Maximising the Value of an Autonomous Vehicle

Many cities are testing out autonomous vehicles (AV) and Singapore, a city-state, started its first public trial of an autonomous taxi service in August 2016. The trial is conducted by a Singapore-based company, nuTonomy and the trial will be conducted within One-North, a commercial hub. One-North is a 200-hectare development designed to host a cluster of research companies in biomedical, infocomm technology (ICT), media and other technology fields.

An Autonomous Vehicle


Source: nuTonomy

Free rides

Members of the public can use a smartphone app to book a free ride in a nuTonomy self-driving car. As an added safety measure, an engineer from nuTonomy will ride in the vehicle to observe system performance and assume control if needed in the event of an emergency. The trial enables the company to collect and analyse data relating to system performance, vehicle routing efficiency, app booking process and passenger satisfaction. This data will help nuTonomy refine its software in preparation for commercial launch of AV taxi services in Singapore in 2018.

Maximising usage

For most drivers, a car is seen as an A-to-B transporter, and paying more for a self-driving car does not make financial sense. Currently, the cost to retrofit an existing car into an autonomous vehicle typically exceeds US$30,000. However, the value proposition may change if the owner of an autonomous vehicle can recuperate his investment and potentially earn more. For most drivers, the car will be parked at the parking lot for the whole day after arriving at the office. For an autonomous vehicle, the car could pick up other passengers (like a cab sharing service) or rent out to delivery companies to transport goods. The car will then go back to the office to pick up the owner in the evening.


Maximising sales

Sales of global light vehicles came close to 87 million units in 2015, a 2% increase over the previous year. The annual growth rate was the lowest since the recovery from the global financial crisis. Moving forward, demand over the forecast period is projected to cool in almost all emerging markets, while vehicle sales in mature markets saturate. Demand will thus be largely replacement in nature and hence growth potential is limited. Car manufacturers will need to look at adding value rather than trying to sell more new cars. Autonomous vehicles could help the car manufacturers drive higher revenues and consequently, gain higher margins amidst a slowing market.