KEY POINTS

  • Three barriers have been preventing fully autonomous cars from hitting the road: 1) high technological component prices; 2) varying degrees of consumer trust in the technology; and 3) relatively nonexistent regulations. However, in the past six months, there have been many advances in overcoming these barriers.
  • Technology has been improving as new market entrants find innovative ways to expand on existing fully autonomous car technology. As a result, the price of the components required for fully autonomous cars has been dropping.
  • Consumer trust in fully autonomous vehicle technology has increased in the past two years. In 2013, Chubb Group of Insurance Companies found that two-thirds of consumers would not feel comfortable riding in a fully autonomous car. However, in the World Economic Forum's 2015 survey, more than half (58%) of global consumers said they are likely to take a ride in a fully autonomous car. 
  • California became the first US state to propose regulations. California's regulations stipulate that a fully autonomous car must have a driver behind the wheel at all times, discouraging Google's and Uber's idea of a driverless taxi system. 

Fully autonomous cars have the potential to be the most revolutionary technology of the next 20 years. They could disrupt shipping industries — as evidenced by Mercedes' self-driving truck — taxi industries, and even the ownership model of cars, in that consumers may no longer purchase cars, but instead either lease or opt to ride in one of many affordable pay-as-you-go models. Fully autonomous cars can be divided into user-operated and driverless vehicles. Because of regulatory and insurance questions, user-operated fully autonomous cars will come to market within the next five years, whereas driverless cars — those that don't require a driver behind the wheel — will remain a long ways off.

Nevertheless, automakers and tech companies are improving technology rapidly as they race to get the first fully autonomous car to market. In our Self-Driving Car Report, we projected that the first user-operated fully autonomous car — in which a person could sit behind a steering wheel and manually drive the car with the option of turning on self-driving mode — would come to market in 2019. We continue to believe this will happen and are bullish on the technology and automakers making this possible.

Three primary barriers have been standing in the way [...]