The Aerospace & Defense sector for Canaccord Genuity, a global investment bank, has just published a follow-on report to its ‘Age of Autonomy’ whitepaper on unmanned systems.
Executive summary
We believe the drone ecosystem will benefit from likely structural changes as a result of the COVID-19 pandemic. While regulatory complexities surrounding BVLOS travel have been tempering the rate at which commercial drones can be adopted by the marketplace, the enormous pressure placed on the delivery and logistics industry is likely to accelerate regulatory action in this space. The likelihood of an extended pandemic heightening the importance of social distancing and no-contact delivery for at least the rest of the year has many companies, namely UPS, seeking to expeditiously roll out drone delivery programs worldwide.
Since the end of 2019, the number of commercial drone registrations in the U.S. has grown 15% from 385k to 442k. According to the FAA, this follows particularly strong expansion in registrations during the course of FY19, which increased by 39% y/y. While the impact of the pandemic may slow the adoption and registration of commercial drones in FY20 compared to FY19 due to logistical issues, this impact is not yet visible given the rapid clip of registrations in the first quarter of the year. In our view, the necessity of social distancing between workers is likely to have a positive correlation with adoption of unmanned aircraft by private industry for at least the next year or more.
There have been other noteworthy developments in the drone ecosystem. In our view, the most important developments in the drone industry over the past few months include the FAA’s recent notice of proposed rulemaking (NPRM) requiring that all BVLOS unmanned aircraft broadcast a remote ID to a wireless network, the FAA’s proposal to certify specific drones for delivery services, and the ongoing rollout of the UPS Flight Forward delivery program in the United States.
Investments in the unmanned ecosystem totaled $1.2B in 2019, representing a 68% increase over 2018. Of the $1.2B in investments during the year, more than $830M, or 69% came from venture capital sources.
Unmanned systems remain a high priority for the Pentagon in their FY21 budget request. The DoD specifically highlighted $1.7B for autonomy programs and $800M for artificial intelligence in their budget request. The Navy also appears to be accelerating its efforts in the space, with the department’s FY21 budget request allocating $464M to procure two large unmanned surface vessels (USVs).
To obtain your free copy of this 14-page report, contact Ken Herbert at Canaccord Genuity:
+ 1-415-229-0646