Short- and medium-term impact (2018-2040)

Today there are only commercially sold manual cars on the roads. Short term it will probably stay that way, although we can expect to see more public trials like the driverless taxi service Waymo currently is doing in Phoenix and other places. Soon we will see the first commercially sold autonomous cars on the roads, entering a new phase where manually driven vehicles share roads with autonomous vehicles. This phase will be an intermediary phase where many problems will surface and thus filled with opportunities for the creative ones. Let’s look at some short- and medium-term impact the introduction of autonomous cars might have to the society but first, let’s try to understand the driving factors.

Nigel Tadyanehondo

What will drive the development towards autonomous cars?

Cost

The cost of buying, driving and maintaining a car today often sums up to a considerable part of the household’s income. There are reasons to believe that the cost of cars will come down as autonomous cars make their entrance to the market. It will not happen immediately, and the usage of autonomous cars has to reach a certain critical mass before the total cost of access to the vehicles fall below the total cost of manually driven vehicles. Currently, for example, vehicles with combustion engines are still significantly less expensive than vehicles with electrical engines. It’s expected though that within a few years the prices of electric cars will be lower than cars with combustion engines, partly because electrical engines are less complex and contain fewer parts and partly because batteries are estimated to fall in price. But until volumes are higher the automotive companies will try to get some incoming cash flows compensating somewhat for their R&D. So, we can still expect to see relatively high prices for electric cars for some years. And the prices for autonomous cars will be even higher for yet a few more years.

Let’s have a look at some arguments to why autonomous cars might have a smaller economic impact on the households’ income:

• Since the autonomous vehicle can drive by itself it’s significantly easier to share the vehicle with other people. This means that the cost of the vehicle and its maintenance can be distributed among more people.
• Users of autonomous cars won’t have to pay parking costs.
• As mentioned above, electric cars have simpler engines with notably fewer parts compared to combustion engines. And for example, the regenerative braking could also extend the life of brakes. As a result maintenance costs might go down.
• Assuming autonomous cars will be less involved in car accidents compared to manually driven cars the need for repair will decrease.
• If the cars are involved in fewer accidents the insurance premium will probably be significantly lower than for manual cars.
• We can also assume more efficient production in the car factory as a result of robots and AI, bringing costs down for the vehicle.
• Vehicle tax might also be lowered due to fewer accidents, less harm to the environment and maybe also less congestion in the urban areas.

There are obviously arguments for why autonomous cars will be more expensive than manually driven cars (more technology than a manually driven car, new technology that is R&D heavy, unknown risks for insurance companies…) but by assuming that these costs will diminish over time I make it easy for myself.

Safety

As mentioned in Part 1, autonomous cars will probably have a huge positive impact in regard to safety. It’s reasonable to think that safety reasons will be an important driver towards autonomous cars from a political point of view.

Convenience

While the autonomous car takes you to your destination you can be tired, intoxicated or you can focus on something else than the road, like work, look at your favourite TV-series or just take a nap. Soon people will experience an increased level of freedom which can be a strong driver for autonomous cars. And with cars connected to each other working with intelligent solutions (central or distributed), there will probably be fewer congestions leading to smoother trips and shorter time of arrival. But it’s probable that a lot of people will be sceptical of autonomous cars and resist the change, especially if there are some accidents with autonomous vehicles in the early years. It will probably take a few years before most people feel comfortable riding in a car without a human driver, even though human error is the most common cause of accidents.

In next post, let’s look at how autonomous cars will change current business models.