Could Industrial Autonomous Vehicles Outpace Autonomous Cars By 2025?

With all the hype surrounding self-driving cars, some investors may be overlooking another sector that could be revolutionized by autonomous technology.

In this segment of Backstage Pass, recorded on Jan. 5, Fool contributors Rachel Warren, Jason Hall, Trevor Jennewine, and Jamie Louko discuss a recent article by The Verge about Deere & Company's (DE -1.07%) soon-to-be-released autonomous tractor and whether industrial autonomous vehicle usage could outpace that of self-driving cars by the middle or end of the decade. 

Rachel Warren: Apparently, "agricultural equipment maker, John Deere, has announced its latest piece of autonomous farming kit, a package of hardware and software that combines machine-learning with the company's GPS-powered auto-steer features to create a fully autonomous tractor."

According to the article, "farmers will not only be able to take their hands off the wheel of their tractor or leave the cab, they'll be able to leave the field altogether and let the equipment do the work without them while they monitor things remotely." Real quick, guys, what do you --

Jason Hall: I officially want to be a farmer.

Warren: I know, right? [laughs] It's so cool, [laughs] An autonomous tractor. What do you guys think about this? Do you think there will be more autonomous cars or autonomous industrial/agricultural vehicles out by the year 2025? Trevor.

Trevor Jennewine: I tried to do some math to take a rough stab at this. I'm narrowing it down to Tesla (TSLA 1.12%) and John Deere. But Tesla said they can grow their deliveries at 50% or more per year. They just delivered 936,000 cars in 2021.

So if you multiply that out by 50% per year, that's 4.7 million units by 2025. John Deere has grown their unit sales by about 5% or 6% over the last few years. So they could be producing 400,000 tractors by 2025.

Elon Musk has said, he said back in September 2020, that he thinks Tesla will have a fully autonomous self-driving car, priced at $25,000 within three years. He said that back in September 2020. So maybe Tesla doesn't hit its mark.

But I'm going to take the autonomous car's side here. Tesla makes a lot more cars than John Deere makes tractors and if just 10% of their sales in 2025 were fully autonomous, I think that would beat John Deere by itself, even if all of their tractors were autonomous.

If you extend the timeline out to 2030, I'm more confident in my answer, but 2025 might be a little soon for self-driving cars.

Warren: True. Jamie, thoughts?

Jamie Louko: I'm definitely in agreement on the 2030 piece. But what really holds me up about the 2025 timeline is regulation, especially in the United States where there's so much concern and regulation over full self-driving.

While Elon Musk wants to get this out by 2023, at September 2023, I really don't think he's going to be able to. I think it'll be 2024, 2025 before regulation, if it comes at all, will allow Tesla and other companies to enable full self-driving.

Whereas clearly, as Deere put out yesterday, that's not the case in agriculture. When it comes to the risk on a street in New York City or a risk on a thousand-acre farm, there's clearly so much more risk in the middle of New York City than there is on a farm.

So when it comes down to regulation, there's definitely less concern and less risk on a huge farm than there is on roads going 50, 60, 70 miles an hour and because of that solely, I'm going to go with Deere.

One really cool thing that I wanted to point out that I read last night from a piece about this Deere tractor. The tractor allows for up to 20% more efficiency in its fields.

I think that is absolutely insane. Just thinking about all the extra crops that we could get from 20% more efficiency is just absolutely astounding.

Hall: It's a reminder that 90% of people assume that they are an above-average driver. [laughs] Tractor or car, it doesn't matter, I'm not. [laughs] Love that, Jamie, absolutely love that.

I think to me it's the industrial equipment, the automation, is going to work in those environments because they're controlled and I don't think it's going to be close.

I will go so far as to say, I don't even think Tesla is going to have the most autonomous vehicles by 2025.

Warren: Fighting words. [laughs]

Hall: I know that's a bold statement. [laughs] I'm going to get some Twitter (TWTR) flack for that, I'm sure. I'm not convinced that the approach that they've taken, backing off on the sensors and focusing more on AI is going to pay off.

I think that's a huge risk they've taken and I don't know that it's going to work for Tesla. I think by 2030 maybe.

But no, I think we're going to see a lot of industrial and farming equipment that's going to be autonomous for a far longer period.

I would go so far as to say that we might even see autonomous 18-wheelers and convoys where the lead is a human driving it and there's a convoy of AI trucks following that.

I would say that's part of the industrial mix just because I like to cheat and add that onto my winning total.

Warren: [laughs] I tend to agree. I think it might be more of that growth in the industrial area, but we will see.