Automated cars to create $7 trillion Passenger Economy

Really? This new research smells a lot like marketing to me with mandatory big numbers, including that self-driving vehicles will be a major use case for 5G – wait for it – between 2035 and 2050.

Blimey. We’re talking about Strategy Analytics research, Accelerating the Future: The Economic Impact of the Emerging Passenger Economy, which was commissioned by Intel, an investor in self-driving vehicles. But 18 years is not so much a long time as an eternity in tech, and as we all keep observing, ad nauseam, the rate of change appears to be increasing.

One thing that is certain though, no matter how the market pans out, super-reliable connectivity is the vital ingredient, but will it be 5G and does that matter?

Whether it’s 5G is not the point

No, we don’t think the name matters and anyhow, we have some star witnesses who think 5G is somewhat misleading. Here’s what Dr. Lester Thomas, Chief Systems Architect, Vodafone Group, has to say on the subject: “From a technical perspective, there is no 5G. The technology term is LTE – long-term evolution LTE was effectively meant to be the last G. It’s a bit like Windows 10 – there’s not going to be a Windows 11 because 10 will evolve incrementally.

“With 5G, there will be a marketing event, probably with the Tokyo Olympics,” he adds. “But in our plans, we’re doing things which you could claim are 5G and we’re doing them now – we don’t intend to wait.” Check out how Vodafone has already run a proof of concept Catalyst project for network slicing – a key 5G attribute – to control drones and prove we can already run anything as a service.

Plus, I reckon by 2035 5G will be a dim memory, just like the geek who told me, with utter certainty, that we’d never see such a leap – from 14.4kbps to 19.2kbps via modem – again in our lifetimes. You can walk faster than 19.2kbps. My boss has just sympathized with me because I have been offered broadband at only 40Mbps .

Not the tech but the business case?

Dr. Thomas’ quotation was taken from TM Forum’s own primary research, published in June, which showed that telcos’ suppliers are much more enthusiastic about the potential of connected (the precursor to fully autonomous) cars as a platform service, enabled by 5G, than the telcos themselves (see the two graphics below – TM Forum members can download the report, 5G: Is platform the killer use case?, free while non-members can access the Executive Summary, free.

Maybe it’s not the tech and its lack of standards, but the business model that is the biggest stumbling block? That is, working out how to be part of an autonomous car ecosystem, and how to orchestrate and monetize that – although these issues were also addressed by that Catalyst. This could also explain why connected vehicles came fifth when we asked service providers to name the 5G-enabled services they would deploy first (see graph below), whereas it was the tech suppliers’ joint second favorite – see graphic below. Perhaps it reflects the big difference between selling equipment in a buzzy market and figuring out how to make money from it in partnerships?

And let’s put this in perspective too; McKinsey predicts only up to 15 percent of new vehicles sold by 2030 could be fully autonomous. Which is a relatively small number, a long time hence. This is a good thing because it gives us all a chance to read or reread Harvard Business School Professor Clayton Christensen. He coined the term disruptive innovation and has written extensively about first-mover advantage, which isn’t always an advantage, and try to figure out how it applies here and to ecosytems. Take all the help you can get, and especially exploit the unfair advantages TM Forum’s Digital Maturity Model can give you, right now.

All those interesting concerns aside, here are some of the whizz-bang numbers that connected cars are forecast to bring about which are always fun and fodder for presentations.

The Passenger Economy in numbers

  • Some 250 million hours of commuters’ travel time will be freed up in the most congested cities in the world;
  • $200 billion will be generated by innovative new services that emerge as driverless vehicles evolve;
  • a new sector focused on making use of this time will grow to reach an $800 billion by 2035 before snowballing to $7 trillion by 2050 as autonomous cars enter the mainstream – that’s the Passenger Economy;
  • nearly 55 percent of the new sector’s revenue – $3.7 trillion – will come from mobility-as-a-service (MaaS) offers for consumers, offerings, while 43 percent –$3 trillion – will be generated by business use of MaaS;
  • on top of the estimated 585,000 lives that could be saved between 2035 and 2045 as the vehicle proliferate, public safety costs could see reductions of more than $234 billion during the Passenger Economy era [that depends how much the tech costs];
  • 5G will support the massive surge in data use as we all check email or watch videos or tune into social networks [more of what we do already except surely email will be dead by then?]and;
  • the ‘really innovative’ stuff could include in-car experiences beauty treatments, mobile healthcare clinics and even speedy casual dining. Firms like Starbucks and McDonalds, that have previously increased their reach by upping the number of physical locations, could introduce mobile versions of their bricks-and-mortar stores. [Maybe an innovative MaaS would be winches for getting us in and out of cars as we get ever fatter and lazier?]

The B2B stuff is a bit more interesting? The report gives Amazon’s ‘airborne fulfillment centers’ ­– hovering warehouses from which to dispatch delivery drones and Alphabet’s Sidewalk Labs Flow software is designed to connect cars with parking spaces [there are already apps for that with ordinary cars].

In conclusion

“Businesses in this fledgling sector will need to boost their IT capabilities and network reliability to cope with an influx of data, as well as providing support for advanced analytics that personalize the experience for each passenger. MaaS firms will need solid, secure networks to make use of predictive maintenance and dispatch systems and dynamic deployment of their fleets, depending on demand, as well as keeping customers’ data safe.”

Yeah, we know.




    About The Author

    Snr Director, Research & Media

    Annie Turner has been researching and writing about the communications industry since the 1980s, editing magazines dedicated to the subject including titles published by Thomson International and The Economist Group. She has contributed articles to many publications, including national and international newspapers such as the Financial Times and International Herald Tribune, and a multitude of business-to-business titles. She joined the TM Forum in 2010 and is responsible for overseeing the content of the Research and Publications portfolio.

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