partial autonomous driving (SAE levels 1-3) will, most likely, continue to be incorporated and adopted at a gradual pace. Just as we have historically accepted other driver aids, from cruise control, satellite navigation to self-parking and lane control. When, whether and why drivers will give up complete control (levels 4 & 5), in all situations, remains to be seen.

Challenge 2: Who owns the data?

Connected cars are also "the future". In fact they are essential, if we are to move to truly autonomous vehicles (CAVs) that are able to communicate and interact with one another. However a number of issues are raised: who owns the vast datasets that will be created and will consumers be willing to share "their" data?

McKinsey estimate that the value pool from car data and shared mobility could add up to more than USD 1.5 trillion by 2030. The figure above illustrates the multiple sources and entities that will generate and share data from and to connected vehicles. The increase in sharing of "car data" should in theory open up numerous tangible benefits to consumers, not least, increased safety and convenience together with reduced costs and time. Today, most consumers willing and consciously "give up" their data in return for "free" app usage and content. Whether this continues to be the case, as the generation and transfer of data increases both in terms of sophistication and value, also remains to be seen.

Data security and vulnerability to hacking is also a concern. As with any other object that becomes part of the ever-expanding Internet of Things (or Everything) with increased connectivity comes increase utility, potentially increased value but also an increased "attack surface" for hackers. Horror stories of compromised CAVs being forced to crash already abound. Confidence and peace of mind for the consumer will need to be built to overcome this significant constraint. This is not a trivial task, given the issues we are already seeing today in protecting our personal and commercial data, not to mention the increasing challenge to the integrity of elections and geopolitical stability.

Challenge 3: Who's in charge?

Adopting autonomous vehicles raises all kinds of interesting, complex and, as yet, unresolved moral, legal and ethical issues. From a safety perspective, how should an autonomous vehicle optimise outcomes? To protect the passengers in the car? Pedestrian safety? Cyclists? Other vehicles? If something does go wrong, who is to blame? The car owner / passenger, the vehicle manufacturer? The software developer? Providers of connectivity (that may have failed)? Etc.

Policy makers, lawyers, insurance companies and their ilk have numerous issues still to work through before AVs can dominate our road infrastructure. Who will set the standards? How will we ensure that even if agreed, those standards will be compatible internationally? Who is insured and for what? The pace of innovation and speed of technology today is far outstripping the ability of policymakers and regulators to keep up. AVs are one area, I would argue, where society shouldn't be on the "bleeding edge".

One of the most high profile providers of semi-autonomous technology available in cars today is of course Tesla. Their Autopilot software (with over-the-air updates) is often lauded as a major breakthrough in the next generation of mobility. The key word here from a control and "who's in charge" perspective is "semi". Elon Musk and his marketing team hype the autonomous and intelligent features of their cars and only at the end of high-profile promotional events do they add that legally, a driver must still have their hands on the steering wheel. The temptation not to do so (check YouTube for the evidence!) and potentially lose focus must be high. Speculation as to the cause of crash that killed Joshua Brown back in May 2016, while "driving" his Tesla in Autopilot mode (see photo post-crash below), still continues.

Imagining a transitional world where "drivers" are still responsible for the safety of their vehicles, with the expectation that humans will be constantly ready to intervene in the case of an emergency, is hard to plausibly imagine. The release and testing of what is effective beta software in the real world also troubles a number of observers. Tesla did, interestingly, release a new version of their Autopilot software shortly after Brown's death.

Step on further in time, into a "transitional world" scenario and having a mixed fleet of manual, semi-autonomous and fully autonomous vehicles also throws up a number of practical challenges. Driving is still an intensely social process that frequently involves intricate interactions with other drivers, cyclists, and pedestrians. In many of those situations, humans rely on generalised intelligence and common sense that computers still find very hard to replicate and/or understand.

Challenge 4: Who has the power?

The rise of electric vehicles (EVs) is widely assumed to be on a parallel innovation track with an increase in connectivity and automation. Many of the leading traditional, and so called "challenger", vehicle manufactures combine electric propulsion systems with their latest developments in self-drive technology. The issues in transitioning to the widespread adoption of EV's, especially battery-powered "plug-ins", are multifold, not least; user range anxiety; initial cost of manufacturing; limitations of battery technology; loss of tax revenues from fossil fuels; the true environmental impact from both manufacturing and use of EVs; and of course the lack of a robust charging infrastructure.

On the last point, "My Electric Avenue", a recent pilot study sponsored by Scottish and Southern Energy Networks, concluded that about one third of the UK's local electricity grids will need to be upgraded if and when EV penetration gets to between 40% and 70%. While there has been growth, with around 500 electric cars registered per month during the first half of 2014, rising to an average of almost 3,000 per month during 2016, EVs still have a very long way to go before reaching such high rates of adoption across the entire UK fleet.

Challenge 5: Are we willing to share?

The sharing economy is disrupting industries around the globe. How this phenomenon will impact car ownership is still far less than clear. On the one hand there is a rapid growth in car clubs and sharing opportunities, particularly in urban areas. Alix Partners' research, claims that car club membership is now growing at 30% a year and should hit 26m members worldwide by 2020. The competition is intense, from "pure play" clubs like Zipcar (owned by Avis Budget) to more traditional manufacturers also launching their own initiatives, including BMW's Drive Now and Daimler's Car2Go.

My alma mater, Morgan Stanley, published very bullish numbers on the growth of car sharing (see chart below), speculating that the motor industry was being disrupted "far sooner, faster and more powerfully than one might expect". In reaction there have been a number of car makers trying to reinvent themselves, including GM, who announced a $500m investment in Lyft at the start of 2016.

And yet, traditional car ownership doesn't show signs of abating any time soon. New car registrations in 2016 in the UK hit an all time high of nearly 2.7m a 2.2% increase on the previous record set in 2015, noting the 3rd highest year was back in 2003 (2.58m cars). While there are some cyclical and macro economic forces at play here (cheap finance etc.) the structural trend for ownership would appear to be resilient.

As we know, the process of buying a car is not a purely economic or rational decision. Social status, displays of affluence and brand allegiance are also very important factors. Or at least they have been. A number of recent studies and market reports indicate that Millennials are far more pragmatic in their choices if and when they do decide to buy rather than share. A recent report from KPMG, surveying auto manufacturing executives, highlights that 59% of respondents expected that half of today's car owners do not want to own a car anymore in 2025. However, when Millennials themselves are surveyed (or indeed purchases recorded), the data is less conclusive. A recent study by Strategic Vision showed that people who were born from 1980 to 2004, are actually more captivated by cars than their parents and still want the freedom of owning one.

Smoothing out the bumps..

Driving technology would appear running ahead of society's ability to accept, trust, embrace, legislate and adopt at scale. To address this, industries need to converge and adapt; value chains need to reconfigure, policy makers, legislators and commercial manufacturers need to collaborate as never before. But, perhaps most importantly, we, as consumers, drivers and passengers, have to decide how we want to live our lives. What are the important trade-offs we have to make? What are we prepared to give up in order to gain as yet unquantified benefits? Are we prepared to sacrifice individual freedoms to become part of a resource optimised but potentially sanitised collective?


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