Mellon Mobility Innovation: The Evolution of Autonomy
Rising congestion and increasing safety concerns from consumers are driving companies to find alternatives to traditional vehicles. In response, several manufacturers are actively exploring self-driving cars, also known as autonomous vehicles.
While fully autonomous vehicles, identified as Level 4 and Level 5 by the Society of Automotive Engineers, are still several years away, steady progress at Levels 1 through 3 is underway now. Advanced driver assistance systems (ADAS) attach rates are increasing due to the rising number of sensors per vehicle. Systems like lane departure warning, automatic emergency braking and blind spot detection are increasingly helping drivers and their vehicles make lifesaving decisions in real time.
ADAS Systems Continue to Evolve
Multiple Systems and System Redundancy is essential for automated driving
Acronyms are defined as follows: CAA/ACC (collision avoidance assist/adaptive cruise control); SRR (short-range radar); MRR (medium-range radar); LRR (long-range radar).
Recent research from the National Highway Traffic Safety Administration (NHTSA) in the US supports our view. According to NHTSA, US traffic fatalities declined by 3.4% in 2018 as a percentage of miles driven. Fatalities improved with an additional 4.5% decline in the first half of 2019.1 Recent trends support an improving trend after a 2.5% decline in 2017 and rise in fatalities in both 2015 and 2016 due in part to distracted driving from texting.2 The NHTSA attributes the reduced fatalities to higher ADAS attach rates. Level I ADAS attach rates increased from 6% in 2015 to 45% in 2018. NHTSA predicts ADAS Level I penetration rates will reach 75% by 2022.3 Additionally, Level 2 ADAS has increased from 1% in 2017 to 3% in 2018 and 10% by the first half of 2019. Despite improved safety rates within the car, NHTSA recorded a rising trend in accidents of 3.8% per year for pedestrians and cyclists. Based on rising global concerns over these trends, NHTSA forecasts a 19% compound annual growth rate (CAGR) in global ADAS volumes through 2025.4 These trends support our positive outlook for future growth in the ADAS subtheme.
ADAS progress is not only driven by a need for improved safety, but also for improved efficiency. In 2019, self-driving applications began to extend beyond the car and into new markets, including trucking. Commercial truck drivers continue to be in short supply in North America. The mobility industry is addressing this shortage by delivering improved autonomy with self-driving mining equipment and truck platooning where trucks are tethered together wirelessly over long-haul routes. According to Allied Market Research, the self-driving truck and platooning markets can grow to $1.67 billion and $4.59 billion, respectively, by 2025.5
Also supporting this trend is the rollout of 5G technology, which will not only improve safety measures but will also transform how vehicles are powered and who is driving them. As 5G networks come online, they will help create new technologies that will propel the creation of fully autonomous vehicles. As these vehicles rapidly become a reality, many people are beginning to question the future of ridesharing, which is already facing significant headwinds and increasing regulatory barriers.
In our next article, we discuss the challenges and opportunities facing the ever-changing ridesharing business and what it could mean for investors over the long term.
1National Highway Traffic Safety Administration. US Transportation Secretary Elaine L. Chao Announces Further Decreases in Roadway Fatalities. October 22, 2019.
2Federal Highway Traffic Safety Policies: Impacts and Opportunities. Congressional Research Service. July 12, 2019.
3US Department Of Transportation; National Highway Traffic Safety Administration. The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Year 2021 – 2026 Passenger Cars and Light Trucks. July 2018.
4David L. Kelley and Gavin Kennedy. '18 Crash Declines; US to Revamp Crash Ratings, Pos. for Active Safety Adoption. Jefferies. Auto Tech & Connected Mobility. October 23, 2019.
5Chandani Poddar & Supradip Baul. Self-Driving Truck Market by Level of Autonomy (Level One, Level Two, Level Three, and Level Four) and Industry Vertical (Logistics, Construction & Manufacturing, Mining, and Port) - Global Opportunity Analysis and Industry Forecast, 2020 – 2025.
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