The self-driving taxi could ultimately take the global auto industry on a wild ride. Our use-case approach reveals why. Personal mobility could change profoundly in the next two decades. Consumers, who increasingly view mobility as a service, want more choices for traveling between points A and B, including ride hailing, car sharing, and perhaps even self-driving “robo-taxis.” For automakers, the proposed changes could replace the industry’s traditional emphasis on “moving metal” with new schemes to capture greater profits per mile or per trip. The focus may even expand from monetizing new mobility models to monetizing the time consumers spend in vehicles. Autonomous vehicles (AVs) could play a key role in this transformation. But the industry tends to view the phenomenon mainly through a technology lens, which, while important, only addresses part of the challenge. Industry discussions often focus on autonomous-driving levels, such as the Society of Automotive Engineers’ conditional, high, or full-automation specifications (SAE levels 3, 4, or 5, respectively). However, automakers also need to fill in several other gaping holes to understand autonomous-driving issues fully. That requires an ecosystem approach (for more on broader shifts in the landscape, see, “Measuring the robotaxi’s disruptive potential across automotive megatrends”).

Measuring the robo-taxi’s disruptive potential across automotive megatrends To understand why the robo-taxi has such strong disruptive potential, we need to consider it in the context of other megatrends shaping the auto industry. The expansion of four mobility megatrends—autonomous driving, connectivity, electrification, and shared mobility—will have game-changing effects on the automotive market:

Autonomous driving Autonomous driving is the key driver for decreasing the total cost of ownership (TCO) to public-transport levels. Robo-taxis could reduce a fleet operator’s TCO by 30 to 50 percent compared with private-vehicle ownership and by about 70 percent against shared mobility, significantly disrupting the mobility market. Autonomous driving also promises to sow disruptions beyond the automotive sector. For example, in the insurance industry, it could result in more fleet management and lower risk of accidents, and among airlines, consumers might choose to relax in an AV for four to five hours instead of taking a flight.

Vehicle connectivity Modern technology increases the amount of car data collected from fleets. Consequently, cities that work with robo-taxi fleet managers to enable these to operate in their communities will have much more data to use. By freeing the user from driving, the robo-taxi will also increase his or her interaction with connected-car features, boosting demand for these services.

Powertrain electrification Most robo-taxis will feature electric powertrains, which should offer lower operating costs for fleet managers. What’s more, most fleets can readily manage the complexity of charging a fleet of vehicles (for example, providing centralized fueling and maintenance).

Shared mobility Robo-taxis will increase the opportunity for shared mobility. By pooling rides, fleets can further decrease TCO, making the service more accessible to users. Likewise, new technology enables new platform designs that make sharing a better user experience. However, questions remain as to whether people will adopt shared service to capture lower costs along with increases in time and inconvenience.

Unlocking the AV ecosystem via use cases Building a successful AV ecosystem requires four perspectives. The first centers on the technology involved: What can it do now, and how soon will it be able to do more? Regulation comes next: How will it and associated policy-making initiatives create opportunities for deployment? Third, the customers: Who are they, and how willing are they to use the product? For example, from a total-cost-of-ownership (TCO) perspective, will consumers still buy private cars when AV taxis become commonplace, or will they switch to this new mobility option? Fourth, the business case: Is it profitable and sustainable? In other words, will shared robo-taxis disrupt today’s shared-mobility market?

Use cases can also help regulators understand how policies might have to change in different situations. For example, in a “geofenced” area (one where the AV cannot leave the area), a private AV might face different regulations than an L4 robo-taxi. Similarly, an L4 robo-taxi operating in a city may face different regulations than an L4 interstate truck, even though both meet the same L4 readiness standards.

The use-case-based framework (Exhibit 1) enables businesses to understand the underlying technology needed, the focus of regulations, the customer, and the impact on future value pools and go-to-market strategies—all elements of an AV ecosystem.

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