Crypto News: The road to autonomy

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Andrew Grant from BloombergNEF Intelligent Mobility research here. My Bloomberg News colleagues have published several reports on the autonomous vehicle industry over the past few months that paint a bleak, dejected or downright miserable picture.

In my view, much of the current disillusionment around self-driving vehicles stems from years of overpromising that's drowned out meaningful progress made to develop the technology and business models that can generate revenues and benefit consumers.

Self-driving vehicles development is going better than many realize. I'd point to examples such as Waymo expanding to Los Angeles, Cruise operating a fully commercial robotaxi service in San Francisco and Baidu launching commercial services in Wuhan and Chongqing.

And the most powerful source of optimism might be the development of the supply chain and rollout of technologies that will make achieving the widespread deployment of robotaxis easier.

In October, Ford and VW announced they would shut down Argo AI, the self-driving development company they previously valued at $7 billion. They may be ceding an opportunity in a lucrative market in the long term, but in the meantime they'll pivot to focus on advanced driver-assistance systems (ADAS), a market which BNEF research indicates could grow to a $220 billion a year market globally by 2030.

Level 2 partial automation and Level 3 conditional automation are both forms of ADAS. For those unfamiliar, SAE International, formerly known as the Society of Automotive Engineers, offers a handy guide to levels of driving automation here.

In BNEF's outlook, Level 2 vehicles surpass 50% of global passenger vehicle sales by 2025. The peak for Level 2 sales is in 2028, with approximately 53 million vehicles sold.

We expect Level 3 vehicles to eat into sales of Level 2 vehicles and become the most common level of autonomy for passenger cars globally by 2033, with nearly 50 million vehicles sold.

Even by 2040, Level 4 and 5 robotaxis are a fairly small chunk of the total market for self-driving systems. However, building economies of scale in lower-level automation systems will slowly but surely bring down the costs of components in higher-level automation systems and improve the economics of those business models.

The uptake of ADAS will create a large market for suppliers. By 2026, we expect Level 2 ADAS sales to reach $70 billion annually. While Level 2 vehicles will remain a sizable market, Level 3 vehicles could be even bigger as soon as 2027, with sales of Level 2 and 3 vehicles approaching a combined $150 billion.

After providing all this optimism, let me balance it with a note of caution: Overpromising and underdelivering — particularly in the field of mission critical driving software — is a looming risk for automakers. Tesla is reportedly facing a US criminal probe of its self-driving claims. This hasn't stopped the company from expanding the rollout of its Full Self-Driving Beta offering, which contrary to its name is a Level 2 system.

ADAS has clear benefits for both consumers and automakers, but both need to deploy and use it responsibly.

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