Self-driving cars - A real life changer!

Normally my blogs always concern the financial services and IT industry, but self-driving cars and specifically the impacts they will have on our society, fascinates me that much, I couldn’t resist writing also a blog about this topic.

The self-driving car is all over the media. With dozens of big tech firms (Apple, Google-Waymo, Uber, Lift, Amazon, Tesla…​) and traditional car companies (GM, BMW, Audi, Mercedes Benz) working on developing and improving self-driving cars it is no wonder that evolutions are coming at a tremendous (exponential) pace.
Don’t expect however the full self-driving car to be available for the large public any time soon (a McKinsey study estimates autonomous vehicles driving around our towns from 2030), but it’s worth to reflect already about the implications. These are difficult to under-estimate.

Especially as the introduction of self-driving cars will surely coincide with 2 other important evolutions:

• The rise of the digital sharing economy: millennials prefer consuming services over owning something. Thanks to the new digital economy sharing objects has become easier, more convenient, more flexible, cheaper and more ecological.
• The rise of the electrical cars: with autonomy of electrical cars increasing and prices dropping year after year, it is only a matter of time till all cars will be electrical cars.

These 3 trends together will most likely lead to service-on-demand driverless shuttles being called via an app and available at prices comparable to those of public transport today. As a result, car ownership will likely be replaced by a subscription model, offered by large companies managing fleets of self-driving cars.
In this article we will assume that these 3 trends will concurrently take place and enforce each other. We will therefore consider the impact of these 3 trends together.

Besides the obvious impacts of no longer having to drive yourself (on average it could save 50 minutes a day for users, which can be used for working, sleeping, relaxing or entertainment) and being able to drink a beer while going somewhere by car, this revolutionary technology means also that many professions will disappear (or will in any case become seriously different). Some come to mind immediately, like taxi drivers, chauffeurs, school bus and public transit drivers (bus or tram drivers) and truckers, but others might be less obvious, e.g. driving instructor (driving schools) or examiner for driving permit, traffic police, valets, parking attendants…​

And let’s not forget certain companies risking to become obsolete or at least be seriously impacted:

• Sectors directly impacted by autonomous cars:
  • Car rental services: will likely be replaced by larger corporations (e.g. Uber, Lyft, Bolt, Google-Waymo or large car manufacturer) providing on-demand a multitude of different vehicles for different purposes, i.e. the user will likely be able to request a specific car, i.e. specify the number of seats, need to transport large equipment, way of seating (sleeping, meeting, working…​), which equipment (e.g. fitness equipment could be installed in the car to complete a work-out while driving)…​
  • Traffic/Road sign companies: autonomous cars can receive traffic/road sign information digitally, meaning there is no need any more to put physical traffic/road signs.
  • Car insurers: car insurance will likely disappear, as it will be part of the warranty/liability of the car manufacturer. Furthermore, as they will be able to assess very accurately the risks, it is unlikely that they will not insure themselves (companies like Google, Mercedes and Volvo have already begun self-insuring the products they make).
  • Parking: the need for city parking will decrease considerably as driverless car fleets move continuously between the various places they are needed. According to McKinsey, these fleets could save in the US alone 61 billion square feet of unnecessary parking space (in some major American cities, parking spaces take up one-third of the land).
  • Car recovery and repair sector: as accident rates will be drastically cut and electrical cards require significantly less maintenance, the need for those services will be considerably reduced. Furthermore, as most cars will be owned by larger corporations, repair and maintenance will be done in a few central workplaces and no longer in small garages all over the country.
  • Car manufacturers: even though the usage of cars will likely be increased, thanks to the increased convenience, the number of cars will most likely drop (the same car will be used more intensively, i.e. according to a McKinsey study, an average privately owned car is only used 5% of the time). Furthermore, as most cars will be bought by large corporations for their on-demand car fleets, margins will drop as these corporations will have very strong bargaining positions. Overall selling less cars at a lower margin will seriously eat away the profit of car manufacturers, a sector already facing over-production and low profitability.
  • Car dealers and car sale platforms (e.g. for 2nd hand cars): as very few individuals will buy their own car, car dealers and car sales platforms are likely to disappear to a large extend. Especially since the large car fleet corporations will buy their cars directly from car manufacturers.
  • Delivery services (packages) and postal services: delivery and postal services will become unmanned, allowing to further reduce delivery costs and allow to further accelerate the trend of online shopping and home delivery (thus indirectly impacting restaurants, shops…​). Delivery could even be combined with the fleet service companies, i.e. instead of delivering your goods at home, we could imagine that the packages are put in the trunk of the car that brings you back home from work (thus reducing specific rides for delivery and avoiding people to be home to accept a delivery).
  • Lawyers for lawsuits linked to car accidents or traffic penalties
  • Public transport: if on-demand cars can be offered at similar prices than public transport but offer all advantages of a privately-owned car (i.e. good privacy and driven straight to destination), public transport will need to reposition itself to stay attractive.
  • Petrol stations: petrol stations will gradually disappear or be replaced by super-chargers
  • Taxi driver companies
  • Driving schools and exam centers
  • Technical examination centers
  • Traffic police
  • Car accessories : as cars will become an on-demand service, appliances like car radios, luggage cases, bicycle carriers, children car seats…​ will be sold considerably less. Most likely when ordering a car, the person will indicate which appliances should be present in the ordered car.
  • Car wash: with centrally managed on-demand car fleet, cars will be washed centrally in the central parking places of the fleet companies.
  • Financial sector: with on-demand car fleets, the market of car leasing and car loans will be seriously disrupted
  • …​
• Sectors directly impacted by specialized autonomous vehicles:
  • Transport: self-driving trucks will drastically change the transport sector, as labor costs can be eliminated, but the need for resting times can also be avoided (allowing to speed up international transport considerably)
  • Farming: tractors could also be replaced by autonomous vehicles that are designed specifically for farming tasks
  • Mining, manufacturing and construction workers: forklifts, loaders, excavators…​ could also be replaced by specialized autonomous vehicles
  • Army: developing unmanned tanks and vehicles that can deliver food, fuel and supplies in conflict zones
  • Travel sector: self-steering cruise ships or even self-flying planes could also be imagined in the not so distant future
  • Garbage collection: could be fully automated, allowing more frequent collection and allowing more different rounds (thus allowing to increase even more the separate collection and recycling of garbage)
  • …​
• Indirectly impacted sectors: apart from the directly impacted sectors, there are many sectors which will be indirectly impacted, by autonomous vehicles. Some examples:
  • Roadside stores and restaurants: as these merchants, typically live from drivers stopping to take a break, their number of customers will considerably reduce.
  • Cross-country travel: as travelling by car becomes more convenient, people will less take the bus or airplane to go to another (nearby) country
  • Short-term Hotels: hotels that rent rooms by the hour or roadside motels offering single-night stays will likely be replaced by self-driving cars. With the sector already facing competition of online platforms like Airbnb, this will be very disruptive.
  • Retail sector: with delivery costs and delays (time between command and package delivery) further reducing, online shopping will become even more attractive, impacting the local merchants and larger retail chains. E.g. via unmanned delivery, we could even imagine ordering a single bread, which is delivered 15' later at my house.
  • Unmanned, mobile shops: unmanned shops (vending machines) driving to locations, where there is a need (e.g. drink machines, portable toilets…​) We could even consider unmanned shops, driving to your location on demand.

While above impacts have mainly a negative impact on employment, AV technologies will also create jobs in new and existing sectors, e.g.

• Media firms: cars will become a new environment for consuming visual media. This will offer an interesting platform for location-based advertising.
• Car sensor firms: firms designing and producing different car sensors, cameras, radars and LIDARs, used for cars to drive autonomously.
• Intervention centers, which are automatically contacted by cars when the car AI (Artificial Intelligence) arrives in a situation it is not able to react correctly. At that moment standby operators could manually intervene.
• Digital map generation: for AVs to correctly react and anticipate, it is crucial to have detailed and continuously updated maps of all roads in the world. These maps need to be enriched with traffic signs (especially if signs will only exist digitally in the future), road works, redirections based on events (like e.g. weekly market, sport events…​)…​ Collection all this information and updating maps as soon as possible will open a huge potential for new firms.
• Logistic control: if driverless fleets of trucks are transporting goods, careful planning of this fleet and managing the loading and offloading of the goods will still need to be managed from central logistic control units. Currently the truck driver takes care of (many of) these tasks, but in an unmanned truck, this needs to be organized centrally.
• Computer engineering: the complex software for managing the autonomous vehicles, but also the software to optimize the mobility of all cars in a certain area (to avoid congestion) will need to be continuously improved, resulting in hundreds of new positions for software engineers.
• Image analysis and mapping: in order to improve AV reaction on strange situations, it will be required to continuously let people judge certain images and movies captured from actual traffic. Especially the situations that led to (near) accidents or situations of cars having to slow down because of unexpected situations or where multiple cars are waiting for each other, will need to be analyzed and judged how different humans would have reacted in they were behind the steering wheel. This user feedback can then be fed to the AV models to improve them and avoid such situations in the future.
• Fleet management: just like for the logistic control of trucks, the enormous fleets of autonomous cars at large fleet companies will need to be centrally managed (e.g. plan maintenance, intervene in case of accidents, theft, vandalism…​)
• Cleaning services: although car washes will disappear, the central offices of the fleet companies will employ an army of cleaning personnel, to clean the interior of the car between different car rides (one of the largest objections against public transport is that people don’t like to sit in the mess made by someone else).
• Data transport, storage and processing: autonomous cars generate enormous amounts of data. This data needs to be communicated to central servers (partially via mobile transfer and partially by a physical data connection when car is recharging), to be stored (for future processing, but also as evidence for potential audits in the future) and processed (to improve the AI algorithm). Enormous investments (hardware, network, physical docking stations, software…​) will need to be made to setup this vast data infrastructure.

But apart from these sectors being impacted, we shouldn’t ignore either the impact autonomous vehicles will have on our personal lives and the cities we live in:

• Cities can be rendered more livable: roads in city centers can be fully adapted, as most parking spots can be removed (AV will drive to large parkings outside or be used by someone else, while you don’t use the car). Imagine what we can do in most streets when the parking space can be used for something else, e.g. planting trees, increasing the bicycle path or the sidewalk…​
• Government taxes: governments will need to review how they tax mobility, e.g.
  • Taxes on fuel will disappear when all cars drive electrical
  • Traffic taxes will disappear to a large extend, if no one owns a car anymore
  • Parking costs and traffic fines will disappear, when each car follows all the rules (parking correctly, obeying speed limits…​) and can park outside the center, where there is no cost for parking.
• Private parking at your house (garage or carport): when no-one owns a car and cars can park elsewhere, prices for garages will plunge and people will be able to transform their garage into another type of living space (e.g. gym, storage space, extra bedroom…​).
• Car accidents: across the world, nearly 1.3 million people die in car crashes every year and a multitude gets severely injured. Almost all those accidents can be avoided by AVs (as they are linked to a human error), which means an end to these human tragedies and a saving of billions in health care costs.
• Mobility of children and elderly: autonomous vehicles can increase mobility for the elderly (allowing them to remain more socially engaged) and help parents bringing their children to different places (like school, sports club, parties…​). It will take however quite some time, before we trust the technology so much, that we let our children go alone in an AV to school.
• …​

I can imagine that people impacted by this evolution look with fear to the future. There is still time to prepare, as it will be a gradual evolution, but it is sure that the impact on our economic fabric will be enormous. The advantages for society are however so big, that we should do everything to stimulate this evolution. In any case I am looking forward to the future, where my car brings me everywhere I want.
My sun is now 6 years old. Strange to think, that he might never drive himself.