Autonomous vehicle market to reach $50 billion by 2040

Autonomous vehicle (AV) technology continues to advance and will become a $50 billion market by 2040, according to a report from Lux Research, released today.

The report details the growing advances in AVs across all markets—including logistics, ride-sharing, and consumer use—and offers a timeline for widespread adoption of various levels of automation. The researchers say all vehicles will have at least level 2 autonomy—meaning they’ll be equipped with hands-free, advanced driver assistance systems (ADAS)—by 2039. Far fewer vehicles are expected to be fully autonomous, or level 4, by that time.

“Level 4, or completely self-driving, vehicles aren’t the only goal,” Christopher Robinson, senior analyst at Lux Research and lead author of the report, said in a statement Thursday. “Hands-free level 2 ADAS systems will grow rapidly in popularity across all regions, and by 2039, all vehicles will feature at least this level of autonomy. Level 3 autonomous systems will be introduced in 2021 and by 2040 will make up the largest portion of revenues from autonomous vehicles.”

Level 3 systems include more advanced features, such as automated parking.

The report lists four factors that may affect the trajectory of AV growth over the next several years:

  • AV Fatalities. The pace of rolling out level 4 AVs is a fine balance between ensuring safety and being early. Future incidents could sway public perception, forcing developers to achieve an even higher standard of confidence before deploying an AV.

  • Car Ownership. Emerging trends like micromobility and ride-hailing could lead to a decline in personal ownership of vehicles. Look for the areas with the highest density of people who don’t require cars to commute to work to lead this trend.
  • Validation Tools. There are currently no common tools used to validate whether an AV system meets any potential standards that would allow it to operate on public roads. AV developers mostly self-assess their progress, which makes it difficult for regulators to make decisions. A common tool, test, or set of metrics could help accelerate regulatory decisions.
  • System Cost. It’s difficult to forecast the rate of cost decrease for AV systems, as new types of sensors, computers, and algorithms are integrated into new systems constantly.