Fleet Management Autonomous fleets: challenges and opportunities
Autonomous fleets could make way for faster, more efficient and safer transport. On the other hand, fully-automated fleets present a range of challenges from cost, to data privacy and insurance.
Gartner has previously estimated that one in five vehicles on our roads are currently connected to wireless technology with components that can monitor, report and control car operations.
While fully-autonomous vehicles (AVs) are still a work-in-progress, the idea of autonomous fleets gives birth to many new opportunities.
According to the European Parliament, the market for AVs is expected to grow exponentially, creating new jobs and generating profits of up to €620 billion by 2025 for the EU automotive industry.
Let’s take a closer look at the challenges and opportunities of autonomous fleets:
Freight vehicle fleets
The reality of a level-5 autonomous road freight vehicle may seem a while away yet, but prototypes do exist. The Mercedes Benz Future Truck, for example, is a conceptual self-steering truck that can travel at 85km/h using Active Driver Assist (ADA) technology.
Autonomous transport fleets present an opportunity to enable round-the-clock logistics on specially-designed smart motorway lanes. Drivers wouldn’t need to take breaks, so logistics would be quicker. Roads would also be safer as the driving would be handled by Artificial Intelligence (AI) and sensor technologies, removing any human error.
Of course, in order for self-driving trucks to be fully conceivable, investment will need to be made into developing enough smart motorways to handle long-haul journeys. Autonomous freight vehicles will also likely experience a first and last mile problem, as they approach urban areas that don’t have smart roads.
Ride sharing fleets
The European Federation for Transport and Environment estimates that rideshare schemes remove up to fifteen private vehicles from the road. Today, some of the biggest players in ridesharing include Uber, Lyft and DiDi and we’d expect these companies to become involved in autonomous fleet management in the future.
With ride sharing, CO2 levels can reduce and journey times for commuters can be quicker. Car parking will be more freely available and cities will have the opportunity to reclaim land to be used for other purposes. Ride sharing journeys are also more sociable as commuters meet new travel companions and spend more time traveling with friends, family and co-workers.
However, in order for ride sharing fleets to have a positive impact in the future, behaviour change is required from commuters and those with private vehicles. For congestion to reduce, ride sharing services need to be used pro-actively, otherwise the number of vehicles on the road may actually increase as the number of ridesharing companies grow.
Fleet management costs
On the one hand, the technology required to run an autonomous vehicle is costly. Onboard safety systems, sensors, cameras, software and electronics can cost as much as $100,000 on top of the price of each vehicle.
According to a study of 54 autonomous vehicle practitioners by Forrester, 22% believe component costs are too high.
On the other hand, expensive fleets need to be financed, which can create business opportunities. According to Roland Berger, the market for developing AV hardware will most likely remain with automotive manufacturers, which could be worth $30-40 billion by 2030. In turn, this will create new career and investment opportunities.
Autonomous fleet safety
According to the U.S Department of Transportation, over 90% of collisions are caused by human error. Autonomous Driver Assistance Systems (ADAS) can help reduce the number of vehicle collisions through front collision and lane departure warnings.
Manufacturing services company, Jabil, reports that 36% of automotive companies say ADAS are a key element of their automotive visions. And for good reason.
According to a report published by the Association for the Advancement of Automotive Medicine, a forward collision warning could reduce 35% of near-crash events under fog conditions. Similarly, a study conducted by the Insurance Institute for Highway Safety (IIHS) found that lane departure warning systems reduced injury crashes by 21%.
Despite the physical safety benefits that autonomous fleets can bring to road users, all that technology leaves fleets vulnerable to cyber security threats. In a previous post about connected cars and security, we highlighted that key-fob hacking accounts for 38% of security incidents. Server attacks follow closely behind, accounting for 27.2% of attacks.
As such, before autonomous fleets can go mainstream, connected cars need to be made as secure as possible.
There’s also the issue of data privacy, which we explored in more depth in our article Is there too much data going in and out of cars? We summarised that car data is becoming ever-more valuable and the way that data is handled needs to be carefully considered.
Insurance for autonomous fleets
As software replaces human drivers, we’d expect to see less road accidents. It will therefore become more challenging for insurance companies to quote premiums, given that there will be no human variables to base premiums on.
There are already some insurance companies like AXA who are working with AV software companies to offer insurance products for autonomous fleets. Rather than providing premiums on driver age, accident history, driving habits and other telematics data, their premiums are based on a ‘client’ profile, which looks at vehicle manufacturers, owners and operators as well as component manufacturers and software developers.
It’s estimated that driverless cars will remove 90 percent of the risk associated with driving, and in all likelihood, the car insurance industry will experience a reduction in premiums.
As AI takes the place of human capacity to cause accidents, the car insurance business model will likely evolve as the risks associated with driving shift from the drivers themselves, to the companies that manage the vehicle’s autonomy. This will undoubtedly present opportunities for investors and manufacturers of components, who can capitalise on the safety aspect of autonomous fleet insurance.