Is the U.S. gearing up for the brave new, more efficient world of AVs?
Despite the wide-reaching impact autonomous vehicles (AVs) can have on society, the environment and the economy, the sector is still very much in its infancy. But recent legislative movements could fast track the AV market into maturation.
For a long time, the AV industry has been held back by regulatory restrictions, but this year several steps have been made towards national AV implementation. In an unprecedented move, the U.S. National Highway Traffic Safety Administration (NHTSA) removed the requirement for autonomous vehicles to have conventional safety controls such as steering wheels and pedals. And a bipartisan Congressional Autonomous Vehicle Caucus was formed to educate lawmakers about autonomous vehicles and revive legislative action. The U.S. government is clearly seriously considering how to implement AVs nationally—and they should! Autonomous vehicles have the potential to completely transform businesses and economies.
It’s not just the manufacturing industry that would benefit from AV production. The adoption of AVs will impact all industries by improving transport and supply chain efficiency, as well as making public transport more accessible and sustainable. This will increase productivity and make the U.S. even more competitive in the global economy.
It’s vehicle manufacturing, but not as we know it.
It is clear from some recent AV and EV start-up failures that AV manufacturers face many challenges. The cost of AV manufacturing is high, and the development of experimental AI technology paired with the constraints of safety regulations means AV manufacturing is at high risk.
Manufacturers need to ensure they get the most value out of their efforts—this means adopting a new manufacturing and service model to maximize the potential of AVs at every stage of the production process, from design to manufacture to operation.
Because make no mistake, the AV and EV market is vehicle manufacturing, but not as we know it. In the beginning, manufacturers need to win over the approval of governments, law makers, businesses and customers to make widespread AV adoption a reality. And in the end, service and servitization will be the key to a successful AV business model and a mature AV aftermarket.
The new service model that will prioritize long-term efficiency and sustainability
While waiting for the legislative green light, manufacturers need a new approach to maximize value at every stage of the manufacturing process to keep out of the red, improve the social and economic value of AVs and build sustainable business models.
Autonomous vehicles should be manufactured with ongoing servitization in mind and designed for quality and durability as AV businesses look to sell the service, not the vehicle — manufacturing for long-term sustainability will be a priority.
In a service model, ownership of an AV asset is retained by the manufacturer, so parts and materials from the original asset can be retrieved for ongoing maintenance and remanufacturing when the asset reaches end-of-life, ensuring the most value is obtained from resources through a closed-loop supply chain.
‘Transport as a Service’ – an old business model for a new industry
The U.S. needs intelligent transportation solutions to improve traffic conditions, sustainability and efficiency. In a similar way to how technology companies have capitalized on the business model of Software as a Service (SaaS), manufacturers of AVs can capitalize on “Transport as a Service” (TaaS).
Although the concept is not a new one, a service model will provide manufacturers with increased revenue streams over a longer period of time from less assets—enabling manufacturers to build long-term profitability.
Dynamic route scheduling and ease of repair in a service model will significantly reduce the downtime of AVs compared to traditional vehicles, ensuring optimal use of AV assets while simultaneously reducing waste and maximizing resource utility.
It’s all about making the most out of the initial investment of resources, energy and effort put into the AV asset by optimizing resource utilization, prolonging AV lifecycles, and ensuring efficient operation. This is the key to build a profitable AV business model now, for a sector that is re-shaping the future of transport, travel and our society.