Morgan Stanley Analysts Believe Autonomous Cars Will Transform the Auto Industry, Boost the Economy

With Self-Driving Technology Already Available, Obstacles to Adoption Are Largely Social, Legal in Nature

Cars with basic autonomous capability are in showrooms today, and completely autonomous cars—those that drive themselves—are likely to be available before the end of the decade. The result may be a potential transformation of the auto industry business model, according to a new Morgan Stanley Research report.

According to the report's authors, autonomous cars "can drive one of the most significant transformations of the automobile in its history." In addition to their many practical benefits, autonomous cars can contribute $1.3 trillion in annual savings to the US economy, with global savings estimated at more than $5.6 trillion. The report attributed the savings to a number of factors, such as a decline in costs for fuel and accidents, as well as $507 billion in annual productivity gains, since people could work, not drive, in their cars while commuting to work.1

Morgan Stanley Research analysts held brainstorming sessions with top executives in the auto industry to help develop a specific vision of what the industry's future might look like. In doing so, they broke new ground on the topic by focusing on areas that have not yet been addressed. Specifically, they determined a timeline for adoption, highlighted global implications, quantified the socio-economic benefits and examined investment implications, including categories such as long-haul freight delivery, telecommunications services, semiconductors, media and software. The authors also came up with a variety of potential solutions to the industry's most pressing obstacles.

The technology to make a car autonomous is already available, and only incremental research and development will be required. The report’s authors believe that the main barriers to autonomous vehicle growth include questions around liability in the event of an accident, customer acceptance and infrastructure development.

"With US drivers driving 75 billion hours a year, autonomous cars are poised to have a much greater impact on society as a whole than most people give them credit for," said lead author Ravi Shanker of Morgan Stanley Research.2 "It is now clear to us that not only are autonomous cars real, but also they are likely to come around sooner than most people think."

This report is the latest Morgan Stanley Blue Paper and is designed to address long-term, structural business changes that are reshaping the fundamentals of entire economies and industries around the globe. 

The full version of this article is available on our Matrix website. Please contact your Morgan Stanley representative for access if needed.

1 "Autonomous Cars: Self-Driving the New Auto Industry Paradigm." Morgan Stanley Research. November 6, 2013.
2 "Autonomous Cars: Self-Driving the New Auto Industry Paradigm." Morgan Stanley Research. November 6, 2013.

CRC767409 11/13