The impact of self-driving cars on passenger rail could be comparable to the impact of automobile itself 125 years ago.
Self-driving cars are coming, bringing with them a rather sizable wave of disruption. Traditional automakers must form new alliances as they are being challenged by startups, software giants and ride-hailing companies. The predicted decrease in car ownership, due to the cost and convenience benefits of car-sharing options, also means automakers must reevaluate traditional distribution channels. Not to mention the millions of taxi and public transport drivers who might well be out of a job within ten years. The rail industry is yet another sector which will be challenged by self-driving cars, according to a new research brief by BCG Perspective. “The advent of autonomous vehicles (AVs) could well affect passenger rail travel as profoundly as did the automobile 125 years ago,” wrote BCG Perspective.
The consulting company found in a recent survey that about 50 percent of interviewed consumers had an interest in buying or riding in autonomous vehicles. Increased productivity, like being able to work, read or sleep while riding, just as is possible when travelling by train, is the main reason behind this positive sentiment towards self-driving cars. In addition, BCG estimates that 40 percent of current train passengers will choose autonomous vehicles over the train over time, with passengers aged 55 or older the least likely to switch.
Self-driving car sharing is the key
The advent of highway-only self-driving cars will however have a limited impact on passenger rail. BCG predicts this will change drastically as autonomous vehicles are capable of driving in residential areas. “When AVs become capable of safely driving in residential areas, however, AV adoption will likely disrupt rail significantly—probably making the biggest impact since the emergence of the automobile itself. That’s because AVs ready for both urban and residential use could speed the widespread adoption of both car sharing and ride sharing, which would dramatically improve the advantages of the car relative to the train.”
There were more than 86,000 car-sharing vehicles in operation in 2015 around the world, totaling 5.8 million users, according to BCG. Ride-sharing itself is expected to have a major negative impact on passenger rail as the costs per passenger kilometer in a shared autonomous vehicle could drop by 20-40 percent. “Such a substantial reduction will invariably ignite AV adoption and erode passenger rail’s market share,” said BCG. The consulting firm’s calculation shows however that autonomous vehicle travel gets cheaper than passenger rail when three or more passengers share a ride in an autonomous vehicle.
Source: BCG Perspective, “Will Autonomous Vehicles Derail Trains?”
It is also probable that commuting by train will remain the least expensive option in urban areas at peak times. “We expect AVs to constitute a tangible threat to passenger rail within the next one or two decades regardless of the rate of adoption. Trains will remain the least expensive mode of transportation during peak times in urban areas. But during off-peak hours and in rural environments, they will lose riders to AVs.”
Source: BCG Perspective, “Will Autonomous Vehicles Derail Trains?”
BCG warns the potential decrease in passenger volumes could prompt train operators to increase prices to cope with high fixed costs, which could in turn lead to fewer passengers and eventually a loss of revenues. Rail companies must now decide how to deal with this evolution. Beyond assessing the impact of self-driving cars and refine their value proposition, rail companies could also choose to enter the autonomous vehicles race themselves.
IIoT News Recap: The European Union is working on IoT cybersecurity rules; Deutsche Telekom brings Microsoft, Cisco, Huawei clouds under one roof; Orange selects Ericsson for 5G use case testing; Nokia signs Optus on network evolution to 5G
Security: The European Union is working on IoT cybersecurity rules
The European Commission is working on a new piece of legislation aimed at protecting connected machines from cybersecurity breaches, Euractiv reports. The new legislation will require all IoT stakeholders to meet stringent security standards and go through a certification process to guarantee data privacy. “That’s really a problem in the internet of things. It’s not enough to just look at one component. You need to look at the network, the cloud. You need a governance framework to get certification,” said Thibault Kleiner, Oettinger’s deputy head of cabinet, at a Brussels conference earlier this week.
Cloud: Deutsche Telekom brings Microsoft, Cisco, Huawei clouds under one roof
Deutsche Telekom announced the launch of a multi-IoT platform bringing the cloud offerings of Microsoft (Azure), Cisco (Fog) and Huawei under one roof, at the operator’s cloud data center in Biere, Germany. “According to a study by PAC, we’ve only captured five percent of the potential of the IoT. This is due, among other factors, to the highly fragmented market, which requires users to manage many different specialist suppliers,” said Anette Bronder, director of T-Systems’ Digital Division. “We now offer a scalable, pan-industry platform, together with plug-and-play starter packages to help companies begin using the IoT.” The multi-IoT platform will route the data gathered from hardware through gateways to the preferred cloud platform, giving Deutsche Telekom the role of a data custodian. All data is subject to German privacy and data protection laws.
Road to 5G: Orange selects Ericsson for 5G use case testing
Ericsson announced it will be working with Orange to develop and test 5G use cases across Europe. “Our ambition is to be prepared for a 5G deployment in 2020. By joining forces with Ericsson, we will create for our customers a solid network capable of delivering a wide range of services, from greater data speed everywhere to specialized services for cities and industries,” said Alain Maloberti, senior vice president, Orange Labs Networks. Together, Ericsson and Orange will work on 5G technology building blocks, proof of concepts, and pilots across Europe from 2017 onwards. Use cases will include wireless multi-gigabits internet access in suburban and rural environments, massive and mission critical Internet of Things supporting the digital transformation of industry and society, ultra large mobile coverage solutions, and connected cars.
Road to 5G: Nokia signs Optus on network evolution to 5G
Nokia and Optus have signed a Memorandum of Understanding (MoU) to collaborate on the development of 5G, Optus announced. One of the key projects will be a 5G trial using Optus’ 3500MHz spectrum. The companies will also develop a 5G prototype in Optus’s band in Australia by 2017. “There is a global race to explore and develop 5G technology, and in Australia, Optus is well positioned to lead in this space with our ownership of 3.5GHz, and close partnerships with our vendors including Nokia,” said Tay Soo Meng, group chief technology officer, at Singtel, owner of Optus.
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