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How Our Driverless Future Will Transform the Economy

Google CarWe have become desensitized to technological progress—a new laptop is coming out and it is 20% faster, big whoop—but if there’s one technology that is still fascinating to us, it’s the self-driving car and its promise of a more convenient future. The driverless car will transform our world in more ways than any of us can imagine right now. Let’s explore where we are now, where we are going, and the economic implications of this technology. Entire industries will be turned on their heads, perhaps as early as 2017.

Where We Are Now

With Mercedes-Benz’s 2014 S-Class coming out this fall with options for automated steering, braking, acceleration, and accident avoidance “up to 124 miles-per-hour” as well as road surface detection (so that the suspension can adjust to bumps on the road) up to 80mph, the future promises faster, comfier, and safer commutes for those able to pay upwards of $100,000. This will be the closest thing to an automatic vehicle that consumers will have access to in 2013.

© Борис Ульзибат, Wikimedia Commons

Google’s driverless car technology can be traced back to Stanley, a car that won DARPA’s Grand Challenge in 2005, and has been in development ever since. The technology has been evolving and Google’s driverless cars have logged more than 300,000 miles without accidents, making this the most tested and proven autonomous car technology. Google has sparked an interest in car manufacturers to produce self-driving tech of their own before Google can create an offering that will reach the masses.

When Will We Get to Ride One?

On 08/27/13, Nissan became the first manufacturer to name a year when they will offer their own driverless technology to the masses. Nissan promises to have multiple fuel-efficient and affordable self-driving models ready by 2020 and a working prototype sometime in 2014. Before Nissan’s recent announcement, all we had was a report from KPMG and the Center for Automotive Research that says autonomous cars will be in showrooms by 2019 and Ford’s expectation that driverless cars will hit the road by 2017.

Possible Economic Implications

With cars that can drive themselves,  it’s feasible to imagine a decline in the demand for cars—families could manage much better with a single car if a virtual chauffeur helped them get about their lives. If vehicular behavior can be coordinated en masse, traffic jams could eventually go the way of the dodo. Let’s start talking about the most positive economic outcomes and slowly transition into the more negative outcomes.

Traffic

Assuming no human-controled vehicles, traffic lights, stop signs, and other signaling used today could become obsolete and traffic could look like the video below. Interactions with human-controlled cars would still require traffic lights, but when communication between cars is enabled, the distance kept between vehicles can be shortened and cars can stop and go simultaneously instead of “as a wave.” Traffic jams are dominated by “traffic physics” and by queueing theory. Eliminating traffic waves, rubbernecking, driver reaction time, and variation in driving should greatly reduce traffic and, therefore, commuting time.

Potential outcome: it will take a long time before the majority of human beings give up control behind the wheel, but innovations such as car-to-car communication could still make driving safer and faster for us all.

Personal Transportation

Options will be plentiful. You can invest on your own car, program your family’s transportation needs, and be productive while you move everywhere. Road trips would let every participant be engaged in conversation, because seating arrangements could maximize communication and entertainment instead of road visibility. If your car will have significant downtime every day, services like getaround.com will let you monetize this downtime better than ever before—and you will always be able to trust the driver.

Potential outcome: a huge win for the consumer who can afford the technology, and even those who cannot because taxis and other means of transportation should become cheaper.

Commercial Transportation

New models will flourish, costs will come down, and the barriers to create new ways to use vehicles will come down. Delivery vehicles that text you when they are around the corner (do you leave a tip?), flawless and cheap scheduled pickup services (nope, no tips for machines), faster non-stop buses, and cheaper courier services are exciting. Renting a car and offering a taxi service could eventually become the same thing—maybe they’ll both work more like vending machines with an app for being picked up. The way businesspeople think of vehicles will evolve and commercial transportation will be an entirely different industry.

Potential outcome: more choices than we can make. USPS turns a profit after years of losses. Exciting innovations that cannot be dreamed up just yet.

The Environment

Did you know that 30% of driving in business districts is spent looking for parking spots? Did you know that as much as one-third of many cities’ land is devoted to parking space? What if there were better solutions than parking garages or waiting around for the “most comfortable” parking spot? Trees are often cut down to make way for sprawling parking lots, and very rarely are parking lots shrunk or eliminated for trees. What if your car could drop you off and either do something else or find a place to wait for you; if cars could talk to each other, then your car could efficiently find a parking spot nearby.

As you program your daily routine into your car, mapping software could be retooled to look up others who follow similar patterns and help make carpooling decisions. Your car could ask you if you’d like to find someone else who is going the same way as you at about the same time. How cool would that be?

Potential outcome: Many could realize that they don’t need a car anymore and sharing cars could become the norm. With the promise of reduced traffic, less space needed for parking, and better carpooling, the carbon footprint of automobiles could start to shrink significantly and parking lots could start being replaced by parks. Driverless tech could be a very green development.

Automotive Industry

Once the technology is good enough and accessibly priced, this industry could have a big boom. As described above, personal transportation and commercial transportation should evolve significantly—the promise of simplicity and savings should spur sales figures like Detroit and other car-centered economies haven’t seen in years. Since this is a software-driven innovation, the automotive industry should start poaching developers from Silicon Valley and top talent from around the world in the coming years. The main thing that could stop this boon for Detroit and others is another company (perhaps Google or some other group) building cheaper and/or better kits that could convert any regular car into a self-driven marvel. Depending on the API schema that manufacturers come up with, they may even start making revenue from other companies that figure out how to monetize self-driven cars.

Potential outcome: Detroit, Japan, and Germany invest and a boom ensues or industry profits fizzle thanks to an aftermarket automotive innovation.

Trucking, Taxiing, and Public Transportation Industries

These three industries have more than one thing in common, but a couple of significant aspects come to mind:

  1. Heavily unionized
  2. Cannot be outsourced—long-haul trucking may have benefited from outsourcing
  3. Employ hundreds of thousands of unskilled laborers—there are 3.5 million truck drivers, 650,000 bus drivers, and 240,000 taxi drivers in the US, representing almost 3% of the labor force
  4. Stand to be the most negatively-affected industries by self-driving technology

People employed in these industries have never faced challenges of the magnitude of self-driving cars. Additionally, drivers are limited by fatigue and laws that require rest stops in their ability to make money. Self-driving technology has the potential to destroy millions of jobs, but at the same time make consumer goods and food a lot cheaper. In fact, Ryan Lawler already predicted some of this in a TechCrunch article.

Potential outcome: truckers and taxi drivers, some of whom already own their vehicle, buy self-driving cars to earn money while at home or even while performing another job. Public transportation workers may not be that lucky. Companies may be forced to decide whether to replace entire fleets at once or continue working with unionized drivers.

Hacking Industry

Already, there are reports of a flawed API in the Tesla Model S that allows a hacker to drain the battery and do other shenanigans. As cars become increasingly connected and complex, hacking may become something to watch out for—not just because of traffic safety concerns, but because hacker could facilitate grand theft auto, kidnaping, or using other people’s cars to conduct business (like taxiing or transporting illegal substances). Physical hacking could also become an issue—blocking roads, covering up sensors, or doing other things that override programming in order to raid a semi-truck’s container full of merchandise or do other malicious actions.

Potential outcome: Manufacturers who are sloppy with their vehicle’s cyber-security will quickly need to correct issues, but hackers will always remain on the prowl for identifying flaws and monetizing them. If there is no industry standard, manufacturers will bleed money patching software while hackers have a field day. On a positive note, software security experts should see more jobs and millions of people could be employed as cargo protectors on commercial vehicles.
 
Image thumb via ©Steven Jurvetson, Wikimedia Commons

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