This article is part of Design News’ 2018 Look Ahead package, offering perspective and insight on 10 areas of advancing engineering. Before you dive too deeply into 2018, prepare yourself for what will surely be an innovative new year with Design News’ 2018 Look Ahead articles.

On the strength of better sensors and software, automakers will speed the development of self-driving vehicle technology in 2018, reaching milestones that experts hadn’t anticipated so soon.

“We’ll see more SAE Level 4 vehicles in testing and pilot programs next year,” Sam Abuelsamid, senior analyst for Navigant Research , told Design News. “We didn’t foresee this happening, even as recently as a year ago.”

The technological foundation for the advancements emerged in the last quarter of 2017. Velodyne Lidar , a manufacturer of autonomous vehicle sensors for more than a decade, rolled out a less-costly, higher-resolution Lidar sensor in November. The new puck-shaped sensor will cut the cost to around $4,000 – about half that of preceding versions. Velodyne is being joined by other sensor makers, who are aiming at sub-$1,000 Lidar systems by employing solid state designs.

The new sensor technology is seen as a huge step forward for the autonomous car movement. “Five or six years ago, the spinning sensors used on the Google-Prius (autonomous) roofs were closer to $80,000 each,” Abuelsamid said.

Also in November, General Motors revealed its strategies for autonomous cars, telling industry analysts that it plans to drive the cost of Lidar sensors on its electric Bolts to less than $10,000 per vehicle by 2019, Abuelsamid said. Given that it will probably employ five Lidar sensors per vehicle, the cost per sensor would be just $2,000 each, he added. The giant automaker, ranked only behind Ford Motor Co. on Navigant’s 2017 autonomous leader board, told The New York Times recently that its cars would be ready for consumer applications in “quarters, not years.”

To be sure, such “commercial applications” don’t mean that consumers will soon be able to buy fully self-driving cars at their local dealerships. GM, for example, plans to unveil SAE Level 4 vehicles for commercial applications in 2019, but those vehicles will be limited to narrowly defined fleet applications. Moreover, Level 4 vehicles are a big drop down from Level 5, which essentially would provide fully-autonomous curb-to-curb service in virtually any application.

Waymo LLC, formerly known as the Google self-driving car project, is moving to SAE Level 4 autonomous car technology as part of a Phoenix, AZ, pilot program. (Source: Waymo LLC)

Already, some automakers are putting Level 4 self-driving cars in pilot programs. Earlier this year, Waymo LLC , formerly known as the Google self-driving car project, invited residents of Phoenix, AZ, to be part of its “early rider program,” which calls for hundreds of self-driving vehicles to be made available to families and commuters. The Waymo program, which is employing its hardware and software on Chrysler Pacificas, has said it will put assigned staffers in second-row seats, instead of the conventional driver’s spot. The staffers will be equipped with control panels to bring the cars to a stop if the occasion calls for it.

Still, the latest Level 4 advancements don’t necessarily change the timetable for Level 5. Level 5 is still a decade away, according to experts. Automakers and analysts alike say that while today’s autonomous vehicles may be able to handle 99% of the potential on-road situations facing autonomous cars, that’s simply not enough. Engineers will need years to feel confident enough to release a Level 5 vehicle.

“Level 5 means it has to operate fully independent under every imaginable condition,” Abuelsamid said. “We don’t expect to see that until the late 2020s at the earliest.”

The biggest problem, however, is still cost – not just from sensors but from multiple other components. “These vehicles are vastly more complex,” Abuelsamid told Design News. “The wiring harness for an autonomous car has more than 200 connectors. It has 40 sensors. It’s got three computers, along with redundancies for the braking and steering systems. These vehicles are going to be very expensive for a long time to come.”

In 2017, Navigant Research placed GM and Ford at the front of its Autonomous Driving Systems Leaderboard. (Source: Navigant Research)

And the costs don’t stop there. Legal experts are still trying to nail down the liability issues. And OEMs are trying to conjure up a revenue model capable of paying for all the necessary updates to software, maps, sensors, and other components.

The good news, however, is that the development of self-driving vehicle technology is happening faster than anyone had anticipated. Automakers are already moving toward automotive-grade hardware to enable the technology survive in real-world applications. Moreover, engineers say they’re more confident in the ability of software to operate successfully in a wider variety of on-road scenarios. Equally important, costs continue to fall.

“Level 4 is happening,” Abuelsamid said. “With GM’s announcements about commercial deployment, and with the pace that Waymo is going, we’re probably a year or so ahead of where anyone expected.”

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Senior technical editor Chuck Murray has been writing about technology for 33 years. He joined Design News in 1987, and has covered electronics, automation, fluid power, and auto.