MADISON, Wis. — It’s official. Commercial robotic cars (that are no longer test cars) will hit the road in 2018, not — as previously predicted — two or three years from now. The headless driver in front of you will no longer be just a little old lady. Supply chain intelligence collected by Yole Développement, combined with Waymo’s recent acknowledgement that it will launch a ride-hailing service in Arizona in 2018, point to the conclusion that the commercial future of robotic vehicles is already upon us. Waymo in Arizona (Source: Waymo) For observers of the autonomous vehicle market in the U.S., the first domino was the state of Arizona last month granting Waymo a permit to operate as a transportation network company. Earlier this month, Waymo confirmed its plan to start charging customers for robo-taxi rides in 2018. But well before this year, Yole Développement, a Lyon, France-based market and technology research company, was already picking up information that fleet operators and carmakers are placing sizable orders on very high-end sensors. This suggested strongly that a rollout of commercial robotic vehicle services is imminent. EE Times sat down with Yole Développement and asked about the firm’s analysis on the evolution of the robotic vehicle market, and market drivers for such highly automated vehicles. We also asked the estimated cost for a robotic vehicle today, and the likely number of robocars that might hit the commercial market in 2018-2019. We also asked Yole to break down robotic vehicle economics. ‘Cognitive dissonance’

Yole is a technology/business market research firm best known for its ability to dissect, understand and assess such emerging technologies as MEMS and sensors and their markets. Unlike conventional automotive research firms, Yole’s focus is not on cars as finished systems and tallying up annual auto shipments. Yole’s strength is in sizing up the emerging market from a component level. The research firm has been looking at the robotic vehicle market for a while. Over the past 12 months, Yole has published separate reports on topics such as 3D sensing, automotive sensors, automotive radars and high-end inertial measurement units (IMUs). Pierre Cambou, Yole’s activity leader for imaging and sensors, told us, “It was right around the summer of 2017 when we began to see ‘cognitive dissonance’ in the [robotic vehicle] market place.” Pierre Cambou He noted, “Big investments and sizable orders on high-end industrial grade sensors got us involved, since we do monitor those markets at Yole.” Cambou realized that “Automotive ADAS could not justify the investments we have witnessed, for example, in lidar, and the financing of projects which appeared to be quite high end (such as lidars by Luminar, and those from Blackmore).” But at the same time, Cambou kept hearing from many robotic vehicle market observers who were predicting the robocar market won’t happen until 2020 or 2021 at the earliest. Most said 2025. “Several companies called us wondering what was going on, by cross matching the demand for lidars, industrial-grade IMUs and industrial grade cameras.” Describing Yole’s business as connecting the dots, Cambou said, “We kept thinking something wasn’t adding up.” Yole found persuasive evidence gleaned from the supply chain. Big investment in high-end lidar technologies and sizable orders placed by big carmakers gave Cambou some hints. But that’s not all. Sensors like high-end IMU accelerometers — “whose market is usually not so dynamic,” according to Cambou — have also begun growing in volume for the automotive market.

Cambou concluded, “We are now pretty certain the commercial robotic vehicle market is happening much faster than most in the industry had predicted.” Judging from what it now knows, Yole estimates 8,000 to 10,000 highly automated vehicles will be available not for testing but commercial use this year. What we know of the next 5 years (Source: Yole Développement)

Cambou stressed that such numbers do not include vehicles with ADAS features. “It’s important to make a clear distinction between robotic vehicles and ADAS cars.” They are not the same and they shouldn’t be confused, he said. “Tesla and Volvo with ADAS features are totally different from Google’s Waymo robocars.” Cameras that go into robotic vehicles, for example, are 10 times more expensive than those in ADAS cars, said Cambou. The same thing can be said about lidars and gyros in IMUs. “Robotic vehicles are using very high-end, industrial grade sensors,” he said. First mover advantage

So, why do fleet operators like Waymo, Uber and Lyft, as well car OEMs such as GM and Ford appear to be in such a big hurry to jumpstart commercial robocar services? Cambou calls this the first mover advantage. In the B-to-B world, the first player to enter the market by investing in new technologies and infrastructure stands to gain the most, he observed. The bicycle sharing service proliferating in many cities in the world is an example, said Cambou. In every city, it’s pretty much proven to be a winner-take-all market. Robotic vehicle economics

Based on the cost of each technology building block required in a robotic vehicle, what’s the cost of that car today? Waymo previously disclosed that the company is using in its robotic vehicle (a Chrysler Pacifica Hybrid minivan) Waymo’s internally developed lidars (one unit of long-range lidar, one unit of medium-range lidars and four units of short-range lidars), four radars, eight cameras and one to three IMUs per vehicle. Uber, on the other hand, said it deploys one long-range lidar developed by Velodyne, four radars, seven cameras and one IMU per robotic vehicle. Uber retro-fitted Volvo XC90 sport-utility vehicles to support its driverless car software (Photo: Uber) In GM/Cruise autonomous cars, there are five short-range lidars made by Velodyne, eight radars developed by Delphi, 16 cameras and one to two IMUs. General Motors Cruise Automation (photo: GM) And a partridge in a pear tree. Each of these automated vehicles, of course, comes with computing units capable of many trillion operations per second processing power. Given all that, Cambou estimated that, on average, a 2018 robocar comes in around $200,000. By 2022, Yole predicts the industry is likely to manufacture 65,000 units a year. Per vehicle cost should then go down to $150,000, he estimated. People won’t be surprised to see robotics vehicles on the road by 2022, he said, as the cumulative number of robocars on the road will number about 150,000. So, what’s the significance of a $200,000 robotic vehicle? From Yole’s point of view, “There is a lot of hardware value in each of these cars. Just 10,000 vehicles on the 2018 robotic car market might seem insignificant to consumers. But for the technology suppliers, it has far reaching ramifications. That means the market is investing $2 billion in the robotic car segment. Cambou estimated that half of that investment — roughly $1 billion — goes to sensing. Noting that Yole deals with a lot of small high-end players in MEMS and sensors market, Cambou said, “For them, moving from $10 million to $100 million is a big deal.”

Robocar economics

As with any disruptive technology, those most shaken by the emergence of robotic vehicles will be conventional car manufacturers and insurance companies, according to Cambou. The taxi business, already weakened by ride-hailing companies, will suffer another blow. Meanwhile, robotic car proliferation might allow reductions in public transport, he added. Assuming a $200,000 price tag, the question is: How to recoup that investment and how long will it take? Does robocar economics make sense at all? Yole did some math. Cambou said that if a robo-taxi drives at 30 miles per hour in a U.S. city for 23 hours, it will cover 700 miles per day. If it works 330 days a year (assuming 10 percent down time), the robo-taxi will end up covering 230,000 miles per year. If a fleet operator charges $0.43 per mile, that single robotic vehicle will bring in $100,000 in revenue per year, meaning two years to amortize the purchase price. A fleet operator who decides to double the fare will get the money back in a year. The general expectation is that a robo-taxi ride will be cheaper than a regular taxi. But there are various scenarios. Parents might be willing to pay more when sending their kids to schools and activities. Meanwhile sending goods to the city on robotic vehicles for delivery might have to be very cheap. Work/sleep during a commute is another scenario in which pricing may vary depending on the customer’s demands, and if employers might pay for it. Driverless “Easymile EZ-10” electric shuttle (Photo: Easymile) Robo-taxis are likely to be more expensive than public transportation, said Cambou, but will offer more convenience. He noted, “As with most disruptive technologies, we should expect most of the growth drivers for robotic vehicles to be out of the current use cases. In short, robocar users are not current private car users/owners, and use cases by robocar users will be very different from what we already see on the market. He added, “What we haven’t really figured out are a variety of business models that will come out of this. It would be interesting to know, he said, because that will definitely affect the growth of the market. Starup Robomart wants to bring the 'world's first self driving store (Photo: Robomart) Cambou equated the dawn of the robotic vehicle today to the time — in 1992 — when nobody had ever envisioned what iPhone technology could do 15 years later. Lifespan of robotic vehicles

Today the life span of a regular vehicle is believed to be 15 to 20 years. In Europe, the average age of a vehicle owned by consumers is 8 years, while in the United States, it’s about 10 years, Cambou said. Because taxis drive so much, Cambou pegged the life cycle of a robo-taxi to be around five years. He stressed that the lifecycle “is absolutely the key” in forecasting the market. “Take a look at mobile phones,” he noted. “Two billion units are replaced every year.” Asked if a robotic vehicle should last longer because they are packed with electronics and fewer mechanical parts than internal-combustion cars, Cambou cautioned, “Not necessarily. You can’t assume all robotic vehicles will be EVs from the start.” Indeed, when Waymo finalized an order for thousands of self-driving Chrysler Pacifica minivans, it ordered hybrid minivans. However, as major cities around the world place more restrictions on cars coming into urban centers, while providing preferential access for electric vehicles, it is possible that in some places, only electric robo-taxis will be allowed. Robocar technology change in 2021?

Waymo, Uber, Lyft and GM are unquestionably jumping the gun on the robo-taxi business. Will the architecture of those robotic vehicles remain the same over the next decade? Cambou believes the technology will change “around 2021.” Reflecting feedback from the real-world driving experience, he expects modifications to happen. “But those will be small adjustments,” he said. “I expect no disruption.” What about such claims by new sensor technology companies as lidars will be eventually replaced by the combination of more advanced radars and vision processors? “No, it won’t happen,” said Cambou. “They won’t replace lidars. Those who think so are in the fantasyland.” According to Yole, by 2027, 1 million robotic vehicles will be on the road. That number will increase to 5 million by 2032. By then, Yole estimates a robotic vehicle will cost $95,000.

— Junko Yoshida, Chief International Correspondent, EE Times