Autonomous vehicles

The news that General Motors has decided to fold Cruise into its overall business should send shock waves through the industry. If Cruise can’t do it, with all its money and giant parent’s backing, who can?

Cruise is a relatively new startup which had huge optimism around it because several billion dollars were invested into it and a lot of people still believe autonomous cars are the future of global road traffic.

But after burning through $10 billion and only generating $500 million in revenue, Cruise seems to have lost its parent company’s confidence and has now been absorbed into the historic automotive giant, with its technology being repackaged into GM production cars as, essentially, an advanced driver assistance system called “Super Cruise”.

The imminent disappearance of a specialist autonomous car developer of such a size raises the question of whether the nascent autonomous car sector has any hope at all to become a sizeable market. Or whether a combination of regulatory hurdles, public apprehension and technological limitations will turn everything into the proverbial white elephant, with tens of billions invested and little to nothing in return.

The long road ahead

Autonomous vehicles represent a technological leap that had promised – and still promises – to revolutionise transportation. Its proponents are always keen to promote the potential to reduce accidents, improve traffic efficiency, and lower emissions. Despite unconvincing evidence for such claims, these vehicles are often heralded as the future of mobility.

Yet, despite years of development and billions of dollars in investments, their widespread adoption remains uncertain – unless you’re watching sci-fi films, in which case they are everywhere.

The critical question is: Are autonomous cars safe enough to convince regulators and governments to allow them to operate freely on public roads?

This article explores the safety, regulatory, and economic dimensions of this question, using examples from test programs around the globe and examining what the future holds for the industry.

Current state of autonomous vehicle technology

Over the past decade, autonomous vehicle technology has advanced significantly. Companies like Waymo, Tesla, and Baidu have made strides in areas such as lidar, AI-powered navigation, and vehicle-to-vehicle communication.

For instance, Waymo has conducted extensive trials in Phoenix, Arizona, where its driverless taxis operate under controlled conditions. Similarly, Tesla’s Full Self-Driving (FSD) system, while controversial, has amassed vast amounts of real-world driving data.

Despite these advancements, challenges persist. Autonomous systems often struggle with so-called “edge cases” – rare but critical scenarios like erratic pedestrian behaviour or ambiguous road markings.

Additionally, sensor reliability in adverse weather conditions, such as heavy rain or snow, remains a major hurdle. These limitations underline the gap between the promise of autonomous vehicles and their readiness for unrestricted use on public roads.

Taken together, these technological limitations mean that fully autonomous vehicles on regular public roads are not going to happen in the foreseeable future. In 10-15 years maybe, possibly, but not anytime before that. But that’s just our view.

Regulatory hurdles

Regulators worldwide are cautious about allowing autonomous vehicles to operate freely. Safety is the foremost concern: any failure in an autonomous vehicle system could have catastrophic consequences. Governments and regulatory bodies demand near-zero failure rates, a standard that current technology emphatically has not met.

Examples of regulatory roadblocks abound. In California, stringent testing requirements have slowed the implementation of autonomous vehicles, even for companies with significant technological prowess.

In Europe, regulators have adopted a similarly cautious approach, emphasising strict compliance with safety standards and liability frameworks. Public perception also plays a significant role; incidents like the fatal Uber self-driving car crash in 2018 have prompted scepticism and heightened scrutiny.

And with good reason. The fact is that, in completely new and unforeseen situations, an autonomous car cannot use its own judgment because it hasn’t got any; and the data it has been trained on won’t help because it doesn’t contain any information about this new and novel situation because it may never have happened before or even have been imagined before.

Can technology ever meet the conditions?

So, bridging the gap between current capabilities and regulatory expectations is a formidable task. Autonomous systems must achieve a level of reliability that matches or exceeds human drivers while addressing the unpredictability of human behaviour. Unfair though it may be, autonomous driving technology has got to surpass human drivers in many ways for it to convince the public.

While advances in AI and machine learning show promise, they may never fully eliminate the edge cases that confound autonomous vehicles systems.

Ethical dilemmas also complicate the path forward. Decision-making algorithms face scenarios akin to the classic trolley problem: should the car prioritise the safety of its passengers or pedestrians?

Resolving these questions in a manner acceptable to regulators, insurers, and the public is crucial for autonomous vehicles to gain approval.

And that is very unlikely in the near-term future. Yes, many autonomous vehicles are being operated on large, industrial sites or transport hubs where there are no pedestrians and far few obstacles, but the chaos of some public roads in the world would basically overload the circuits of a typical autonomous car – it just would not be able to cope.

What does this mean for companies like GM?

General Motors’ decision to close Cruise highlights the immense challenges facing the industry.

Despite years of development and significant investment, Cruise’s progress was insufficient to justify continued funding. This move raises broader questions about the viability of autonomous vehicle companies.

Other players in the field are adopting varied strategies. Waymo, for example, has pivoted toward partnerships with logistics and ride-hailing companies to create practical, revenue-generating applications for its technology.

Meanwhile, Tesla continues to position its FSD system as a consumer-oriented product, albeit with significant controversy surrounding its safety claims. These differing approaches reflect the uncertainty and high stakes of the autonomous vehicle market.

Market potential if autonomous vehicles succeed

If autonomous vehicles were to gain regulatory approval, the market potential is immense. Estimates from McKinsey suggest that the global autonomous vehicles market could reach $1.6 trillion annually by 2030, encompassing ride-hailing, freight, and last-mile delivery.

However, this growth depends on overcoming regulatory and technological hurdles, as well as public acceptance, none of which – as has been said repeatedly in this article but needs to be emphasised – has been done.

Geographical differences also shape the market’s outlook. Some analysts say that urban centres, with their dense populations and structured environments, are “more likely” to adopt autonomous vehicles than rural areas.

They might point to countries like China, which have shown a willingness to rapidly implement emerging technologies, but we would argue that such an example is not appropriate. In fact, the opposite is more likely – there are fewer obstacles and complications on rural roads, desert roads and so on, so it stands to reason that autonomous cars will be better suited to such environments.

Still, China might currently be leading the way, but that’s because Chinese regulators are apparently not as strict in some ways as their counterparts in Europe and America. China still probably considers itself an emerging economy and may take risks that mature economies would not take in order to enable an apparently promising sector like autonomous vehicles to grow.

That is a problem for many reasons, not least of which is that a less regulated environment may lead to faster refinement of the technology through trial and error – no matter how dangerous to humans that refinement process is.

China, being the largest car market in the world, could incorporate autonomous cars into its public road system earlier than the West, which means that European and American car companies that are still developing autonomous cars should be able to get the returns on their investments over there. And then, maybe, eventually, sell in Europe and in America and the rest of the world.

Regulatory caution in the US and Europe may slow progress in their respective regions, but that doesn’t mean that they can’t enter the market at a later stage.

When Japanese watchmakers started producing cheap quartz watches in the 1960s and ’70s, they nearly killed off the entire Swiss watchmaking industry. But the technological shift had to take place. Switzerland was essentially stuck in past, with unions and regulators preventing the modernisation of the watchmaking sector. But when quartz watches outsold mechanical watches for the first time in 1970, the Swiss watchmakers realised they had to change. Switzerland reorganised itself to adapt and is still the fourth-largest watchmaking nation in the world today.

Similarly, when Japanese carmakers produced cheap, reliable cars that put European and American cars to shame because of their constant breaking down and so on – let’s be honest – it forced Western carmakers to improve the product and that, in turn, led to maintaining a very large worldwide market share. At least half the car brands in any top 10 global list will be American or European car companies.

Exhausted pipe dream

The dream of autonomous vehicles operating freely on public roads remains elusive. In fact, for now, it could be argued that it’s nothing but a pipe dream.

Technological challenges, regulatory hurdles, and public scepticism form significant barriers that will take years, if not decades, to overcome.

While we do believe that autonomous cars and vehicles will eventually outnumber human-driven cars on the road, that eventuality is more than a decade away – we’d say several decades but we don’t want to depress everyone too much.

Companies developing autonomous cars face tough decisions about whether to continue investing in this space or pivot to other opportunities, like GM has decided.

While the market potential is vast, making money in it requires substantial breakthroughs in both technology and policy.

As the industry navigates these complexities, one question looms large: Will autonomous vehicles ever be safe enough to earn the approval of the regulators and the trust of the public?

Until that question is answered, the road to widespread adoption will remain a long and rocky one.