Autonomous vehicles (AVs) have been a key topic of conversations globally — conversations so numerous that it often seems that AVs should be farther down the road than they actually are. There are several key components that must come together to accelerate the availability, usage and proliferation of AVs across Asia. Ownership of these components is often divided amongst governments, manufacturers and suppliers, as well as service industries that will enable consumers to own and operate their vehicles with peace of mind.
In most situations, commercial industries are the ones that take the big risks, invest both their intellectual and physical capital, and hope to reap the financial rewards when that new technology takes hold. But with AVs, governments have a key role to play in paving the way forward, especially in the critical and intersecting paths of policies and infrastructure.
Singapore was the #1 Asian country (and 2nd globally) on the 2019 Autonomous Vehicles Readiness Index by KPMG Global. Singapore is renowned for being one of the most expensive countries in which to own a car, with roughly two-thirds of the total cost being driven by vehicle taxes. The vehicle tax structure was originally introduced to discourage people from owning and driving more cars than the country’s roads could manage. But as Singapore looks to take regional and global leadership in accelerating the deployment of AVs, the government now has the opportunity to revise vehicle tax structures by potentially reducing taxes on AVs versus traditional vehicles. This would, in turn, incentivise citizens and businesses alike to purchase and utilise AVs because of more favourable tax treatment.
Infrastructure is another domain of government that can aid in the proliferation of AVs. Japan, which was #2 in Asia (and 10th globally) on the same AV readiness index, achieved its high rank due to the country’s exceptional 4G mobile network coverage and the pace of next-generation 5G. Japan has made key investments in road logistics infrastructure as well. For AVs to work as promised, they will need access to send and receive large amounts of data from their on-board sensors and to interpret traffic conditions in real time. Japan’s infrastructure investments are well-placed to help AVs process and interpret this essential data fast and accurately.
Technology supply chain — storming and norming
Governments and their policies and infrastructure play an encouraging role, but the industry itself is still largely responsible for enabling the performance and safety features it has touted for AVs. The industry is currently not helping itself, as consolidation among key artificial intelligence (AI) and machine learning providers is running rampant. Companies such as MapR, a key AI and analytics provider, have recently missed their own deadlines for finding either a buyer or a new source of funding. Cloudera, a machine learning and analytics platform, tried in October 2018 to bolster its capital position by merging with Hortonworks, but many on Wall Street see the merger as a failure, and Cloudera’s chief executive officer stepped down in June 2019. Industry consolidation is nothing new and may indeed play into the strength of players that have stronger financial footing and are cornering the market on managing data and applications, such as Microsoft Azure and Amazon Web Services.
Never thought of as “techy” or cool, the insurance industry now finds itself as either a potential barrier or one of the accelerators to AVs in the marketplace. Many insurers are taking another look at their traditional auto policies to see how these must be reinterpreted to adjust risk in a world where no one is actually driving the car they are insuring. Who now bears liability when an accident occurs? The owner of the AV? The manufacturer who built the AV? Or possibly the technology provider who built the software that runs the guidance systems? These are all complex questions that the insurance industry and its actuaries will have to figure out before AV auto policies can be priced effectively and offered to the public.
A combined effort
No one entity is entirely on the hook to accelerate and bring the vision of AVs to our roadways. Instead, it will take a combined effort. Government policies and the incentives they put in place can speed-up adoption by consumers. Government investments in infrastructure are key to ensuring that networks are fast and available to carry and process car-generated data effectively. The AV industry itself and its technology supply chain must also normalize to provide continuity and dependability of key components and intellectual property. Lastly, service industries, such as insurance, will have to rethink how they offer policy protection in a new world where liability in a potential auto accident is not entirely clear-cut.