Risk Factors for Autonomous Vehicle Innovation in Automotive Industry

This report analyzes the risk factors for autonomous vehicle innovation in the automotive industry, including microeconomic and macroeconomic factors, and proposes solutions to mitigate these risks.

A research informed analysis
of risk factors for a
contemporary business
innovation

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Microeconomic factors................................................................................................................3
Macroeconomic factors...............................................................................................................5
SUMMARY OF STRONGEST RISK FACTORS AND PROPOSALS TO MITIGATE THE
RISK................................................................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
This report is based on conducting research informed analysis of risk factors for a
contemporary business innovation. The project mainly includes the microeconomic factors and
macroeconomic factors which affects the performance and productivity of business. It also
covers the the summary of strongest risk factors and proposals to mitigate the risk factors. Within
this project, the implementation of technological advancement is autonomous vehicle which is a
part of automotive industry. This industry is one of the biggest and rapidly growing industry in
terms of technology and innovation.
MAIN BODY
Microeconomic factors
The impact of customers:
Automotive industry creates a great impact on the customer by bringing autonomous
vehicle. Customers generally creates a direct microeconomic influence on the business. Thus, it
is important for automotive industry to attract its target customers by offering them autonomous
vehicle (Kouroutakis, 2020). Autonomous vehicle rely on actuators, machine learning system,
sensors, powerful processors to execute software and complex algorithms. The new technology
can create a positive impact on the consumers as it helps in reducing emissions, save fuel and
time (Hussain, Lee and Zeadally, 2018). For example, Aston martin is going to offer autonomous
vehicle to its customers so that they can change to use or access private mobility. But there are
various factors which influence the perception of customer to purchase autonomous vehicle such
as anxiety from not understanding how the technology works, fear of unintended consequences
and concerns about unknown risks. Thus, it is necessary for autonomous company to identify
ideal customer types and develop effective marketing campaigns in order to build customer base
and generate revenue.
Availability of employees:
Availability of employees is another microeconomic factors which influence the
performance of the automotive industry in UK market. Employees generally produce, sell the
service that drives business. Automotive industry prefer employees who are well qualified and
also give their best performance in improving the sale and growth of business (Mardirossian,
2020). The industry requires talented staff who have an ability to think creatively and

innovatively. Thus, automotive industry brings a job opportunity for people in UK such as
engineers, electric vehicle and autonomous vehicle mechanics and many others.
Distribution channels and suppliers:
It is necessary for Automotive industry to create a strong distribution channel and good
bond with suppliers while brining autonomous cars in UK market. Suppliers can help in
improving the growth and performance of automotive industry by offering them high quality of
products or materials that satisfy the needs of customers (Panagiotopoulos and Dimitrakopoulos,
2018). Thus, suppliers and distributors also face challenges due to autonomous vehicle such as
they face issue related to delivery process. For example, the distribution channel of Tesla is
direct they generally focuses on using internal marketing and sales team in order to deliver its
products to target customers. The brand sell their electric cars through the official website of
Tesla and at company owned stores. In order to compete in automotive industry, the brand uses
broad differentiation strategy.
Level of competition:
The level of competition also affects the performance of automotive companies. The high
competition in the automotive industry usually signifies the lots of demand for the cars and
services provided. Automotive companies are competitive with each other in order to provide
safe and sustainable driving experience o its target customers. There are several companies
which are emerging in developing new and innovative features in autonomous vehicle due to
which it makes class of automobiles more agile and advanced (Menon and Alexander, 2020). For
example, Tesla is one of the emerging company that produce autonomous and electric cars. The
brand has showcased record breaking innovation in autonomous vehicle domains and also they
have established themselves as a competitors in automotive industry. The competitors of the
brand are adding new features in autonomous vehicle in order to compete with the company and
provide best services to its target customers. Thus, there are various competitors which deals in
autonomous vehicle such as General motors, Hyundai, Volkswagen, Porsche and many others.
Media and general public:
Media and local community also affects the ongoing brand image of the automotive
companies, Communities generally support the brand that provide jobs, operate with social and
environmental responsibility and pay taxes (Mahlous, 2022). Thus, it is important for the
automotive industry to focus on reducing negative impact from the community. By bringing

autonomous vehicle, company can cut few factors such as less gas is burned, less air pollution
and many others. There are various benefits which can be availed by the customers through using
autonomous vehicle such as it helps in handling the roads more wisely, reduce accidents,
improves ride sharing programs and many others.
Macroeconomic factors
Macro economic factor is described as an influential natural, fiscal or geopolitical event
that eventually impact a national or regional economy. There are also some factors that affects
the industry in order to operate their businesses in better manner. An autonomous vehicles is
considered as new technology in which is capable in sensing its environment as well as can
operate without involvement of human (Hussain and Zeadally, 2018). But there are some risk
involve due to presence certain macroeconomic factors while using this technology within auto-
mobile industry. The auto-mobile industry of UK is planning to introduce self-driving cars for
their customers but there are some risks involved that may affects their decision. These
macroeconomic factors are described below:
a. Political risk
These are those risk which is created by the involvement of government with in industry
or economy. Government of a country imposed various rules and regulations on the industry that
help in serving best to the citizens. These rules and regulations provide great impact on the
industries and businesses. The auto-mobile industry is also required to face problem from these
rules and regulations while launching self-driving cars. The first risk of launching is to fulfil
political norms of the government of UK as these norms are imposed in order to provide safety
to the citizens (Wadud and Mattioli, 2021). The self-driving cars may be dangerous for the
people as there human involve for operating it due to which accident cases may happen. For
protecting citizens from this kind of issues government imposed various rules and regulation on
the auto-mobile industry.
b. Security – consider physical security, digital security and sustainable security
Security is considered as the main factor which is need to be concerned by every industry
or while using any technology. It can be for the the security of people life, important information
or sustainability of the economy. While launching self-driving cars, the auto-mobile industry
need to be faced many risk related to the security. Self-driving cars not involve human for
operating it which may create problems for the life of people. As most of accidents have been

caused from self-driving cars due to which most of the people get injured. There are many
physical security risk involve in self-driving cars. It may create many problems for the company
to protect their hardware, software as well as important data of their business (Alves and et. al.,
2020). There are many hackers that may create problems for the company while launching self-
driving cars in UK. These hackers may hack their important information and give it their
competitors due to which their competitive growth may affects from this. Self-driving cars are
sustainable when it is run through electricity not from any fuel. Cars that operate from fuels
adversely affects the environment of the country as well as decreases natural resources. Electric
self-driving cars provide sustainable security as it give less carbon footprints in the country and
protect the environment.
c. Environmental factors
Environmental factors are those factors that affects the business environment of a
industry or business. Government of many country are focus on protecting the environment and
preserve natural resources so, they imposed various rules and regulation on the industry in order
to make them to take certain actions that helps in protecting environment of the country. The
autonomous industry is the major source of fuel consumption due to which environment of the
country is affected as well as excess use of natural resources. It create environmental risk for the
self-driving cars that run through fuels (McCormick, 2019). The auto-mobile industry need to
focus on making their self-driving cars electric for dealing with environmental risk in better
manner. Electric Self-driving vehicles provide great impact on the environment of the country. It
helps in making improvement in the consumption of fuel. The autonomous industry need to
focus on adopting electric vehicles, improvement in battery technology, cost competitiveness,
charging infrastructure along with the supporting government policies.
d. Social factors
These are those factors that affects the industry due to certain changes in the society. It
involves customer preferences, disposable income, and so on. Self-driving cars have the potential
in order to provide significant impact on the society by offering driverless mobility to large
number of people from door to door. Self-driving cars help people who cannot drive due tos their
physical, psychological or other conditions (.Li and et. al., 2020). It can improve the approach to
mobility of lower and middle income class people as it reduces the transportation costs. But the
customer preference create risk for the auto-mobile industry while launching self-driving cars in

UK. Self-driving cars are new technology which is unknown for the customers and they may
face problems in gaining trust for using it. Most people thinks that it is operate without involving
human sue to which there are more accident cases occurs that may affects their purchase
decision.
SUMMARY OF STRONGEST RISK FACTORS AND PROPOSALS TO
MITIGATE THE RISK
From the above discussion, it has been analysed that auto-mobile industry faces many
risk while launching self-driving cars in UK. For mitigating their political risk, the industry need
to follows all the rules and regulation properly which helps them to launch self-driving cars in
effective manner. Maintaining security of the peoples life, sustainable, cyber and physical can
help industry to mitigate security risk in better manner. The auto-mobile industry can launch
electric self-driving cars while helps them to mitigate environmental risk in the country more
effectively. Self-driving cars that runs on fuel affects the environment as it emitted more carbon
as well as uses excess natural resources (Hudson, Orviska and Hunady, 2019). The autonomous
industry need to focus on adopting electric vehicles, advancement in battery technology, cost
competitiveness, charging infrastructure along with the supporting government policies. The
industry need to inform their customers that self-driving cars are safe for them and it create less
accidents in comparison to normal cars. Self-driving cars are available in less cost which helps in
attracting low and middle income class group people.
CONCLUSION
It is being concluded from the above information that automotive industry is growing
rapidly by bringing new and innovative cars and services that attracts more and more potential
customers towards the brand. They are focusing on changing the way of consumers by offering
them autonomous vehicles. The new technology improves the experience of customers and also
creates excitement among them in driver assistance technologies. Autonomous vehicle helps in
reducing accidents, reduce traffic congestion, increase lane capacity, lower fuel consumption,
reduce CO2 emission and also reduce travel time. The autonomous vehicle focuses on
revolutionising the safety standards and also allows cars to drive and self optimise. Thus,
autonomous cars generally influence the automotive industry by increasing the growth.
Autonomous cars enable to steer, brake and accelerate automatically within its lane. There is a

huge competition in automotive industry as companies are competing with each other by adding
more advanced and innovative features in their autonomous cars which attracts target customers
and also improves the profitability of company. Therefore, autonomous cars generally creates an
impact on the other businesses and services by reducing demand for taxi drivers, human truckers,
delivery people and other professional drivers. Hence, autonomous vehicle helps in creating
positive and negative influence on the environment.

REFERENCES
Books and Journals
Alves, G .V and et. al., 2020. Reliable decision-making in autonomous vehicles. In Validation
and Verification of Automated Systems (pp. 105-117). Springer, Cham.
Hudson, J., Orviska, M. and Hunady, J., 2019. People’s attitudes to autonomous
vehicles. Transportation research part A: policy and practice, 121, pp.164-176.
Hussain, R. and Zeadally, S., 2018. Autonomous cars: Research results, issues, and future
challenges. IEEE Communications Surveys & Tutorials, 21(2), pp.1275-1313.
Hussain, R., Lee, J. and Zeadally, S., 2018. Autonomous cars: Social and economic
implications. IT Professional, 20(6), pp.70-77.
Kouroutakis, A. E., 2020. Autonomous Vehicles; Regulatory Challenges and the Response From
UK and Germany. Regulatory Challenges and the Response From UK and Germany
(August 22, 2019), 46.
Li, Y and et. al., 2020. Adaptive square attack: Fooling autonomous cars with adversarial traffic
signs. IEEE Internet of Things Journal, 8(8), pp.6337-6347.
Mahlous, A. R., 2022. Cyber security challenges in self-driving cars. Computer Fraud &
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Mardirossian, V., 2020. Will Autonomous Cars Put an End to the Traditional Third Party
Liability Insurance Coverage?. In InsurTech: A Legal and Regulatory View (pp. 271-
290). Springer, Cham.
McCormick, L., 2019. Testing autonomous vehicles. In The Law and Autonomous Vehicles (pp.
6-13). Informa Law from Routledge.
Menon, C. and Alexander, R., 2020, January. A safety-case approach to the ethics of
autonomous vehicles. In Safety and reliability (Vol. 39, No. 1, pp. 33-58). Taylor &
Francis.
Panagiotopoulos, I. and Dimitrakopoulos, G., 2018. An empirical investigation on consumers’
intentions towards autonomous driving. Transportation research part C: emerging
technologies, 95, pp.773-784.
Wadud, Z. and Mattioli, G., 2021. Fully automated vehicles: A cost-based analysis of the share
of ownership and mobility services, and its socio-economic
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