Self-Driving Vehicles, Car Sharing, and the Urban Mobility Revolution

New automotive technologies and business models are converging to spark a transformative revolution on our city streets.

It’s no longer a question of if but when self-driving vehicles (SDVs, also known as autonomous vehicles) will hit the road.

Multiple parties are already at work developing autonomous-driving technologies, and the trend toward putting SDVs on the road is rapidly gaining momentum across a broad front that encompasses OEMs, suppliers, mobility providers, technology companies, academic institutions, governments, and regulatory bodies.

A potentially big barrier to self-driving vehicles—consumers’ acceptance of a car that drives itself—turns out to be a shrinking obstacle, and one that will likely dwindle over time as consumers gain experience and familiarity with the vehicles. The Boston Consulting Group and the World Economic Forum conducted qualitative and quantitative research among more than 5,500 consumers in 27 cities in ten countries—to date, the largest survey fully dedicated to autonomous driving.

Overall, 58% of respondents said they would take a ride in an SDV, and 69% said that they would take a ride in a partially self-driving car.

Consumers like convenience, and the biggest single attraction of SDVs is not having to find a parking place. More than four in ten consumers said that the number one reason for using an SDV is that it “drops me off, finds a parking spot, and parks on its own.” Other attractions include being able to multitask or be more productive while traveling, the sheer novelty of SDVs, and the ability of the car to switch to self-driving mode in heavy traffic. Majorities—more often than not, substantial majorities—are willing to pay a premium of $5,000 or more for an SDV.

To be sure, consumers also have concerns, and safety tops the list. Half of all consumers said that they “do not feel safe if the car is driving itself.” Only 35% of parents would let their child ride in a self-driving car alone.

The Future of Car Sharing

If SDVs are to affect urban life significantly, car sharing almost certainly has to be part of the deal. With fewer vehicles on city streets traveling fewer overall vehicle miles, emissions will be lower and space will be freed for alternative uses.

A BCG study found that although car sharing will expand relatively quickly and widely, it will have only a minimal effect on new-car sales, both because most drivers will not forgo car ownership entirely and because some share of lost car sales will be partially offset by sales into car-sharing fleets in large urban areas.

The size of the urban population and the number of licensed drivers will determine the growth of car sharing in Europe, North America, and Asia-Pacific.

In Europe, some 81 million people will be living in large urban areas in 2021, 46 million of whom will have a valid driver’s license. About 14 million people will be registered with a car-sharing service and 1.4 million of them will be heavy users who take multiple trips per month. The North American urban population is expected to reach 50 million by 2021; 31 million people will be licensed drivers, of whom 6 million will be registered users of a car-sharing service. Some 600,000 people will be heavy users. Asia-Pacific’s urban population will grow to 253 million, and there will be 75 million licensed drivers. Roughly 15 million will be registered with sharing services, and 1.5 million will use them for multiple monthly trips.

Car sharing will certainly bring about changes in urban driving, driver behavior, and the business models of OEMs and new entrants. It will expose new revenue pools and become increasingly relevant to a cohort of mostly younger drivers. It is not, however, a true game changer. It will not do to the automotive business what iTunes did to music: it will not redirect a stream of revenues to a disruptive upstart, and it will not spark a widespread change in consumption. By contrast, SDVs will change the game dramatically, erasing the distinction between car sharing and ride sharing and offering users a significant edge in the total cost of ownership. But since SDVs will not arrive on the market in force until 2027, there is still ample time for the car-sharing market to evolve and for players to prepare for a period of accelerating change.

The Autonomous Road Ahead

There is a compelling case to be made for SDVs—especially in cities. The potential benefits are significant and easy to see, even if some will be difficult to realize in the short term. The major players in the private sector—industry and consumers—are excited and engaged. The public sector is moving too, albeit a bit more cautiously.

Technologies and new business models already under development can substantially transform and improve urban transportation—and by direct extension, livability—while providing new opportunities for the private sector. It is a powerful and exciting starting point for a truly transformative revolution on our city streets.