Wednesday September 25, 2019 0 comments
By Thomas Frey
The DaVinci Institute
The impact of driverless vehicles will be profound, touching almost every aspect of our lives, and the level of disruption will be staggering.
It will not only change the way we get from point A to point B, but also how we think about shopping, entertainment, dining out, as well as the design of our buildings, houses, hospitals, churches, and shopping centers.
It will shift how we manage our businesses, how we schedule our time, how we interact with our friends, and what we should invest in.
Virtually every facet of society, in every country around the world, will be touched by driverless technologies, and the vast majority of it is destined to improve our global standard of living.
Yes, there will be job losses, but they will be offset by job creation. Businesses that disappear will be replaced by innovative new businesses.
As transportation becomes faster, cheaper, and easier, we will simply do more of it. We will become a very fluid society, and all this movement will seem natural and effortless.
However, the path to progress is strewn with countless land mines and pitfalls. Many things will go wrong as every new tech journey is never smooth.
Here are a few of my latest thoughts on the impact of driverless tech:
- People will still own their own cars in the future, but it will be a rapidly declining number.
Transportation-as-a-service companies will first spring up in large metro areas and expand into small towns and rural communities. But few of the early fleet owners will be interested in small-town-small-profit communities, even though they might serve as a far more manageable proving ground. With both human drivers and autonomous vehicles sharing the same highways, a number of complications will crop up to impede progress.
- Car manufacturers will most likely be the early fleet owners.
While software and tech companies are taking over many industries (i.e. some of the biggest banks in the future will be tech companies), car manufacturing still requires unique skills and companies such as Tesla, Toyota and Ford will be in a deciding position as to how their cars will be used. They will also have the greatest potential for responding to rapidly shifting market demands. Self-driving cars will be heavily used, 24-7 if possible, and fleet owners will learn the nuances of customer preferences first hand, translating quickly evolving expectations into next generation design details in a matter of months. For this reason, it will be in the manufacturer’s best interest to eliminate every possible barrier between design teams and end users as they rapidly iterate from one design to the next, and grapple with emerging business models in the process.
- One autonomous car will replace roughly 30 traditional cars.
There are roughly 273 million registered vehicles in the U.S. and replacing them all will be a long drawn out process. But here’s the math most people don’t understand. For a city of 2 million people, a fleet of 30,000 autonomous vehicles will displace 50% of peak commuter traffic. During off-peak times, 30,000 autonomous vehicles will handle virtually all other transportation needs. Peak traffic times will naturally be the hardest to manage.
- Vehicle design will rapidly iterate from one design to the next.
Car companies have spent so much time in the race to get the technology safe and functional that they haven’t taken time to understand the evolving expectations of driverless customers. As an example, people will still pay more to ride in luxury vehicles, but our definition of luxury will change. Ease of entrance and exit will become important issues. So will lighting, visibility, noise levels, entertainment option, seating arrangements, and cleanliness. The operating systems for driverless tech will also evolve quickly as use cases grow and adaptive self-learning AI-based neural networks respond to every new situation. Eventually all technology to support human drivers will disappear, including steering wheels, dashboards, gas pedals, and brake pedals. Instead, vehicles will be designed around comfort, conversations, entertainment, project spaces, desktops, power outlets, and snacking/eating.
- Child seats will be the most challenging feature to design in self-driving cars.
For parents, the safety of their children takes priority over virtually every aspect of their life. The elaborate process of strapping kids into their seat and buckling each of them into a five-point harness has become a routine way of life for moms and dads everywhere. Let’s face it. Kids are messy, dirty, get sick, throw up, toss things, and find ways to turn a perfectly clean vehicle into a waste management problem in a matter of seconds. At the same time, fleet owners will not want to ignore kids because they represent a significant percentage of the marketplace.
- Other major design issues will include dealing with pets, service animals, handicap people, elderly, and politicians.
What if a daycare center needs a vehicle with six car seats? What if a dog trainer has to pick up four dogs? What if an assisted care center has three people in wheelchairs that want to travel together? What if politicians pass a law requiring fleet owners to accommodate all of these situations?
- Next-generation storage cells will mean that batteries will never have to be changed on autonomous vehicles.
If Tesla’s latest claims holds true, they will soon have a battery that lasts a million miles. This means the rest of the car will wear out before the batteries.
- Car death and accident rates will plummet.
In 2018, roughly 40,000 people lost their lives in car crashes, and about 4.5 million people were seriously injured in crashes. Over the next three decades we will see a constantly shifting ratio of human drivers vs. autonomous vehicles. As human drivers decline, death and injury rates will fall. Our safest form of transportation is the airline industry. If we can get car safety even close to that of airlines, we will save tons of lives and lifelong injuries in the process.
- We currently spend over $500 billion per year repairing people after car accidents.
This amounts to one out of every six dollars in the healthcare industry. Cars are taking a huge toll on our society.
- How will autonomous cars affect retail?
In a big way! Over time there will be no more customer-facing mechanics, tire shops, brake shops, car washes, auto parts stores, or gas stations. Over 10% of retail is car related and likely to disappear.
- Autonomous vehicles will be used to create driverless mobile businesses.
As we removed the driver from the equation driverless tech opens the door to completely different ways of doing business, ones that separate themselves from a permanent location. The number one challenge of traditional retail has always been driving customers to the store. As we move into a highly mobile marketplace, this type of business will soon be able to drive to where the customers already are.
- Over 80% of driverless cars will be one-passenger vehicles.
Since 85% of cars on the road only have one person in them, and since one-person vehicles will be cheaper, it’s very likely that upwards of 80% of autonomous fleets will be designed around single passenger occupancy. Naturally larger vehicle can be summoned whenever necessary. It may be counter intuitive, but people will actually prefer to one-person cars.
- Cities will lose over 50% of their current revenue streams.
When we combine the loss of sales tax, retail stores, income from traffic violations, gas tax, vehicle licensing, parking meters, and parking garages, the total loss of revenue to a city becomes a very large number. Keep in mind, cities will undoubtedly develop new forms of revenue but that will require considerable foresight and planning.
- Driverless tech will likely trigger a city pension crisis.
Numerous cities have made overly generous long-term commitments to fund staff pensions, a commitment that will be especially hard to manage when revenues begin to drop. With increased longevity, most pension funds were never adequately funded in the first place. Since driverless tech will undermine many of our city’s existing revenue streams, the challenges they’re facing today will transition into a full-blown pension crisis for many of them in the future. There will be no easy solutions for bailing out these super expensive pension plans.
- We will reach the peak demand for oil before 2040.
Once we reach peak demand for oil, stemming from a surge in wind, solar, and nuclear, prices will start to plummet. Driverless tech will hasten the shift to electric cars. There are many geopolitical implications that will accompany this change. Petroleum will continue to be valuable for making plastics and other materials, but will not be burned for energy at any scale. Many companies, countries, and investors have already started making plans for what comes next.
- Location will no longer matter.
In the past, being in business was all about “location, location, location.” However, as the driverless world evolves, passengers will become much more involved in working, watching movies, and playing games throughout the commute. As a driver, we become very invested in the landmarks along the way, and understanding the context of our location. But once drivers become passengers, they will be paying far less attention to local landmarks. As a result, it will be far easier to just ask your car to take you to whatever store or business you want to go to, regardless of proximity to your current location. Perhaps a better way of thinking about this is that location will still matter, but it will matter differently.
- Over 5 million acres of parking lots will soon become available for redevelopment.
Currently 14% of Los Angeles is dedicated to parking. We have an amazing amount of land dedicated to parking -- over 5 million acres to be precise. Demand for parking will begin to dwindle over the coming decades and this property will be sold as prime real estate for redevelopment.
- Owning a car will soon become a very expensive hobby.
Autonomous vehicles will cause car ownership to evolve from a necessity to a luxury, to an expensive hobby. As dealerships and gas stations begin to dwindle, the overall cost of owning and maintaining a car will begin to ratchet upwards. Once autonomous vehicles reach 20-50% of commuter traffic, the cost of traditional car ownership will skyrocket.
- Roughly 25% of today’s jobs will disappear as a result of autonomous vehicles.
Over the next 2-3 decades, driverless technologies will be either directly or indirectly responsible for the loss of 25% of all of today’s jobs. But that’s only part of the story. Virtually every aspect of society, in every country around the world, will be touched by driverless technologies, and the vast majority of it is destined to improve our global standard of living. Job losses will be offset by job creation. Businesses that disappear will be replaced by innovative new businesses built around the ingenious new capabilities autonomous vehicles provide.
- The automobile insurance industry will dwindle to a fraction of its current size.
Total personal automobile insurance premiums in the U.S. stood at about $173 billion in 2018. According to KPMG, accidents will decline 80% by 2040 due to autonomous transportation. While the cost per accident may rise substantially because new cars and their parts are more expensive, once driverless tech hits its stride, the decline will be dramatic and result in sizable reductions in loss and premiums. More than 90% of accidents each year are caused by driver error.
- The number of taxi and truck drivers will drop, eventually to zero.
In its place we will see many of the same people working at truck and transport command centers. Someone born today might not understand what a truck driver is or even understand why someone would do that job — much like people born in the last 30 years don’t understand why someone had ever been employed as a switchboard operator.
- Lobbying efforts surrounding autonomous vehicles will get ugly.
The biggest losers in driverless tech will be insurance, banks, and auto dealerships and they will spend heavily to muck up the political playground for this emerging industry.
- Driver’s licenses will start to dwindle as will the Department of Motor Vehicles in most states
. People will start using other forms of ID but biometrics and face recognition will pave the way for the inevitable digitization of all personal identification.
- No more DUIs. Traffic tickets will dwindle and disappear altogether
along with traffic court, lawyers, DAs, and all the revenue streams they perpetuated. This will happen relatively soon since all driverless vehicles will operate at the correct speed and there will be fewer options for slipping between vehicles and racing down an open stretch. Speed junkies, for the most part will go away since few people will even care how fast they’re going.
- Police departments will shrink dramatically.
With up to 80% of today’s police forces focused on traffic control, cops that survive the transition will soon have a far less visible presence and a substantially different daily routine.
- Alcohol and cannabis consumption will rise.
Restaurants and bars will sell more because people will consume more, as they no longer need to consider how to get home and will be able to consume inside vehicles. Many self-driving vehicles will come equipped with their own mini-bars.
- Tech companies will study every little detail inside each car.
Companies like Google and Facebook will accumulate data on everything related to customer movements and locations. Unlike GPS chips that only tell them where someone is at the moment, autonomous vehicle systems will know where people are going in real-time and how they’re preparing for what comes next.
- Privacy mode for the inside of vehicles will be an upsell feature.
Privacy mode will be designed for those having business discussions, arguments, sex, affairs, doing illegal drugs, and much more. But it will come with heavy fines if the vehicle is somehow damaged or trashed during the blackout period.
My goal in writing this has been to spark your imagination about the dramatic changes that will soon take place.
Car designers today spend the vast majority of their time trying to optimize the driver experience. After all, the driver is the most important part of the ownership equation.
As we enter the “driverless era,” the focus will shift to the passenger experience. Very soon, cars with steering wheels will seem as outdated as dial telephones!
Fancy dashboards displaying dazzling amounts of information for the driver will become a thing of the past as riders fuss over on-board movies, music, and massage controls.
Some fleet owners will offer car experiences that are more conversational in nature, pairing socially compatible riders in a way to maximize conversations and improve the social environment. Others will stress the benefits of alone-time, offering a peaceful zen-like experience for those wishing to escape the hustle and bustle of work-life.
However, as we navigate our way towards a safer, more efficient society, we still have a few bumpy roads to go down before we see the light at the end of the tunnel.