Canadian Underwriter

Intel predicts autonomous driving will spur new ‘passenger economy’ worth US$7 trillion by 2050

June 2, 2017   by Canadian Underwriter

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Technology company Intel Corporation is predicting that autonomous driving will cause a new “passenger economy” to emerge to support the idle time when drivers become riders, an economy that will be more than twice the size of the “sharing economy.”

The findings were contained in a new study titled Accelerating the Future: The Economic Impact of the Emerging Passenger Economy and released on Thursday. The study, prepared by analyst firm Strategy Analytics, predicts an “explosive economic trajectory” growing from US$800 million in 2035 to US$7 trillion by 2050 “as autonomous vehicles become mainstream,” Intel said in a press release.

Business use of Mobility-as-a-Service (MaaS) – which will disrupt long-held patterns of car ownership, maintenance, operations and usage – is expected to generate US$3 trillion in revenue, or 43% of the total passenger economy. Consumer use of MaaS offerings is expected to account for US$3.7 trillion in revenue, or nearly 55% of the total passenger economy. Another $200 billion of revenue is expected to be generated from “rising consumer use of new innovative applications and services that will emerge as pilotless vehicle services expand and evolve,” Intel suggested.

“Companies should start thinking about their autonomous strategy now,” said Intel CEO Brian Krzanich in the release. “Less than a decade ago, no one was talking about the potential of a soon-to-emerge app or sharing economy because no one saw it coming. This is why we started the conversation around the passenger economy early, to wake people up to the opportunity streams that will emerge when cars become the most powerful mobile data generating devices we use and people swap driving for riding.”

According to Intel, autonomous driving and smart city technologies will enable the new passenger economy, “gradually reconfiguring entire industries and inventing new ones thanks to the time and cognitive surplus it will unlock. History has proven that technology is the catalyst for massive societal transformation and that businesses need to adapt or risk failure, or worse, extinction,” Intel continued. “New digital business models ushered in by personal computing, the Internet, ubiquitous connectivity and smartphones gave birth to whole new economies. Autonomous driving will do the same.”

The report frames the value of the economic opportunity through both a consumer and business lens and begins to build use cases “designed to enable decision-makers to develop actionable change strategies,” the release said. Highlights of future scenarios explored in the study include:

  • “Car-venience”: “From onboard beauty salons to touch-screen tables for remote collaboration, fast-casual dining, remote vending, mobile health care clinics and treatment pods, and even platooning pod hotels, vehicles will become transportation experience pods”;
  • Movable movies: Media and content producers will develop custom content formats to match short and long travel times; and
  • Location-based advertising: This will become more keenly relevant, and advertisers and agencies will be presented with a new realm of possibilities for presenting content brands and location.

Harvey Cohen, president of Strategy Analytics and study co-author, said that autonomous technology will drive change across a range of industries, “the first green shoots of which will appear in the business-to-business sector. The emergence of pilotless vehicle options will first appear in developed markets and will reinvent the package delivery and long-haul transportation sectors. This will relieve driver shortages around the world and account for two-thirds of initial projected revenues,” he predicted.

The research firm further points out that autonomously operated vehicle commercialization will gain steam by 2040 – “generating an increasingly large share of the projected value and heralding the emergence of instantaneously personalized services.”

Other key highlights of the report include:

  • Conservatively, 585,000 lives can be saved due to self-driving vehicles in the era of the passenger economy from 2035 to 2045;
  • Self-driving vehicles are expected to free more than 250 million hours of consumers’ commuting time per year in the most congested cities in the world;
  • Reductions in public safety costs related to traffic accidents could amount to more than US$234 billion over the passenger economy era from 2035-2045; and
  • Mobility-as-a-perk: Employers, office buildings, apartment complexes, university campuses and housing estates will offer MaaS to add value to and distinguish their offer from competitors or as part of their compensation package.

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