NBR Column – driverless cars

This is my NBR column from December 2016:

Since the invention of the first “horseless buggy” in 1891, there haven’t been many significant changes to the basic of the car. There have been incremental improvements to the platform – such as better engines, increased safety and more comfort – but the core has remained unchanged. A driver from 1920 would be able to adapt to a modern car and the reverse would also apply.

While a driver from the 1920s would be able to drive a car, a mechanic from the same era would no longer recognise the key components. Today’s new cars are equipped with collision avoidance sensors, traction control, ABS, air bags, reversing cameras, engine computers and media players. This technology means that new vehicles contain more software than a modern passenger aircraft and a laptop is more useful than a wrench when tinkering under the hood.

While this may be startling to some people, it pales into insignificance compared to what’s about to happen to the car when driverless vehicles become mainstream.

Since their first significant debut in 2004, driverless cars have evolved quickly. They have now been demonstrated in a range of situations, with manufacturers posting videos online showing just how well their machines work (usually in near-perfect conditions).

These advances have been enabled by developments in sensors, cameras and computing power. On their own, each of these required technologies was prohibitively expensive only a decade ago. Fast forward to now, however, and the cost has fallen to the point where it’s feasible to bundle them into a car.

For example, one of the key components is a device called a LIDAR which creates a millimetre accurate map of the world around the car. Early versions of LIDAR systems fitted on a car cost $75,000. Just last week one manufacturer announced a version with similar capabilities that would cost about $50.

Implications for ownership
While a lot of attention is on the technology in the car, most astute analysts are focused on the second and third tier implications of driverless vehicles. This is the most interesting part of the discussion because cars are ubiquitous in most urban environments, and a change in their form and function has massive implications.

The most significant implication will concern the very notion of car ownership.

A car is one of the most expensive assets in a household but at the same time it’s also one of the least used. Most a car’s life is spent stationary, though the cost of ownership is justified through what it creates.

In modern society a car creates access to opportunity, and for cities without an efficient mass transit system, car ownership is the way people access opportunity.

However, the notion of car ownership is being questioned in some cities and people have calculated that using a car-sharing service is cheaper than owning a car in some situations. Driverless cars are the next evolution of on-demand mobility without requiring ownership.

The most likely scenario to emerge in cities is that private car ownership will dwindle, and the demand for mobility will be met by fleets of vehicles available on demand and tailored to your requirements.

For example, a two-seater car could take you to a meeting, while a people carrier may stop past your house in the morning to collect your kids and take them to school.

Eliminating road congestion
Once you have a network of fleets running in a city, and every car is sending data about its state, it then becomes possible to optimise roads in a way that’s simply not possible now. When you know exactly how many cars are on the road at any one time and where they are going, you can start to organise their routes in such a way that eliminates congestion.

Another implication of driverless cars is the remodelling of city streets to remove carparks – cars without drivers never need to be parked for hours on the kerbside.

The biggest benefit of driverless cars is likely to be the near elimination of road accidents. A car that’s operated by a computer will never get distracted by phone calls or fall asleep at the wheel. Some researchers have predicted that driverless cars have the potential to reduce road deaths by up to 90%.

Regulating for driverless cars is one of the biggest hurdles to their adoption, and for this reason uptake on private roads (which are free of regulation) has already begun.

To illustrate, some Australian mines have operated driverless trucks since 2008, and since their introduction productivity has increased and accidents have decreased. In New Zealand one of the first significant pilots of driverless vehicles will take place in 2017 when Christchurch airport will introduce a driverless shuttle bus on its private roads.

In the next few years the workforce will start to be impacted by this technology, with truck drivers likely to be affected first. Already a delivery truck owned by an Uber subsidiary has driven almost two hundred kilometres across the US on interstate highways in self driving mode. This has profound implications for the three million truck drivers employed in the US and the industries that support them.

The next decade will be a transition period where driverless vehicles start to become commonplace in some situations. They’re unlikely to be widespread in cities as many experts believe that there are very hard problems that still need to be solved. For this reason it won’t be until after 2025 that we’re likely to see a dramatic change in the transportation fleet.

What makes this timeframe interesting, is that unlike many technology driven changes that have slowly changed business, this one is clear to see.  Organisations that have the foresight to leverage insights about the changes created by driverless cars will do extremely well. Those that don’t will end up like the horseless buggy.

Copyright NBR. Cannot be reproduced without permission.
Read more: https://www.nbr.co.nz/opinion/fast-forward%C2%A0normalisation-driverless-cars-not-so-far
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