Seismic Regulatory Shifts |
NEWS
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Recent developments for drones may be good or bad depending on your business model.
A bill considering a blanket ban on DJI drones is set for debate in the U.S. Senate. The bill comes on the heels of a 2022 decision by the Pentagon to designate DJI as a Chinese military company—another development in rising tensions between the two nations. For hobbyists and organizations seeking low-cost solutions, this could be devastating: DJI controls some 80% of the consumer small Unmanned Aircraft System (sUAS) market and supplies around 1,500 police forces in Western nations with low-cost hardware. DJI’s competitors flounder when it comes to price. Parrot, Skydio, and Autel offer competing solutions often at around a 30% increase in cost.
Elsewhere, regulators are beginning to warm to drone operations, including Beyond Visual Line of Sight (BVLOS) and flying in built-up areas. Flying drones BVLOS has long been a major obstacle to commercial drone ventures (consider Amazon Air’s series of stuttering drone-based last-mile-delivery initiatives). Although Zipline, Amazon Air, and Wing (an Alphabet group subsidiary) have been permitted to operate limited drone-based delivery services in select parts of some U.S. states, new Federal Aviation Administration (FAA) regulation (with an announcement date coinciding with the DJI ruling) may soon dramatically expand BVLOS for commercial operations. Recent FAA approval of Wing and Zipline operations in downtown Dallas are indicative of future permissibility.
Further, several other nations (including the United Kingdom, Switzerland, and Singapore) have begun schemes to create extensive drone infrastructure (“drone highways,” analogous to air traffic control) for sUASs to safely traverse nations, creating significant opportunity for commercial expansion of operations.
Broader Drone Success—Moving toward Autonomy |
IMPACT
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Regulatory permissibility will create significant growth opportunity for business models and services (beyond last-mile-delivery) that are already demonstrating value with small drones. Many commercial ventures are aware of the regulatory volatility surrounding DJI and opt to offer software-based products (providing drone agnosticism, mitigating a dependence on DJI) or chose to manufacture their own sUAS hardware. The latter group attempts to balance higher Capital Expenditure (CAPEX) with end-user tolerance for risk surrounding Chinese manufactured drones. Two key examples are inventory monitoring and inspection.
- Inventory Monitoring: Service providers, including Gather AI and Skydio, have demonstrated significant value by providing a service for monitoring inventory in large warehouses. By leveraging Machine Vision (MV) and autonomous small drones, advocates have demonstrated significant stock loss reductions.
- Asset Inspection and Mapping: Swiss drone manufacturer Flyability is a market leader for autonomous inspection across Europe. Flyability’s drones (such as the Elios 3) are equipped with a suite of sensors for performing comprehensive inspection. An advanced Simultaneous Localization and Mapping (SLAM) solution for providing mapping services is also provided by Flyability, opening up new verticals such as raw material extraction that require services such as change detection.
Unlocking the full economic potential of drones necessarily requires full autonomy—obviating the need for direct human oversight. Advancements in this direction have been made by companies including Israel-based Percepto. In May 2023, Percepto was the recipient of an FAA waiver to fly drones BVLOS for asset inspection (primarily within the oil & gas market vertical) in low-risk and “shielded” environments. Percepto is a semi-autonomous solution provider with drones essentially flying independently with minimal human oversight. The company claims that one operator can oversee up to 20 autonomous drone operations simultaneously. A second inspection company operating in the United States, Cyberhawk, also recently received a waiver to fly BVLOS.
Aversion to Chinese Robotics |
RECOMMENDATIONS
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Regulatory changes and infrastructure proposals, although potentially harmful for lower-budget operators, open the door for enterprise expansion. Regulators and the market are gearing up for fully autonomous drone operations—without the need for any human oversight—which is the logical next step for drone services.
Feasibly, DJI will find methods to mitigate the damaging effects of an outright ban. This may involve the creation of large U.S. and European subsidiaries or guarantees that data captured by sensors on DJI products will not be transmitted overseas. However, the perennial risk of bans will lead consumers and decision makers to shy away from DJI’s (and other Chinese vendors’) drone products. The sentiment of aversion to Chinese hardware can be felt throughout the Western robotics space—both for national security concerns and a caveat of government funding under subsidy packages, including the CHIPS and Science Act (CHIPS) and Inflation Reduction Act (IRA).
Startups and innovators should take note of the large potential for drone markets in the coming years, while being aware of consumer preferences and government requirements surrounding internationally manufactured robotics hardware.
