Moody’s: Autonomous Vehicles to Drive Change
On May 17th, Moody’s Investors Service published a report entitled “Autonomous Vehicles Will Drive Change from Auto Manufacturing to Insurance”, which looks at the potential impacts of autonomous driving in a number of areas.
“One of the most debated technologies currently under development is the autonomous, or self-driving, road vehicle. While the widespread adoption of fully autonomous vehicles in Europe is still decades away, some features are already being incorporated into newer vehicle models. Driverless car technology has the potential to make road travel safer and less costly for households and companies, and to significantly affect vehicle production, spending and usage.
While there are many uncertainties about the future of autonomous road travel, there are potential credit implications for a wide array of industries:
Auto manufacturers could benefit from a price premium for these vehicles, although the replacement rate could decline because optimized driving by a computer would reduce wear and tear. Slow initial demand due to high production costs should pick up dramatically once costs decline and vehicles are available at attractive price points. Over the long run, fewer cars could be sold due to lower wear and tear of autonomous cars.
Technology companies would benefit to the extent that the technical capabilities of the vehicles become the true value for consumers. Software and semiconductor firms are best placed to benefit from demand for driverless cars as software and electronic hardware will become even a more integral part of automobiles. Data and Internet providers will also benefit from requirement of continuous data feeds on driving conditions.
Insurance sector could see dramatic change, particularly if manufacturers accept product liability for accidents. Automobile insurance is one the most profitable segments for insurance companies. As accidents decline, automobile premiums are also very likely to fall reducing insurers’ profitability.
Toll road operators would benefit as autonomous vehicles reduced congestion and increased road capacity. Better utilization of roads due to smoother driving will improve per mile toll revenue yield, resulting in better returns on investment and shorter payback periods.
Automobile financing industry is likely to face different annuity streams from financing more expensive automobiles in the short term, and software and battery renting revenue in the long term.”
In: CLEPA News, Connectivity & Automation, Growth & Competitiveness