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Is the future of Autonomous vehicles bleak?

Everyone in the industry is becoming more and more nervous that they will waste billions of dollars," ~ Klaus Froehlich, head of research and development at BMW.

In case you are wondering what Klaus is talking about, he is talking about autonomous vehicle investments that various companies are making. Why is there a sudden change in the outlook of various OEMs and other players in the Autonomous Vehicle (AV) segment? Let us look at what has happened in AV development and how the positive attitude of OEMs and Tier 1s has nose-dived to the point that their top executives have started taking about fear of losing money in their investments.What has contributed to this sudden change? Some of the factors that are critical are:
  1. The technology is still not mature enough to be able to mass-produce AVs and we are still 5-10 years away to reach that state.
  2. The market segment for AVs is still not clear. Should the OEMs target the common person? Alternatively, should they target ride-hailing companies like Uber?
  3. Acceptance of AVs by the common person is still some years away. Like any innovation, the critical mass (aka inflection point) takes some time to reach & this is no different for this technology as well.
  4. Clarity on who is liable for any issues that could happen because of malfunctioning AV vehicles. Is it the OEM? The Tier-1? The Tier-2 who supplied the sensors? The debate is still ongoing on how to handle these scenarios.
  5. Legal frameworks are not yet complete for the roll out of AVs. For example, should an AV undergo a ‘Driving Test’ and get a ‘Driving Licence’? In addition, there is always the trolley paradox to deal with….. 
Given all these factors, how should the players in this segment fine-tune their expectation regarding the year by which Level-4 & Level-5 AVs will hit the market? Gartner’s hype cycle for the past 5 years gives us a good indication of what to expect and when. As per Gartner’s research, level-4 AVs are at least 5-10 years away (As per the hype cycle for year 2019) and level-5 AVs are more than 10 years away.

A quick look at the ‘Hype Cycle’ and it becomes evident that AVs have been ‘more than 10 years’ away for the last 4 years. The shifting goalpost is symptomatic of any new technology that is not yet ripe for the industry. What it means to people in the automotive industry is that they need to decide in the next couple of years about the following:
  1. Whether to continue to pump in their R&D money hoping that the returns would come soon or
  2. Stop making these investments & wait for the technology to mature with the flip-side of completely missing the AV bus. 
Does this mean the end of the road for AVs? Certainly not! It just means that companies should aim for the long-term haul, be realistic and steadfast in their goals, be prudent in their technology/R&D investments, look for opportunities for merger and last but not the least, enjoy the bumpy ride!