TECHNOLOGY AT WORK

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Citi GPS: Global Perspectives & Solutions February 2015
Autonomous Vehicles: Transforming Mobility as We Know
It
Itay Michaeli
US Autos & Auto Parts Analyst
Phil Watkins
European Autos Analyst
Figure 41. Global auto fatality stats
Fatalities/ 1,000 vehicles
United States 15
Germany 7
Japan 7
South Korea 26
China 36
India 315
Thailand 119
Brazil 71
Source: Autoliv company reports
Automated vehicles offer potentially wide-ranging societal and business benefits
from improved safety, improved fuel economy, new forms of mobility and the
unlocking of time spent in the vehicle. As outlined in our report Citi GPS: The Car of
the Future, a safer and more convenient vehicle will likely become less expensive
and more enjoyable to operate. Eventually, fully automated vehicles and new forms
of mobility services might allow greater access to cars for consumers who either
cannot or do not drive. As cars become connected machines that can “see” and
learn, road efficiencies could increase—think high-speed highways. Cars will be
able to share their positions, experiences and driving tips with each other. New
forms of human-machine interfaces, such as augmented reality, could completely
change the way we interact with our surroundings.
Despite major advancements in automotive safety systems throughout the past 20
years, road fatalities still claim over 1 million lives around the world each year
(Figure 41). In the U.S. alone, annual fatalities top 30,000. The outlook is
unfortunately even grimmer considering the aging population and the increasingly
connected (i.e. distracted) driver. By 2030, road fatalities are poised to rank in the
top 5 causes of death globally. Why should driving be this unsafe?
It is estimated that 93% of US accidents are caused by human error, with Europe
sporting a similar ratio. Alcohol remains a major US contributor involving ~30% of
fatal crashes. Speeding is also a major factor at ~30%, driver distraction ~20%, lane
keeping ~14% and failure to yield ~11%. It is estimated that if a driver is afforded an
extra ½ second of response time, roughly 60% of accidents could be avoided or
mitigated. So why should driving a car be this unsafe when the root of the problem
is concentrated in driver error and impairment?
Key Drivers of ADAS Demand
We see three core drivers of future ADAS demand:
1. Regulations: In terms of regulation, the EU new car assessment program is
leading the way by essentially requiring all vehicles to have ADAS by 2017 to
achieve a 4-star rating on automatic emergency braking. We expect US
regulation to be solidified over the next few years as well.
2. Possible Future Insurance Savings: As ADAS penetration rises and begins to
prove out in real-world reductions in claim frequency/severity, the potential for
lower insurance premiums might also accelerate ADAS demand.
3. Consumer Value: Safety ranks highly in consumer preference surveys and
there is evidence that consumers are willing to pay premiums for a ‘value
bucket’ of ADAS convenience applications – adaptive cruise control, traffic jam
assist and soon automated highway piloting.
© 2015 Citigroup