Driverless Car Global Market Seen Reaching $42B by 2025

Vehicles that drive themselves on the freeway or take over in traffic jams may be on the road in large numbers by 2017 and autonomous cars might create a $42 billion market for the technology by 2025, Boston Consulting Group said.

Self-driving cars, building on technology already available in many luxury vehicles, will be able to navigate crowded city streets by 2022 and may be a quarter of worldwide auto sales by 2035, the firm said today, citing interviews with industry executives and consumer surveys. Japan and western Europe will probably adopt the technology most quickly, its study found.

“Many people don’t realize how far along some of these technologies are,” said Xavier Mosquet, North America leader of the Boston-based firm’s automotive practice and managing director of its Detroit office. “Even more surprising, consumer interest and the production costs will make autonomous vehicles highly attractive to both carmakers and their customers.”

With as many as 9 billion people predicted to live in urban areas within the next 25 years, more than the global population now, automakers are under pressure to create technologies that ease gridlock and give motorists stuck in traffic the ability to multitask safely.

Ford Motor Co. Chief Executive Officer Mark Fields said this week at the Consumer Electronics Show in Las Vegas that an automaker probably will introduce a self-driving vehicle within half a decade, but it won’t be his company, which is focusing on less expensive features that assist in driving. General Motors Co. said in September it will introduce hands-free highway driving technology on a Cadillac in two years.

The F 015 Mercedes self-driving concept car, also shown this week in Las Vegas, has four seats, including the driver’s, that can face each other, rather than the road. Six screens let passengers monitor information about the Daimler AG vehicle and the outside world, using technology that responds to eye movements and gestures.

Mercedes already sells a system that can pilot a car on the freeway, as long as the driver keeps a hand on the steering wheel, and by 2016 will have a hands-free system, Boston Consulting said in the study. Tesla Motors Inc. plans to offer hands-free highway driving in Model S electric cars this year.

The price to add the technology to vehicles will range from $2,000 to $10,000 and will decline in a range from 4 percent to 10 percent in the first 10 years as adoption spreads, according to the study. By 2035 about 18 million vehicles may be partially autonomous and 12 million could be full autonomous, which China the largest market by that time.

In a September survey of 1,500 U.S. drivers, more than half of respondents said they were likely or very likely to buy a partially self-driving car within about five years, with 44 percent saying they probably would buy a fully autonomous car in a decade, Boston Consulting said.

To ensure the autonomous-car movement doesn’t stall, vehicles must be secure from cyber-attacks and questions about liability must be answered, the firm said. Also, more precise maps will be needed and automakers must overcome social concerns about cars that drive themselves, Boston Consulting said.

The spread of the technology may also lead to self-driving taxis that would be cheaper to operate in large cities such as New York or Shanghai than conventional taxis and reduce congestion, Boston Consulting said. The autonomy may also increase ride and car sharing, further cutting traffic jams.

“The next decades, after 125 years of driving yourself, will be ones that will change the auto industry to an extent it hasn’t been changed in 100 years. It will be radical,” said Thomas Dauner, Boston Consulting’s head of the global auto practice and co-author of the study.

(With assistance from Keith Naughton in Detroit.)