Say goodbye to road rage: By 2025, the market for self-driving cars will be $42 billion

Google's latest self-driving vehicle prototype.
Google's latest self-driving vehicle prototype.

Fully self-driving cars will hit the road in the next decade, and Americans are ready and waiting for that day.

A report published Thursday by the Boston Consulting Group brings the next 10 years into focus for makers and buyers of self-driving cars, projecting a $42 billion global market for fully autonomous vehicles by 2025. That market is expected to swell to $77 billion globally by 2035.

What’s more, drivers are looking forward to the perks of taking their hands off the wheel: 44 percent of Americans BCG surveyed said they would be likely to consider a self-driving car purchase in the next decade. The ability to multi-task on the commute to work, potentially lower insurance costs, and additional safety benefits (Google has claimed its self-driving cars perform better than humans in tests), were features they found most appealing. And, they’re willing to pay about $5,000 for such additional technology.

Self-driving and manually operated cars are likely to co-exist on the roads for a while, and maybe even in the same household, Xavier Mosquet, senior partner and managing director of BCG’s Detroit office said during a telephone press briefing on Thursday. “Maybe the same person will have two [vehicles]: One for the weekend and one for the week.”

With parking assist, lane keeping assistance, and emergency braking features, cars are already aid humans to some degree. BCG estimates that more advanced, but still not fully self-driving cars are likely to hit the roads by 2017.

A week into 2015, automakers have already staked big claims to the self-driving car space — not in Detroit, but in Las Vegas, at the Consumer Electronics Show. Audi drove its A7 self-driving pilot car all the way from San Francisco to Las Vegas for the event. Mercedes showed off a model concept in which all four seats could swivel around to face each other.

Besides giving commuters some texting time on the way home, self-driving “robo-taxis” could have a serious impact on city driving, taking vehicles off the road and cutting costs for drivers, according to BCG’s analysis. Autonomous car ride-sharing could make trips 25-35 percent cheaper than taking regular cabs in New York and Shanghai, according to the firm’s case studies.

Other groups have also been claiming the benefits of sharing rides. Last year, researchers at MIT’s SENSEable City Lab published an analysis that claimed of the 150 million taxi rides that New Yorkers took in 2011, 95 percent could have been shared, with not more than 5 minutes added to the trip of each rider. Also, such city-wide ride-sharing could slash the total time cabs spent on the road by 40 percent.

Data about travel within cities (already being collected by ride-sharing programs like the bike share Hubway) could streamline city transport even further. At a conference at MIT in October, Daniela Rus, a professor at MIT and director of the Institute’s Computer Science and Artificial Intelligence Laboratory, said that the ultimate goal would be to use data to predict traffic flow — where taxis will be needed the most, what times people are likely to travel, and where — to ease congestion. “The vehicles can drive themselves, talk to each other, and figure out the best way for delivering people,” she said.

But though US automakers — including Ford, Tesla, and General Motors — are among those developing and announcing plans for self-driving car technology, the first changes are likely to take place elsewhere.

BCG’s Mosquet expects that robo-taxi rideshares are likely to take off in Europe first. “I feel the most advanced government for me is the Netherlands, both for passenger cars and for commercial vehicles,” he said during Thursday’s press briefing.

As for autonomous tech, BCG analysis indicates that Western Europe and Japan will be the biggest and earliest adopters — based on how quickly they took on adaptive cruise control. The United States and China are expected to be next in line.

Nidhi Subbaraman writes about science and research. Email her at [email protected]
Follow Nidhi on Twitter - Facebook