Autonomous Vehicles to Create $42 Billion Market by 2025

The first semi-autonomous cars are hitting the road now. By the time fully self-driving vehicles arrive in about 2025, global demand for automatic capabilities will create a $42 billion market, according to Boston Consulting Group.

The firm’s study, The Autonomous Vehicle: Car of the Future, says the market will jump to $77 billion per year by 2035.

The report notes that today’s partially automatic features cost roughly $4,000. It figures full self-driving capability will hike car prices by $10,000. BCG estimates cars with some ability to drive and park themselves will capture about 12% of the global auto market by 2025 and twice that share by 2035.

Nearly 60% of car shoppers consider innovation an important consideration, according to the study. It says consumers are especially interested in—and willing to pay for—connectivity, active safety and greater fuel efficiency. That’s what carmakers should focus on first, the study advises.

In a second report, BCG says the auto industry faces a lesser but more immediate sales threat from car-share services. These rent-by-the-hour services will cut global car sales by 550,000 units worldwide in five years, the analysis predicts. It says some of the erosion will be offset by growing sales to car-share fleets.

BCG says the greater impact will come as autonomous technologies take hold. Cars capable of driving themselves virtually anywhere will erase the distinction between car-share and ride-hailing services. By the end of the next decade, the firm says, a new era of on-demand automated vehicles will significantly lower the cost of personal transportation by slashing the need for conventional car ownership.