By Saumya Jain
Although many car makers and future thinkers imagine the rapid adoption of connected and autonomous vehicles (CAVs), a recent study, conducted at the FedEx Institute of Technology at the University of Memphis, suggests that buyers may not be so eager to own one. Significant barriers to adoption included the price point of the vehicles, distrust of the technology in general, and a fear of losing control over operation of the car.
In June, Volvo predicted that driverless vehicles will make up one-third of its deliveries by the middle of the next decade. It is common to see manufacturers around the world setting similar goals with respect to CAVs. With adaptive cruise control, parking assist, lane assist, etc., there is already some degree of automation incorporated in most 21st-century automobiles. From improved efficiency to safety, the potential benefits of CAVs are many. Even ride-share companies like Uber and Lyft are pushing for the introduction of automation. Most manufacturers and innovators are estimating that AV fleets will be nearly fully autonomous by 2050. But the FedEx study questions these estimates based on the concept of resistance and how individuals tend to defer adoption of radical innovations.
Previous studies analyzing CAV adoption are based on a model that assumes an individual is already familiar with a technology and is seeking incremental improvements. This study argues that this type of modeling would not work in the case of CAVs, since individuals have no previous experience with CAVs on which they can base their expectations. The FedEx study developed a new methodology based on Diffusion of Innovation theory to investigate the long-term adoption rates of CAVs. According to one of the researchers, this methodology “considers innovation diffusion as a social phenomenon that has four aspects: 1) the demand to adopt the innovation; 2) communication through certain channels; 3) communication among individuals in a social network; and 4) communication over time.”
The study used surveys of University of Memphis employees to understand how various social agents can alter an individual’s acceptance of an innovation and willingness to pay. The survey participants were quite price sensitive, with 69.1 percent of respondents’ households willing to pay only an additional $5,000 or less to add automation and connectivity. The survey also showed that improving social status among peers was the least important incentive to adopting CAVs, and high risk of virus attack was considered the most important barrier to the adoption. Losing the feeling of control was also more important than safety concerns. All these results were put in the model to simulate the market share of CAVs over a 25-year time period, starting from 2025.
The numerical analysis of the study indicates that the AV fleet will be nearly fully autonomous by 2050 only if prices decrease at the rate of 15-20 percent annually. With a 5 percent annual rate of price reduction, by 2050 CAVs will only be about 15 percent of all vehicles. Assuming that an individual’s perception is dynamic and can change based on peer-to-peer communication the study determined that:
- A marketing campaign may initiate diffusion of CAVs but would have no significant impact on the adoption trend;
- Willingness to pay can be altered by peer-to-peer communication; and
- Peer-to-peer communication would only have a positive effect if most adopters are satisfied with their purchase.
The researchers concluded by accepting a few shortcomings of the study. They acknowledge that they did not incorporate the impact of shared ride services on overall CAV market penetration and did not account for the adoption of used cars, multiple technology generations, car types, etc. But it does leave the policy makers and innovators with the alarming idea that increase in availability of CAVs in the market alone would not necessarily increase the demand for CAV ownership.
Saumya Jain is a Senior Associate at SSTI.