Autonomous Vehicle Adoption: A Forward Look
Industry expectations for autonomous vehicles (AVs) vary widely, ranging from optimistic projections of rapid breakthroughs to concerns that fully self-driving cars may never become commonplace. Goldman Sachs Research observes a growing trend toward partial automation and assisted driving systems. Although the rollout of fully autonomous vehicles is progressing more slowly than initially anticipated, this sector is poised for continued expansion and is predicted to become a more significant component of the broader market in the long term.
“We believe improved AI technology will help the industry reach higher levels of performance,” explains Mark Delaney, who studies automobiles and industrial technology for Goldman Sachs Research, “although we also believe that wide scale AV adoption is still at least a few years away as a base case.”
By 2030, Goldman Sachs Research anticipates that up to 10% of global new car sales could consist of Level 3 vehicles. These are self-driving cars that permit drivers to remove their eyes from the road and their hands from the wheel under specific circumstances, such as highway driving in clear weather. Notably, this is a slight decrease from the previous forecast of approximately 12%.
Sales of fully autonomous Level 4 vehicles could constitute around 2.5% of total sales within the same timeframe, a reduction from the prior estimate of roughly 3.5%. Simultaneously, Level 2 / Level 2+ vehicles, which require driver supervision and represent partially autonomous capabilities, are projected to increase from approximately 20% of sales this year to about 30% by 2027. This contrasts with the earlier prediction of about 24%.
The forecast also indicates that, by 2030, a global fleet of several million commercial AVs will be in use for ridesharing services. While this figure is a modest fraction of the worldwide car population, it signifies a potential market exceeding $25 billion for robotaxis.
How AI Can Drive Advancement in the Autonomous Car Sector
Despite the existence of some AVs on roads today in locations such as San Francisco, Phoenix, Wuhan, and Beijing, the technology has yet to be broadly implemented. Although 60% of present-day vehicles incorporate some degree of driver assistance, Level 3 features are expected to be present in only 1-2% of total global vehicle sales by 2026.
Deploying higher levels of driving automation has been slower than Goldman Sachs Research projected in 2022. This delay is attributable to technological limitations, as well as issues concerning regulatory and business model considerations. Nevertheless, there are also signals that advancements in AI could quicken the adoption of vehicles with substantially higher levels of autonomy.
“Scaling AI research suggests that more computational power, larger training datasets, and upgraded model architectures should enhance the AI model performance,” note the analysts. Another potential factor for the increased adoption of AVs is the decreasing cost of hardware.
Driver assistance and fully autonomous vehicles require numerous cameras, sensors, and, in certain instances, lidar devices. For example, a particular Level 2+ vehicle currently on the road uses 8 cameras, while a specific Level 4 vehicle utilizes 29. As the cost of these components declines, AVs are anticipated to become more affordable and efficient. This acceleration in AV adoption may lead to growth across multiple sectors, including chipmakers, rideshare companies, and self-driving technology developers, and some automakers.
Looking further ahead, Goldman Sachs Research foresees a scenario in which AV sales (Level 3 automation or greater) represent about 60% of all light vehicle sales by 2040. Even in a less optimistic scenario, AVs will likely constitute close to 40% of new sales.
The Transformation of the Rideshare Industry
AV adoption rates are predicted to be highest in China, where sales of Level 3 or higher AVs could represent 90% of all sales by 2040. According to the analysts, almost 80% of all car sales in Europe and approximately 65% of all car sales in the US could be advanced AV vehicles by 2040.
A substantial proportion of these vehicles are expected to be deployed by ridesharing companies, partly because the economic model increasingly favors the transition to self-driving cars. Goldman Sachs Research indicates that vehicle driving costs are currently about $3.13 per mile for robotaxis, but these costs could decrease to less than $1 per mile by 2030, and to 58 cents per mile by 2040.
Robotaxi costs, taking into account corporate overhead and research and development, are substantially higher. However, those costs are poised to fall from an estimated $184 per mile for a vehicle in 2024 to approximately $12 per mile in 2030 and close to $1 per mile by 2040. As rideshare operators grow their AV fleets, the analysts expect a gradual shift in the structure of the industry supply-side, moving from highly fragmented (millions of individual drivers) to a more consolidated model (a limited number of AV fleet operators).
Even if AVs were to be gradually implemented in certain regions over the next 3-5 years, they will likely operate as a supplementary supply for specific routes rather than the sole option. Goldman Sachs Research observes that the most profitable routes are often the most complex to solve from an AV technology perspective, such as airport drop-offs and pick-ups or late-night pickups to nightlife venues in crowded city streets.
In the near to medium term, a hybrid model that combines AVs with human drivers is likely to ensure widespread vehicle availability and enhance the rider experience.
