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Autonomous Vehicle (AVs) technology has improved dramatically in recent years, supported by large investments by auto manufacturers, original equipment manufacturers (OEMs), and technology companies. Safety is one gauge of progress, and according to some analysis, AVs can reduce road fatalities by 94%.1 What makes this technology so intriguing is that with artificial intelligence (AI) and machine learning, AVs can improve on a safety metric like this the more miles they drive and the more data they collect. The road to full autonomy and mass adoption remains a long-term proposition, due in part to necessary testing, as well as regulatory and infrastructure uncertainties. However, early commercial use cases with investment implications are already emerging.
- Stringent testing must be completed to demonstrate advanced AV technology is road ready. By one measure, about 275 million test miles are required for AVs to demonstrate human-like performance with 95% confidence.2
- Investments continue to pour into the AV supply chain, with some of the largest commitments coming from traditional auto manufacturers. Most of the largest carmakers plan to launch fully autonomous commercial vehicles by 2025.3,4,5
- Robotaxis are one of the more immediate growth opportunities for the AV industry, as they can be an easy, low-cost entry point for consumers. The total addressable market for robotaxis could be $160 billion by 2030.6 And a single robotaxi could earn between $30,000 and $85,000 per year.7,8
AV Technology Advancing, but Work to Be Done to Reach Full Autonomy
Autonomous vehicle technology in the market today ranges between Levels 1 and 3, which incorporates various degrees of basic automation. Level 4 is considered high automation, as the car can control all driving functions and operate without human intervention under certain conditions. As we wrote in The Future of Transportation Is Autonomous & Electric, Level 5 is the holy grail for AV technology because the vehicle requires no human input. Forecasts for when the first fully autonomous cars come to market remain a moving target. Tesla (TSLA) first said it would happen in 2019, and then changed it to 2021, before pushing it to 2022.9 Nissan (OTCPK:NSANY), Renault (OTC:RNSDF), and Toyota (TM) believed that they would have Level 5 cars by 2020. Others, such as Jaguar Land Rover and Mercedes-Benz (OTCPK:DDAIF), say 2024 and 2025, respectively.10 GM says they will sell fully autonomous vehicles by “the middle of the decade.”11
But even though fully autonomous cars haven’t hit the roads yet, the technology has made significant strides. AVs constantly collect and process billions of data points from an array of cameras with sensors, radar, and LiDar systems, which are much improved and more affordable than earlier iterations. Also, advanced driver-assistance …….