The global autonomous taxi market could be worth over $2 trillion on an annual basis by 2030, according to estimates from UBS analysts cited by Bloomberg.

In formulating its estimates, the bank utilized its Evidence Lab to run a simulation of an autonomous taxi fleet in New York City using a “complex algorithm that performs dynamic optimal route generation and passenger-vehicle assignment considering vehicle capacity and rider demand.”

What does this mean: The rise of a new multi-trillion dollar transportation industry will likely reshape how consumers travel and automakers operate.

• Consumers:The simulation found that riders of autonomous taxis could see the average cost of their trips drop by more than 80%, which would make them cheaper than a metro ticket. Commute times could drop drastically via autonomous taxis: If metropolitan cities like New York converted their existing taxi fleets into autonomous ones, the average commute time could fall from 40 minutes one way to 15 minutes, for one leg of the trip. With the promise of cheaper trips and faster commutes, consumers will move from relying predominantly on public transit to autonomous taxis for their commutes.
• Original equipment manufacturers (OEMs):In the medium term, new car sales could be propped up from the rise of autonomous taxis. By 2030, autonomous taxi fleets will reach 11 million vehicles and will experience a 5% penetration in relation to new car sales, according to the simulation. However, as the adoption rate of autonomous taxis increases over the long term, automakers could see new car sales drop by 5%-10%. As such, if OEMs hope to survive this technological revolution, they can’t solely be providers of autonomous technology. Rather, they need to offer revenue-driving services of their own. Daily revenue from an autonomous fleet of 4,500 vehicles could be $3.3 million, per UBS.

The bigger picture: There are still major hurdles for the auto industry to overcome in order to see 11 million autonomous taxis on the road as part of a $2 trillion market. Autonomous vehicle (AV) providers have struggled to bring autonomous technology to public roads.

In fact, in April, Ford CEO Jim Hackett stated that Ford “overestimated the arrival of AVs.” He further added that his company’s autonomous taxis would be geo-fenced, limiting their availability, “because the problem is so complex.” Even if technological capabilities catch up, providers still need to win wider regulatory approval and build consumer trust of AVs.

Without advancing in these areas, the mass adoption of autonomous taxis could be significantly delayed — UBS estimates that this could lead to having just 1 million vehicles on the road, significantly less than its more optimistic forecast of 11 million taxis.

Via Business Insider