Research & Discoveries (R&D): The Emergence of Shared Autonomous Vehicles: Transforming Urban Mobility

Academics and experts around the world are studying how AVs can improve safety, enhance mobility, and create new economic opportunities, among other transformative benefits. AVIA’s Research & Discoveries (R&D) Series highlights these reports’ findings about how AVs can create a safer and more mobile world.

A new report from the McKinsey Global Institute on the top areas reshaping the global economy focuses on the shared autonomous vehicle (SAV) industry and the new frontier in urban mobility. Though still in its early stages, the SAV industry is advancing rapidly as companies develop purpose-built vehicles and test autonomous technology on traditional models. With growing investments and technological progress, SAVs have the potential to redefine transportation and transform how we move through our cities.

Technological Foundations

Today, companies like Waymo, Cruise, Volkswagen, Motional, and Zoox are leading the SAV market in the United States. Robotaxis are already available in cities like Phoenix, San Francisco, Austin, and Las Vegas. As SAVs expand, they face significant challenges, including complex navigation and safety in unpredictable urban settings, which has prompted companies to actively address these hurdles in real-world settings.

Investment Trends and Economic Potential

The SAV industry has seen over $100 billion in investments from 2010 to 2021, and while investments peaked in 2019 at $25 billion, the industry saw renewed interest in late 2023 and 2024. Though initial costs are high, economies of scale could make SAVs affordable, creating a substantial market. McKinsey estimates that SAVs could capture between 25% and 51% of the shared mobility market by 2040, generating revenues between $610 billion and $2.3 trillion and providing a cost-effective alternative for urban transportation.

Regulatory Challenges

The report noted that regulatory uncertainty remains a significant hurdle, with a 2023 McKinsey survey showing that 60% of industry leaders view regulation as the primary obstacle to adoption. As SAVs become more prevalent, governments will need to address complex liability and safety standards. Regions like Texas are already exploring legislation to set standards, but a unified approach is needed to support the global growth of SAVs.

Consumer Acceptance

The willingness of consumers to adopt shared mobility options will also influence the success of SAVs. While convenience and affordability make SAVs attractive, widespread adoption will require consumer trust in the technology’s safety and reliability. As of 2022, approximately 40% of passenger miles were traveled in shared vehicles, a figure expected to rise by 2040. Urban policies, such as congestion charges and restrictions on car ownership, could further drive adoption. SAVs are projected to lower per-trip costs, making them more appealing than ride-hailing services for city dwellers.

Industry Dynamics and Competitive Landscape

The SAV market is dynamic, with competition from autonomous technology providers, automakers, and ride-hailing platforms. Leading companies are not only developing technology but also operating fleets. Meanwhile, ride-hailing platforms like Uber and Lyft are leveraging existing customer bases through partnerships with technology providers. Given the high cost and research demands, consolidation within the industry is likely, with key players focusing on competitive advantages in technology, vehicle manufacturing, or customer reach.

Looking Ahead

By 2040, SAVs could become a staple of urban life, offering convenient, affordable, and environmentally friendly transportation options. The industry’s success will depend on advancements in technology, regulatory cooperation, and consumer acceptance. For businesses and investors, SAVs present a significant opportunity to drive innovation in a rapidly growing sector. Shared autonomous vehicles are set to redefine the way we move through cities, marking a new era in urban transportation.

Read the full report from the McKinsey Global Institute here: https://www.mckinsey.com/mgi/our-research/the-next-big-arenas-of-competition#shared-autonomous-vehicles