Analysis

Despite the recent scrutiny surrounding autonomous vehicles, the technology seems to be picking up speed. After three months of testing on the streets of Pittsburgh, Uber has announced that its fleet of self-driving Volvo XC90s will go live later in August. Customers in downtown Pittsburgh will be able to summon a self-driving car, which, for now, will still be manned by an Uber driver who can intervene in the car’s operation if need be.

And Volvo may soon have competition. Ford announced Aug. 16 that it intends to deploy its own fully autonomous vehicles for ride-booking — targeting Uber directly — by 2021. To support its plans, the company has doubled its Silicon Valley and Palo Alto teams and is investing in or collaborating with four startups specializing in light detection and ranging sensors, machine learning, machine vision and 3D mapping, respectively. In addition, traffic navigation app Waze — whose parent company, Alphabet’s Google, is perhaps the most advanced developer in autonomous car technology — unveiled its own plans earlier this year to join the ride-booking game. These announcements reveal how technology is changing the economy.

Over the past five years, the peer-to-peer economy (also known as the sharing economy), which includes companies and services such as Uber, Airbnb and crowdfunding sites, has grown significantly. Operating outside the confines of traditional economic growth models that have stagnated in recent decades, a decentralized peer-to-peer economy has the potential to stimulate jobs, economic growth and productivity. At the same time, however, government regulation and public acceptance still pose challenges to these nascent industries. Uber, for example, pulled out of the ride-booking market in Austin, Texas, after voters passed a proposition requiring fingerprinting for all drivers.

As the technology continues to develop and gain traction, widespread adoption of autonomous vehicles is still years away. Even so, its use in certain sectors, including ride-booking and commercial long-haul driving, could be prevalent within the next five years. The resulting improvement in supply chain efficiency could have isolated but significant effects, for instance by providing a solution to the shortage of qualified truck drivers as demand for long-haul commercial trucking keeps growing. Uber is working on this, as well. In July, the company announced that it reached an agreement to buy Otto, a new startup initiated up by several ex-Google self-driving car engineers that focused on retrofitting existing big rigs for autonomous capabilities.

— The Market for Autonomous Vehicles Revs Up is republished with permission of Stratfor.