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The Future of Autonomous Cars a Scenario Analysis of Emergence and Adoption Master’S Thesis in Management and Economics of Innovation

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The Future of Autonomous Cars a Scenario Analysis of Emergence and Adoption Master’S Thesis in Management and Economics of Innovation The Future of Autonomous Cars A Scenario Analysis of Emergence and Adoption Master’s thesis in Management and Economics of Innovation LUDVIG BARREHAG Department of Technology Management and Economics CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2018 The Future of Autonomous Cars A Scenario Analysis of Emergence and Adoption LUDVIG BARREHAG © LUDVIG BARREHAG, 2018 Technical report no E2018:114 Department of Technology Management and Economics Chalmers University of Technology SE-412 96 Göteborg Sweden Telephone +46 (0)31-772 1000 Department of Technology Management and Economics Göteborg, Sweden 2018 "The horse is here to stay, but the automobile is only a novelty – a fad," Stated by the president of the Michigan Savings Bank while advising Henry Ford's lawyer not to invest in Ford Motor Co. Something the lawyer did nonetheless which earned him the fortune of his life. Acknowledgments Several people have been of great help in the making of this study. First of all, I would like to thank Erik Bohlin, my tutor who has guided my work and continuously provided good advice in terms of structuring and making sense of the results. An extra appreciation goes to his great patience in a time when this study got put on hold. I also owe a large appreciation to Berg Insight and in particular Johan Fagerberg who made this study possible through a combination of good advice, access to extensive amount of data as well as a beautiful office to work in with an excellent coffee machine. For anyone interested in reading a market research analysis version of this study I refer to the title The Future of Autonomous Cars available at Berg Insight. Abstract Despite the substantial evolution of exterior and interior appearance as well as technology performance in cars ever since the development of the model T, one thing has remained constant - cars have always had a driver. The concept of dislodging the driver from controlling the vehicle opens up for new potential applications as well as business models. In fact, the removal of the driver is arguably the most significant and transformative innovation ever faced by the automotive industry. This transition will impact not only the automotive industry but also entire societies in several ways. Cars are severely under-utilized as they are standing still during the majority of their life-time. In addition, many people spend a significant time of their life in the driver seat of their car. To imagine that this time could be spent on something else, something more value adding, opens up for interesting ideas. The benefits with autonomous cars are many and the questions about when they will come and how fast people will adopt them are therefore relevant. This study aims to answer both of these questions based on forecasting techniques. A crucial point in forecasting is the recognition that they most of the time turn out to be wrong. That is a natural consequence of the vast amount of random events that can occur - irregular events and pure chance is an integral part of our world. With that in mind, it is not farfetched to question the usefulness of forecasting. However, the alternative – to simply sit and wait for the future to happen – is even worse. In order to account for the uncertainty in forecasting new technology this study is based on three different scenarios. This includes a base-line scenario following an extrapolation on the current development along with a pessimistic scenario and an optimistic scenario. These scenarios provide boundaries within which autonomous cars of various levels are highly likely to emerge and be adopted. This study finds that autonomous cars will emerge between 2018 and 2025 and reach an adoption rate of between 1 and 77 million annual sales in 2030. Contents 1 Introduction .......................................................................................................................................... 14 1.1 Background .................................................................................................................................. 14 1.2 Purpose and research questions ................................................................................................. 14 1.3 Limitations .................................................................................................................................... 14 1.4 Layout of research study ............................................................................................................. 14 2 Theoretical Framework ........................................................................................................................ 16 2.1 Forecasting Technological Change ............................................................................................. 16 2.1.1 Delphi ................................................................................................................................... 16 2.1.2 Forecasting by Analogy ....................................................................................................... 17 2.1.3 Trend Extrapolation and Growth Curves ............................................................................. 18 2.1.4 Measures of Technology ..................................................................................................... 20 2.1.5 Correlation Methods ............................................................................................................ 20 2.1.6 Causal Models ..................................................................................................................... 21 2.1.7 Normative Methods.............................................................................................................. 21 2.1.8 Environmental Monitoring .................................................................................................... 22 2.2 Technology adoption ................................................................................................................... 22 2.2.1 Diffusion of Innovations ....................................................................................................... 22 2.2.2 Disruptive Innovations ......................................................................................................... 24 2.3 Scenario Analysis ........................................................................................................................ 25 3 Methodology ........................................................................................................................................ 28 3.1 Scenario analysis......................................................................................................................... 28 3.1.1 Step 1 – Scenario field identification ................................................................................... 28 3.1.2 Step 2 – Key factor identification ......................................................................................... 29 3.1.3 Step 3 – Key factor analysis and scenario generation ........................................................ 29 3.2 Setting classifications of autonomy ............................................................................................. 30 3.3 Gathering of empirical data ......................................................................................................... 30 3.3.1 Interviews ............................................................................................................................. 30 3.4 Estimating each scenario ............................................................................................................ 31 4 Overview of autonomous cars ............................................................................................................. 33 4.1 Definitions and classifications of autonomous cars ..................................................................... 33 4.2 Brief history of autonomous cars ................................................................................................. 34 4.3 Current state of autonomous cars and key stakeholders ............................................................ 35 4.3.1 Automotive manufacturers ................................................................................................... 36 4.3.2 Tier-1 automotive suppliers ................................................................................................. 36 4.3.3 Technology companies ........................................................................................................ 36 4.3.4 Connectivity service providers ............................................................................................. 36 5 The global passenger car market ........................................................................................................ 37 5.1 Passenger cars in use by region ................................................................................................. 38 5.2 New passenger car registration trends ........................................................................................ 39 5.3 Market trends ............................................................................................................................... 41 5.3.1 Hybrid electric, plug-in hybrid electric and all-electric vehicles ........................................... 41 5.3.2 Hybrid electric vehicles .......................................................................................................
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