Looking at how the automotive industry has evolved over recent decades can teach us about the barriers
innovative and disruptive technologies faced as well as the strategies that eventually brought them into
the mainstream. Can they help us predict how Autonomous Vehicles (AVs) might enter the market?
Let’s take a lesson from hybrid cars. Selling cars as a status symbol initially worked well to popularize
hybrids. When Tesla came out with the Tesla Roadster, it was not a car that everyone could afford, but
the fact that it’s performance was as good as a diesel run sports car made it sell among the
environmentally conscious wealthy. One challenge to the high status strategy, however, comes from
luxury cars being desirable because the driving experience itself is superior to that of a family car. It is for
people who love driving and are willing to pay top dollar for it. To add to that, in the US, 12 years since
their introduction into the market (1999-2012), hybrid cars captured only 3% of annual total car sales.(1)
With environmental and safety issues constituting a larger, more significant part of the auto consumer
consciousness, it may take more years for AVs to be adopted through this strategy.
In the most practical terms, fleet owners such as taxis or Uber stand to gain the most from AVs. Early
adopters of the autonomous fleets will have a huge advantage of setting up subscription based models
that could turn into monopolies. According to “Driverless Car Market Watch,” cars will likely not reach
consumers directly at the first stage because mapping out all the routes a single consumer needs to
travel to requires extensive (as well as expensive) work. Rather, it makes sense that local driving services
will map out an area to provide AVs for that region. Subscription services have an additional financial
incentive. These services would have the opportunity to reach new market segments that currently do not
independently use vehicles, such as people with disabilities and children. And as the population gets
older, the elderly can also be factored in as a growing market for Avs. Car makers would be wise to direct
a large part of their ad campaigns to target these segments early on.
The big companies that are leading the race so far seem to be high-tech companies such as Google and
Apple and auto-makers such as Tesla and GM. According to Google, their AVS have driven 1.3 million
miles in fully-autonomous mode since 2012. That is the equivalent of 90 years of human driving for the
average human driver. Uber appears to be giving the front runners a good fight though. The company is
rumored to have poached engineers from Carnegie Mellon to speed up its self-driving initiative.(2)
In the past decade, automakers have added sensors and other automated functions to make our driving
easier. So one interesting question is whether we will see self-driving gradually inserted into new car
designs or will autonomous vehicles appear as fully autonomous. While Google is banking on releasing a
fully autonomous car from the get-go, Tesla’ Approach is to create autonomy in stages, such as first
adding advanced cruise control, then adding other features. Taking a safety-first perspective, I personally
prefer fully the autonomous vehicle appear as one complete product. Already in Google's experiments,
though required to keep eyes on the road at all times, some test drivers have been caught reading and
doing anything else but being focused. Having autonomous features appear here and there may simply
confuse drivers and blur the lines of responsibility. From a marketing viewpoint, the advantage of a fully
autonomous vehicle comes from the excitement around it, likely making it a better sell.
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