Forecast penetration rate of Autonomous Vehicles

Written by Rick Cloyd.

Where and how soon will autonomous vehicles gain acceptance and adoption in the marketplace? Dozens of forecasters have expressed their views on the issue, and there is a fairly wide range of possible outcomes. There is, however, reasonable consensus that three factors are foundational and necessary for AV industry development and growth.

Necessary conditions

  • Above all, the technical challenges relating to progressively greater vehicle autonomy must be overcome and deployed in real vehicles. A number of manufacturers are currently offering low levels of autonomy – but few exceed L2. While there are promises of reliable L3 vehicles and beyond on the road by 2020, even recent forecasts (published in 2015-2017) have underestimated the time it takes to bring even modest levels of automation to market.
  • Consumer acceptance, along with reasonable price points, is a necessity. Consumer sentiment seems to be shifting toward acceptance of the driverless car world of the future. Recent market research regarding the value of autonomy as part of a vehicle’s price reflects potential acceptance of an additional $3,000 to $5,000 in the stocker price. S&P Global notes the potential for consumer distrust (or outright fear) of the technology could materially dampen adoption. Recent high-profile accidents resulting in fires, injuries or death do not help alleviate those fears.
  • Crafting a legal and regulatory framework will take time, and will probably be more difficult that some of the technical issues. The definition of driver/vehicular liability may have to be completely rewritten to include software, sensory components and supporting infrastructure.

Where do AVs best fit?

Depending on the combination of these determining factors, the adoption rate of AVs is likely to vary in different locations and circumstances.  For instances, in large cities, especially in their central core, the challenges of congested urban traffic and scarce parking lend themselves more readily to an AV solution.  Thus we might see increased use of AVs for on-demand ride sharing as a way to lower or avoid the use of private, single-person vehicles.  On the other hand, rural areas are likely to be the last places to adopt AVs for the same reasons.

Forecasts for how quickly AVs will be adopted vary widely:

  • Frost & Sullivan: By 2025, 23% of vehicles will have L3 to L5 technology – currently 9%. By 2030, 82% will be L3 to L5.
  • S&P Global: “Low Disruption” forecast is 2% penetration of L4/L5 by 2030, and 10% by 2040. “High Disruption” forecast indicates 20% L4/L5 by 2030, and 50% by 2040.
  • IHSMarkit: 2020 worldwide sales of L4/L5 AV’s of 4,200, a total of 578,000 vehicles in 2025, with 4,503,000 in 2030 and 33,000,000 in 2040.
  • Loupventures: (a venture capital firm that invests in technology) 98,000 L4/L5 cars in 2020, and 96.3 million by 2040.
  • McKinsey: 15% of news cars fully autonomous by 2030.
  • Lux Research: 92% of cars in 2030 will be at least L2 and 8% L3.
  • Boson Consulting Group: 12 million units by 2035, with 15% partially autonomous and 10% fully autonomous.

These forecasts vary widely in when AVs will become more prominent, but they all agree this increasing trend will continue.

What is the adoption curve?

One possible way to calibrate the future adoption rate of AVs is to look at the adoption rate of electric vehicles for comparison. 

Toyota introduced the first commercial electric hybrid for sale in the US in 1997, the Prius. In the 21 years since then, global sales of electric cars of all brands have risen to just over 2 million in 2018. That’s about 2.6% of global car sales volume (78.7 million). In the US, electric car sales were 361,300 units out of annual sales of 5.49 million in 2018, or 6.6%.  This is similar to the 6.3% estimated for China in 2018 as well. In the two largest markets, China and US, electric vehicles took about two decades to reach 6.3%-6.6% market share. 

China already accounts for half the world’s annual volume of EVs today, even though EVs were introduced into the country at a later date than in the US.  Due to the Chinese government’s push, Chinese EV sales are set to grow larger in the future. The Chinese government reportedly wants EVs to be 20% of all car sales by 2025.

Assuming the AV adoption trajectory is similar to that of EVs, AVs adoption rates over the next two decades could reach mid-single digit range in the US and China (6+%), and in the low single-digit range globally (3%). But given the growth rate of EVs, it is entirely possible the adoption rate of AVs could be much faster.

Disclaimer:  This article was based on publicly-available source materials we believe to be accurate. Any content not clearly attributed to its original source is unintentional.