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McKinsey & Company: Private autonomous vehicles: The other side of the robo-taxi story

Although private self-driving cars attract less attention than robo-taxis do, our new market model suggests that they could give OEMs opportunities for growth

In the past few years, autonomous driving (AD) has generated sizable interest. The buzz started with a wave of bold announcements by tech companies and automakers about their plans to launch vehicles with conditional and high automation. These declarations proved premature, however. After investing several years and billions of dollars in R&D—and enduring some highly publicized autonomous-vehicle (AV)-related casualties—automotive players have delayed or retreated from their initial pronouncements; plans for vehicle launches have been postponed or scaled back. Many OEMs cite technology issues and insufficient regulations for autonomous driving when they explain their change of plans.

Despite these early setbacks, there have been some important success cases involving vehicles with AD capabilities, and they represent a huge opportunity to transform mobility. Road safety would increase as AD systems reduced collisions caused by human error, and drivers would have more time to relax in vehicles rather than focus on the road. Many compa­nies recognize AD’s enormous potential and are forging ahead. But in addition to technological hurdles, they face many uncertain­ties, including those related to the COVID-19 pandemic, the exact regulatory requirements that will be established, and customer willingness to pay. These could affect both the availability and adoption of AD features.

Autonomous driving represents a huge opportunity to transform mobility. Road safety would increase, and drivers would have more time to relax in vehicles rather than focus on the road.

To provide greater clarity about how the AV market could evolve, McKinsey developed a detailed mobility-market model that covers more than ten modes of transport. Our model includes data from upward of 2,800 cities and rural areas in more than 110 countries. Among other things, the model projects miles traveled, light-vehicle sales, installed vehicles (or parc), environmental impact, and the size of the value pools for private and shared transport through 2030. Recently, McKinsey updated the model to include COVID-19’s impact on the adoption of AVs.

Using insights from the mobility-market model, we created future AV scenarios that will help OEMs, suppliers, and investors make decisions about their opportunities. After describing general trends, we focus on our findings about the private AV market—a segment that typically attracts less attention than shared robo-taxis do. By our definition, the private AV market comprises all vehicles not used for AV ride-hailing services. We believe that this private market could open new opportunities for OEMs, especially in the premium segment.

Autonomous driving will change the automotive game

AD will be a game changer in the automotive industry. For one thing, it is becoming a key buying factor for customers: a recent McKinsey survey of 1,000 people in China, Europe, and the United States, for example, showed that roughly 60 percent of respondents in each region would switch automotive brands to get a vehicle with better AD features. Despite some degree of dilution when customers move from consideration to purchase, this finding illustrates the current perceived importance of AD features (see the ACES1 2019 survey for details).

Among premium customers, the 2019 McKinsey Future Mobility Survey (Exhibit 1) indicates that the willingness to switch OEMs for the best AD features is significantly higher in China (81 percent) than in the United States (52 percent) or Europe (about 60 percent in France and Germany). Chinese customers may be less loyal to brands in general and more interested in technology. Premium customers also show a significantly higher willing­ness to switch, since they value the latest technology more than other segments do.

Exhibit 1

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SOURCE: McKinsey & Company

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