The Future of Autonomous Vehicles is Here
In the fast-evolving world of automotive technology, interest in autonomous vehicles (AVs) remains front and center. While consumers might picture self-driving cars zipping through city streets, regulatory and technological hurdles keep pushing that vision into the future.
However, a recent investor relations call with Volvo AB sheds light on a more near-term prospect: The commercialization of autonomous vehicles is most likely to take root in confined areas, such as mining and construction sites, before seeing widespread adoption on public roads.
Why Closed Environments?
Safety and Complexity: Operating within a confined environment like a mining site or construction zone greatly reduces external variables and unanticipated situations. This makes it safer and less complex than navigating a truck across diverse road conditions and interacting with unpredictable traffic on public highways.
Optimization and Flexibility: Given the push for #decarbonization and energy efficiency, Vehicle manufacturers such as Volvo are catering to a growing demand for small and mid-size electric vehicles, which afford more flexible and efficient operations. While autonomous drive doesn’t necessitate electrification, these innovations go hand in hand in mobility land. To ensure continuous operation of electric vehicles, companies might need to double their fleet, allowing some vehicles to charge while others are in operation. The granularity in control that comes with ensuring seamless operation with more vehicles, though highly complex, is still far less challenging on closed sites than on an open road with diverse factors at play.
The Volvo Example
Volvo Group is at the forefront of autonomous electric solutions and is currently collaborating with Switzerland-based building materials producer Holcim to test electric haulers in its Gabenchopf limestone quarry. This prototype setup, which Holcim is keen on integrating into other operations, showcases the real-world application of these concepts.
Business Model Implications
As autonomous electric vehicles become more feasible on construction and mining sites, questions also emerge about the business models through which OEMs can commercialize their innovations. In addition to more traditional pay-per-hour, pay-per-tonne, and system purchase/leasing models, the inherent complexity in managing autonomous electric systems is likely to move the industry towards an “Autonomous Transport as-a-Service” model, where clients outsource entire mobility operations to specialized mobility firms. Given that many companies lack the expertise to run such advanced systems, outsourcing mobility operations to innovative OEMs is a logical step forward.
Closing Thoughts
While the road to mainstream autonomous vehicles might be longer than anticipated, the commercial application of autonomous electric construction equipment in closed environments offer a promising interim step. By focusing on sectors such as construction and mining, companies like Volvo are paving the way for broader AV adoption in the future. Whether it’s a push for environmental sustainability or the lure of operational efficiency, the march towards autonomy, at least within closed environments, is around the corner.
About The Singularity Group
The Singularity Group (TSG) makes applied innovation investable in listed equities. TSG is the initiator of the Singularity Index™ (Bloomberg ticker: NQ2045), a global, all-sector benchmark and gold standard for applied innovation. The Singularity Strategies include The Singularity Fund (UCITS Lux), Singularity Reshoring(UBS AMC), and the Singularity Small&Mid (UBS AMC). The Swiss investment advisory boutique works closely with the Singularity Think Tank, a network of entrepreneurs and academics with deep insights into innovation value chains. Their input forms the foundation of TSG’s proprietary innovation scoring system that quantifies the engagement of companies within a set of curated Singularity Sectors worldwide across all market capitalizations and industries. The Singularity Innovation Score (SI-Score; see below) defines how much value listed companies are generating through applied innovation.
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The Singularity Innovation Score (SI-Score): A company’s SI-Score represents the percentage of its revenues associated with innovation. It reflects a company’s ability to create innovation- versus commoditized -business and -cash flows, and its ability to participate in technological evolution. Changes in the SI-Score are just as important as the absolute value. A company’s SI-Score relative to its overall GICS sector can say a lot about the competitive standing and ability to gain and maintain market share. Regional SI-Scores can be used to evaluate the innovation power of markets as well as to gauge companies’ standing in different regions.
Innovation Revenues: 4% of a 74 trillion USD global market: In 2022, the total revenues generated by the World’s listed equities amounted to USD 74 Trillion. TSG’s unique expert-led innovation screening and scoring methodology allows us to divide that amount into innovation revenues and non-innovation revenues. In 2022, roughly 4% (USD 3 Trillion) of global revenues qualified as innovation revenues.
