Auto industry’s big autonomous-vehicle challenges are exposing consumers to AV capabilities, competing with tech companies

But 18% say they’ve already experienced some AV features, up dramatically from 3% a year ago; 29% are AV-intenders, and are willing to pay an incremental $2,600; and among consumers with experience with AV features, 49% have confidence in AVs

06 September 2017

But 18% say they’ve already experienced some AV features, up dramatically from 3% a year ago; 29% are AV-intenders, and are willing to pay an incremental $2,600; and among consumers with experience with AV features, 49% have confidence in AVs

DETROIT (Sept. 6, 2017) – While the future of mobility almost universally is thought to rest upon the pillar of autonomous vehicles, traditional automakers and suppliers have their work cut out for them both in exposing consumers to the advantages of AVs on one hand and in not ceding AV leadership and profits to technology companies on the other.  At the same time, though, traditional auto companies may have at least a decent foundation to build on, as 29% of consumers say they’d be willing to consider buying an AV and to pay an incremental $2,600 on average for the privilege, and 20% of those are the early-adopters who see themselves buying an AV within the first year it is offered for sale and are willing to pay an incremental $3,500 or more. That’s the conclusion of the results of a new survey of more than 1,500 American drivers by AlixPartners, the global business-advisory firm, released here today at the Technology in Motion (TIM Detroit 2017) conference.

Perhaps the two most sobering findings for automakers and their suppliers in the survey is that nearly half (49%) of consumers said they don’t currently feel confident in AVs’ abilities to navigate them safely and, perhaps because of that lack of confidence, 55% said they are unlikely to consider purchasing an AV. 

On the safety front, there were two top concerns, among several possibilities: 84% of respondents said they are concerned about vehicle-software malfunctions in AVs, and a close 80% said the same about potential hardware malfunctions.  Meanwhile, cybersecurity concerns with AVs are also on consumers’ minds, according to the survey results.  For instance, 77% said they would be concerned about their AV being hacked and taken over, and 75% said they are concerned about having their personal data stolen from an AV.  

Two pieces of encouraging news in the survey that might give auto companies hope that the more they can expose consumers to AVs the more successful they will be, are these: Consumer awareness of AVs as a concept now stands at a near-universal 97%, up from 90% in a similar AlixPartners survey in June 2016.  And, in this year’s survey, 18% say they’ve already experienced vehicles with at least some level of AV features, up dramatically from 3% in last year’s survey, perhaps suggesting quicker consumer adoption is indeed ahead.  Critically, of this subset of potential early-adopters, 49% said they feel “confident” or “very confident” about the ability of AVs to safely navigate on roadways, vs. 26% among those who have not experienced AV features.

The AlixPartners survey also reveals a consumer-preferences shift when it comes product features in AVs vs. today’s vehicles, suggesting that automakers might want to adjust their product-development focus away from traditional product attributes, such as performance, design and reliability, which were 15%, 10% and 4% less important to consumers in the survey when considering AVs vs. today’s vehicles, to infotainment and connectivity, which were 4% more important in AVs.   Furthermore, the survey reveals what appears to be a disconnect between where consumers most want to use AVs and the likely plans of automakers for AV roll-out cadence.

Consumers Currently Trust Tech Companies more than Auto Companies

The survey results also reveal that automakers are starting from behind tech companies when it comes the trust of consumers for developing AVs.  For instance, when it comes to the thought of protecting their data in AVs and protecting their AVs from being hacked, consumers in the survey said they have much greater trust in technology companies (Alphabet Inc.’s Waymo as an example) than they do in traditional auto companies.  When asked who they would trust most to maintain their data privacy in an AV, 50% said tech companies, compared to just 14% who said auto companies; and when asked who they trusted most to protect their vehicle from hacking, 62% said tech companies, vs. only 8% who said auto companies.  Ride-hailing companies (Uber Technologies Inc. and Lyft Inc. as examples) placed a far-distant third in trust for both questions, at just 1% for each.

Moreover, tech companies were also ahead of traditional auto companies in the survey when it comes to developing the software so critical to AVs to begin with.  While 79% said they trust traditional automakers most to design and develop AV vehicle hardware, only 10% said they trust automakers most with the software side of AVs—the side of the business where many experts believe the lion’s share of profits will lie.  That compares with a whopping 78% of those polled who said they trust tech companies most to design and develop AV software.  Meanwhile, 10% said they trust tech companies most for designing and building vehicles.  Ride-hailing companies were not trusted for either the “brain” or the “brawn,” of AVs, coming in a 1% for both categories in the survey. 

Interestingly, however, consumers in the survey did not rate tech companies, at least not working alone, as their most-preferred development model for bringing AVs to market; rather, most pointed to partnerships between auto and tech companies as their preference.  Specifically, on a scale of 1 to 5, auto-tech partnerships as the preferred model averaged 3.4; while traditional automakers, working alone, averaged 2.6; and tech companies, perhaps surprisingly given some of the other results in the survey, averaged just 2.1.

Meanwhile, among those surveyed who said they’d consider purchasing an AV (29%), they also indicated they’re willing to pay an incremental $2,629 on average.  And, of those who said they’d be early-adopters to AVs—buying one in the first year of introduction—43% said they’d be willing to pay an incremental $3,500 or more.

That’s all good news.  The bad news is those numbers are below or about even with the 2017 AlixPartners’ study estimate of AV-component costs for 2025—when many experts believe economies of scale will start kicking in and the technology to have matured—of about $3,300. 

Mark Wakefield, global co-head of the automotive and industrial practice at AlixPartners, said:

“When it comes to autonomous vehicles, traditional auto companies and suppliers have a big, two-front battle ahead of them: educating the consumer about AVs and figuring out how to compete in the software end with highly-advantaged tech companies—or partner with them when that makes more sense.  Either way, traditional auto will have to undertake massive operational and organizational changes to afford the autonomous-vehicle investments, be successful with partnerships and not get left out of the profitable parts of the new automotive ecosystem.”

About the survey

The AlixPartners 2017 US Autonomous-Vehicle Consumer Survey was administered July 27-August 2, 2017, to 1,567 adults in the United States who own or operate passenger cars or light trucks.

About AlixPartners

In today’s fast paced global market timing is everything. You want to protect, grow or transform your business. To meet these challenges, we offer clients small teams of highly qualified experts with profound sector and operational insight. Our clients include corporate boards and management, law firms, investment banks, investors and others who appreciate the candour, dedication, and transformative expertise of our teams. We will ensure insight drives action at that exact moment that is critical for success. When it really matters.

Tim Yost
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