EY-Deploying-autonomous-vehicles-30May14

The case for autonomous vehiclesOver the past 24 months, almost every major vehicle manufacturer (VM), supplier and technology company hasannounced projects or collaborations around the autonomous vehicles (AVs) theme. While the notion of AVs has beenalive for some time through science ction and various media, the urgency to make them a reality has gathered pace ascompanies outside the auto industry have illustrated the feasibility and benets that self-driving vehicles present. Thedeployment of AVs today is less about technological capabilities and more about the ability of stakeholders to handle thevarious commercial and governance complexities associated with having such vehicles on the road.EY’s Global Automotive Center has developed the following points of view:• AVs offer several benets once deployed, however, the road to autonomous driving has a number of challenges that will need to be resolved to achieve asustainable mobility ecosystem in the future.• Given the implementation complexities, we expect AVs to be launched through multiple controlled scenarios in and around urban areas.• As the benets outweigh the costs, and liability, safety and security concerns are addressed, these controlled scenarios will expand and merge across vasturban areas and eventually integrate intercity mobility as well.• AVs represent a signicant paradigm shift to the mobility ecosystem — not only a technological revolution, but a value chain transformation. The commercialdeployment of AVs will have far- reaching implications for stakeholders across all levels of the mobility value chain.“ The introduction of AVs could acceleratethe move away from vehicle ownership tohaving access to different integrated mobilitysolutions such as car sharing programs andrst-mile/last-mile connectivity. AV eetsmay also deploy a greater share of alternatepowertrain vehicles.”Mike HanleyGlobal Automotive Leader, EY5-10 years 10-20 years• Controlled, AV-onlyenvironments• Moderate level ofautomated driving• Low to medium speedsTrendicators8thleading cause of death globally: roadaccidents2Xincrease in delay hours due tocongestion by 2050AV deployment timeline• Less restricted environments• High level of automated driving• Medium to high speedsBeyond 20 years95%of road accidents caused due tohuman error6.3 billionurban dwellers accounting for 70% ofpopulation by 2050• Large, connected AV networks,allowing multiple mobilityscenarios• On demand mobility and • Customizable AVsSource: UN World Urbanization Prospects, World Business Council for Sustainable Development, Factiva, Navigant Research, EY analysisEuropean Commission, Directorate General Information Society and Media, Informal document No.: ITS-13-072 Deploying autonomous vehicles: commercial considerations and urban mobility scenarios

AV benets to the mobility ecosystem –challenges to deploymentIn order to overcome the challenges associated with autonomous driving, it is crucial that key AV stakeholders(governments, VMs, technology/telecom players, suppliers, automotive councils and academic institutions) work togetherto implement commercially viable business models that facilitate the deployment and adoption of AVs.Low=Medium=High=Development phase(5-10 years)Controlled deploymentscenarios (10-20 years)Connecting deploymentscenarios (beyond 20 years)BenetsSafetyMobilityEfciencyTrafc safety improvementsReduction of trafc accident-related costsIncreased mobility for elderly, disabledExpanding car- and ride-share programsTrafc network efcienciesDecline in vehicle ownership and vehiclesper familyDecreased fuel consumptionChallengesCapitalGovernanceTechnologyCostInfrastructureRegulationsLiabilityInsuranceCybersecurityData qualityPrivacyDeploying autonomous vehicles: commercial considerations and urban mobility scenarios 3

Deployment scenarios that support increasingautomation of drivingAs the benets outweigh the costs, and liability, safety and security concerns are addressed, these controlled scenarios willexpand and merge across vast urban areas and eventually integrating inter-city mobility as well.Evolving levels of driver control, vehicle autonomy and connectivityLow=High=Drivercontrol1Self-parkingstructures/lots2Dedicated AVhighway lanes3Connectedurban centers4Public AVtransportationVehicle+control+V2X*connectivity• Low to medium speeds; controlled driving parameters• Automation: vehicle system control only within rangeof self-parking infrastructure network• AV-only parking sections/oors to accommodateearly stages of self-park technology rollout• Driver cedes control of primary vehicle functionswhen entering connected highway; regains controlupon lane exit• Commuter “trains” or “platoons” of AVs in AV-only,connected highway lanes• Driver enters AV network within city center, cedescontrol of primary vehicle functions• Automation: vehicle system control within networked,urban centers• Low to medium speeds; controlled driving parameters• AV taxi, busing services, shuttle services• Ride-share, car-share services• First mile/last mile mobility services5Expanded AVhighways6Fully AVecosystem*V2X includes vehicle-to-device, vehicle-to-vehicle, vehicle-to-infrastructure and vehicle-to-home.• AVs function at higher speeds• Commuter AV “trains”/“platoons” navigate AV laneswith independently operated AVs• Driving restrictions shift to human-operatedvehicles — limited/no access• AV networks expand to suburban areas• Urban centers and suburban networks “attached” byconnected highways• Driving restrictions shift to human-operatedvehicles — limited/no access4 Deploying autonomous vehicles: commercial considerations and urban mobility scenarios

Implications of AV scenarios for stakeholdersAVs represent a signicant paradigm shift to the mobility ecosystem. Not only a technological revolution, but a value chaintransformation. The commercial deployment of AVs will have far-reaching implications for stakeholders across all levels ofthe mobility value chain.Low=Medium=High=Self-parkingstructures/lotsDedicated AVhighway lanesConnectedurban centersPublic AVtransportationExpanded AVhighwaysFully AVecosystemBenets/advantagesChallenges/constraintsAVs offer several opportunities to key stakeholders with varying degrees of impactVMs(passenger vehicle)VMs(commercial vehicle)SuppliersTechnology/telecomcompaniesDealer/retail networkGovernment/regulatory bodiesCar-sharingcompaniesPublic transport/integrated mobilityprovidersDeploying autonomous vehicles: commercial considerations and urban mobility scenarios 5

Operating and investment considerations forAV stakeholdersKeystakeholdersVMsTechnology/telecomcompaniesGovernment/regulatorybodiesDealer/retailnetworkOperating and performance considerations• Devise methods of data analytics to manage andinterpret signicant volume of AV data• Assess readiness for regulatory changes in local markets• Manage warranty costs owing to rising technologicalcomplexities• Institutionalize checks to ensure data privacy andsecurity• Explore a more active role in the automotive value chainby providing the requisite infrastructure, data mining,privacy and bandwidth solutions• Institutionalize a framework to enable and run smartand integrated megacities• Provide regulations and policies around deploymentof AVs — data privacy and cybersecurity, safety andliability, incentives and taxation• Seamlessly integrate public transportation intosmart cities• Integrate vehicle registration, state taxes andtolling charges• Re-license drivers to be certied for using AVs• Collaborate and develop industry-wide certicationprocess for levels of autonomy and safety• Invest in employee (on-oor, sales and technicians) anddriver training, and customer awareness• Use digital media and smartphones to promote featuresand facilitate customer transactions• Service the AV network and infrastructureInvestment and capital considerations• Form need-based and strategic alliances, JVs andacquisitions to gain technology and reduce costs• Create a network of partners to enable new revenuestreams — car-sharing programs, on-demandmobility, AV eet service, in-vehicle entertainment/advertising, etc.• Explore opportunities to emerge as a mobilitysolutions provider• Potentially partner with existing VMs in expandingdeployment of AV scenarios• Partner with local government, VM’s, othertechnology companies for investment in requisiteinfrastructure; targeting cities as customers• Invest in requisite infrastructure to enabledeployment of AVs• Support AV research through R&D incentives, testinginfrastructure, and encouraging local stakeholderparticipation in process• Adapt business model to the evolving landscape andcompete with non-automotive retail competition• Explore other revenue streams, such as car-sharingprograms and on-demand mobilityDeploying autonomous vehicles: commercial considerations and urban mobility scenarios 7

Want more?Contact one of our global automotive professionals:Michael HanleyGlobal Automotive LeaderTel: +1 313 628 8260Email: michael.hanley02@ey.comRandall MillerGlobal Automotive Advisory LeaderTel: +1 313 628 8642Email: randall.miller@ey.comEY | Assurance | Tax | Transactions | AdvisoryAbout EYEY is a global leader in assurance, tax, transaction and advisoryservices. The insights and quality services we deliver help build trustand confidence in the capital markets and in economies the worldover. We develop outstanding leaders who team to deliver on ourpromises to all of our stakeholders. In so doing, we play a criticalrole in building a better working world for our people, for our clientsand for our communities.EY refers to the global organization, and may refer to one or more,of the member firms of Ernst & Young Global Limited, each ofwhich is a separate legal entity. Ernst & Young Global Limited, a UKcompany limited by guarantee, does not provide services to clients.For more information about our organization, please visit ey.com.Jean-François TremblayAdvanced Mobility LeaderTel: +1 514 874 4453Email: jean-francois.tremblay@ca.ey.comDr. Rainer ScholzMobility Innovation Group LeaderTel: +49 40 36132 17056Email: rainer.scholz@de.ey.comAnil ValsanLead Automotive AnalystTel: +44 20 7951 6879Email: avalsan@uk.ey.com© 2014 EYGM Limited.All Rights Reserved.EYG no. ED0112CSG/GSC2014/1370896ED NoneIn line with EY’s commitment to minimize its impact on the environment, thisdocument has been printed on paper with a high recycled content.This material has been prepared for general informational purposes only and is notintended to be relied upon as accounting, tax, or other professional advice. Please refer toyour advisors for specific advice.ey.com/automotiveRegan GrantGlobal Automotive Marketing LeaderTel: +1 313 628 8974Email: regan.grant@ey.comAcknowledgmentsSpecial thanks to EY Knowledge automotive analysts Joe Sebestyen,Swati Khurana and Gaurav Batra for the analysis and compilation ofthis study.