The age of autonomous vehicles is closer than you think
In a recent report by BIS Research*, the autonomous vehicle market was estimated at 6.6 million units in 2017 and is anticipated to reach 67.5 million units by 2028. This new technology will have a disruptive impact on jobs, not to mention firms linked to the auto industry, like Sydney Airport (think car parking revenues), Cabcharge, Transurban, Automotive Holdings, AP Eagers and Carsales, Bapcor, Super Retail Group and many others.
Another step toward broad scale global adoption has been announced in China this week with Ciston PR Newswire publishing a press release stating “China Post and Deppon Express, two of China’s leading delivery and logistics companies, have begun autonomous package delivery services with the first self-driving vehicles to be put into daily commercial use in China. The delivery trucks will operate on autonomous driving technologies developed by FABU Technology, a leading artificial intelligence (AI) company focused on intelligent driving systems.”
Putting aside China’s claims that all the above companies are “leading” – ignoring Waymo and many others – the press release detailed the recent testing of the technology;
“China Post, the state-owned enterprise that operates the official postal service of mainland China, employs 860,000 employees in over 82,000 post offices and branches. The service operates over 39,000 transport vehicles, which travel over a delivery network with 1,926,250 miles of streets and highways. Deppon Express is a leading logistics company in China, with operations in Korea, Japan, Thailand, Singapore, Malaysia, and Vietnam. Deppon Express operates 10,000 retail offices across China’s 34 provinces.
“Starting in November 2018, FABU partnered with China Post and Deppon Express to begin testing Level 4 autonomous driving trucks in China’s heavily populated Zhejiang Province. In Level 4 autonomous driving, the car handles the majority of driving situations independently although a human driver can still take control when needed.
“During the testing, self-driving trucks operating on FABU autonomous driving technology averaged 40-mile daily round trips along three different routes, with one delivery route passing through 50 intersections, 26 of which were controlled by traffic lights. The trucks drove both in daylight and at night, and on highways, through tunnels and along residential streets filled with pedestrians, schools and flea markets. Since the self-driving tests were conducted in winter, these Level 4 trucks also had to drive their routes during challenging weather conditions such as rainstorms, snow and fog.”
The carrier however did not specify how many autonomous vehicles it would begin using in April.
Autonomous delivery is on the radar of many U.S. and global carriers. The US struggles with a truck driver shortage. Analysts reasonably expect autonomous vehicles to significantly reduce labour and insurance costs for logistics companies but in the US, most of the autonomous delivery technology is operating on footpaths. Amazon Prime is piloting its ‘Scout’ delivery technology in Washington, FedEx is piloting its SameDay robot in a few months’ time and Starship Technologies is operating in San Francisco’s Bay Area.
Having said that, this Reddit Post shows a user’s photograph of an autonomous truck operated by the freight company Embark hauling an Amazon Prime trailer autonomously from Texas to California. This official website shows the Embark trucks operating autonomously.
It may only be a few years before autonomous vehicles are operating. Logistics and robotaxis are expected to be the first ‘use cases’. It is also true that in a decade’s time, hundreds of millions of conventionally operated vehicles will still be on the road. It may be 50 years or longer before the entire global fleet of conventionally operated vehicles are mothballed but a change is definitely afoot.
* Global Autonomous Vehicle Market – Analysis and Forecast, 2018-2028.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
bret
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As a lot of people have said, I think a lot of jobs will shift to servicing AV instead of driving which will include repairs, fine-tuning, optimisation, call and dispatch centres etc athough in time perhaps those could also be automated through AI and robotics. Perhaps we will see the re-appearance of humans petrol jockeys at service stations, since if I’ve ordered an AV taxi I would expect it to arrive with enough fuel to get me where I’m going. Perhaps the AV companies will turn into fuel companies – buy an AV from us and we’ll give you a deal for the AV to fill up at our depots. Since the AV can do this when not in use, at night for example, then there won’t be people going into service stations to buy stuff – goodbye OTR. The shifts are going to be enormous and exciting.
James Chappell
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With the recent Boeing fiasco, problems with their 727 MAX planes was blamed on a software fault. Looking around at any sort of technology and the constant bugs and unforeseen technical issues I can’t help but wonder if the forecasts for driver less cars are a little optimistic. Automatic trains have proven hard enough to perfect and they are on a fixed track. Someone enlighten me if I am ignorant but the whole concept just seems so far fetched.
Carlos Cobelas
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That is exactly why I will refuse to use one. If I have an accident I am willing to take responsibility for my fault but I am not happy to place my life in the hands of a software program.
Humans should maintain control of this world and not be relegated to mindless couch potatoes.
gabriel
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For the growing number of older drivers, Autonomous cars will be the best option.
Arun
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The missing player in action yet is regulation on these vehicles. Tesla’s accident report on the accident that happened in 2016, researched by NHTSA, was delayed for unknown reasons. There is some evidence that they are now being forced into investigation for every Accident that happens with Level 2 and above. These vehicles are at the moment shoe horned into the roads without having any compliance or published testing procedures and might hit hurdles when ever the safety agencies decide to wake up and actually review standards. Until agreed upon testing procedures are in place these things are going to be a legal magnet.
Carlos Cobelas
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I think you are greatly overestimating the take-up of autonomous vehicles if you think the CBD will be fully autonomous.
Many people will refuse to give up control, many of us enjoy driving our nice cars, one of the daily pleasures in life, and personally they will have to pry my cold dead hands from the steering wheel and gear stick of my sportscar before I own a Googlemobile!
Roger Montgomery
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That’s a view I hold personally too Carlos (I think people will be driving for a long time and note my comment that many billions of conventional vehicles will remain on the road) but that view has been met with quite vehement opposition. When I sat down at the Melbourne F1 race to discuss the subject of autonomous vehicles with the Head of Automated Driving and Active Safety at Mercedes-Benz, he told me that he thought there will ALWAYS be people who would want to drive cars. I think that is true for the foreseeable future but I can see a day (maybe 50 and much less than 100 years from now) where those that do love driving themselves form such a small minority that it will be too costly to provide for them and they’ll be legislated away. The only opportunity to express their desire may be relegated to private roads. My forecast is that low digit and personalised number plates will have zero value. It took a long time from the day Bertha Benz commandeered her husband Karl’s 1886 Patentwagen to drive from Mannheim to Pforzheim in 1888, to when roads were no longer populated by horse hitching posts and drinking and feeding stalls for horses. I suspect the changes in the next generation of changes won’t take as long.
John
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Yep, for example horse drawn carts are still all over the roads today. Of course the same is going to happen with driver dependent cars when automation occurs!
Roger Montgomery
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It’s not a question of ‘if’. The debate is about ‘when’. I’ll be attending a breakfast with a McKinsey consultant who has made this topic their life’s work. I’ll share what I hear.
John
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Roger, have a watch of Tony Seba on youtube – its a pretty convincing argument about how disruptive the coming auto revolution will be – and I tend to be skeptic
John
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Yep, this is a huge disruption. Its interesting to think outside the box to not so obvious disruptions.
What will happen to self storage operations, what will happen to land prices at different locations (theoretically cities become not so important), to operations like safeway and coles and so on.
Also, I think the other big disruption will be the UBI. I am amazed at how much chatter there is on this and how all sides of politics are warming to the idea. Andrew Chan is pushing the idea big time. The implications of a freedom dividend are potentially vast.
Roger Montgomery
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CBD car parks will be an interesting example of repurposing, as will parallel street parking spaces. In a fully autonomous CBD neither might be required. Thanks John.