In a scene with echoes of the space race, American and Russian tech giants are competing to send cutting-edge technology to a tiny slice of real estate. This time, their aim is not to land a craft on the Moon – it’s to deploy the first autonomous ride-hailing services in Israel.

The companies involved say that autonomous vehicles will usher in an era of “mobility as a service,” with fewer cars on the road being shared by more people. Reduced carbon emissions, less waste and a more sustainable future are the benefits of ride-sharing, they say.

They see further benefits. Sensors that enable driverless cars to move without accidents can collect troves of data, in turn, the companies say, helping to power the development of “smart cities.” This means using data to do things like stopping road crews from digging through gas, water and power lines. One company official said citizens need not worry about privacy invasions because personal data isn’t gathered.

Israel, a center of mobility software development with a permissive regulatory climate, has emerged as a key testing ground for transportation giants eager to show off their driverless tech in foreign markets with different road habits and weather conditions.

Intel’s Israel-based Mobileye unit is testing self-driving Volkswagen electric vehicles ahead of a planned 2022 launch. “We are switching from driving with assistance systems to autonomous driving,” Intel CEO Bob Swan told Bloomberg June 16 after being driven through Jerusalem’s clogged streets by a Mobileye test model.

General Motors also is testing Cadillac and Chevrolet self-driving models but hasn’t said when it expects to deploy them.

Meanwhile, Russia’s internet giant Yandex is creeping up on the Americans. Yandex’s ride-hailing app is the market leader in Russia and the company has a strategic partnership with Uber.

While Mobileye sold millions of its EyeQ collision-prevention systems worldwide before being acquired by Intel for $15 billion in 2017, Yandex only began its autonomous driving project in late 2016. The company tested its first vehicle on Moscow’s roads a year later. Now its white-red-and-black Toyota Prius self-driving test vehicles are becoming a fixture on Tel Aviv’s streets.

“We will beat everybody. We are pretty sure about the quality of our technology comparable to others,” says Anton Slesarev, head of engineering for self-driving cars at Yandex.

Not everyone shares his optimism for autonomous vehicles.

Deloitte’s 2019 Global Automotive Consumer Study found consumer interest in self-driving vehicles lagging investment in the technology. Close to half of consumers worldwide, excluding China, remain doubtful about the safety of autonomous vehicles, the survey found.

Most people surveyed by Deloitte want governments to keep a tight watch on regulations governing the industry; decreasing numbers have confidence that traditional car makers can be trusted to bring driverless tech to market.

Despite such misgivings, a report from BIS Research says the global autonomous vehicle market will grow from 6.6 million units in 2017 to 67.5 million units by 2028. A study by Frost and Sullivan sees mass deployment of fully autonomous vehicles in little more than a decade, with the market for privately-owned autonomous vehicles growing to $60 billion by 2030.

Amnon Shashua, Intel VP and Mobileye CEO, says technology is in place to “revolutionize transportation as a service” by ending the need for people to remain close to their cars.

“If you remove the driver from the equation you get something that is really game changing” that will forever alter “personal car ownership and utility,” Shashua told the annual conference of the Machine Vision Application Society in Tokyo in May.

Cars mostly sit around unused, in motion only 4% of the time they are owned, Shashua said. Driverless cars will push that use rate higher, cutting the need for more vehicles.

“A household does not need to hold multiple cars,” Sashua said.

Deployment will come in two phases, Sashua says, since the investment required for each vehicle will be too much for most consumers. However, capital expenditure on a driverless taxi, which gives a return on investment, makes more economic sense. As prices fall, the technology it will be available for mass production.

“We believe that a few years later we can reduce the cost of technology to a few thousands of dollars and then it becomes relevant to premium cars,” he said.

Artem Fokin, head of business development for autonomous driving at Yandex, agrees that self-driving cars aren’t just about being able to watch movies while you commute. They will fundamentally change the way vehicles are owned and deployed.

“Why would you want to buy it when on Monday you prefer an SUV, and on Sunday you would prefer a convertible?” he said. “Far less people would want to buy a car.”

Mobility as a service also means ridding ourselves of parking, insurance, car maintenance and refueling – chores that are less attractive to younger consumers. Younger ride-hail users also ask if they even need a car, the Deloitte survey found.

‘Data Revolution’

As Yandex and Intel compete to become Israel’s first public autonomous transport provider, both companies are making large investments in the country’s mushrooming automotive sector. Even though Israel does not have a single car manufacturer, investments in its transportation technology are second only to the U.S. and China.

Automakers have helped fuel a new industry in Israel, based around its capabilities in artificial intelligence which combine with the country’s proven expertise in imaging and big data. In 2018, 37% of the $6 billion total investment in Israeli technology was in AI companies, according to data from Start-Up Nation Central, which tracks Israeli tech.

Mobileye hopes to use the data collected by sensors to improve urban life. It’s working with Britain’s Ordnance Survey mapping agency to collect data on urban infrastructure, enabling the development of high-precision maps of roadside utilities. They hope to reduce incidents like power and gas lines being hit during roadwork, which happens about 60,000 times a year in the U.K.

“It’s a big issue,” Shashua said, costing hundreds of millions of dollars. Most utilities are either not mapped or inaccurately done so, he said, noting cameras on utility trucks will collect and share data.

“We can have a data revolution powered by the fact that every camera on a car can be a smart agent,” he said.