Bloomberg is on the vanguard of accurate and thoughtful reporting on the emerging and powerful trends of self-driving cars. In this recent article, Jess Shankleman succinctly points out why this autonomous automotive revolution is going to happen way faster than the markets (or the public) thinks. The coming transformation will claim victims from airlines to bicycles to public transportation. The potential winners and beneficiaries of this seismic change might surprise us all. Opportunities for investment could be as simple as buying beverage companies as more people around the world decide to have that extra drink because they don’t have to drive home. As Bloomberg points out, media companies like Netflix could also benefit from the self-driving car. There will be countless other investment implications—all of which are anything but clear. From a social perspective, driverless cars will change the world.
I am re-posting this Bloomberg story because it is one of the most concise and well-argued articles yet published on the topic of the convergence of ride-haling, autonomous driving, and electrification of vehicles. Ironically, autonomous vehicles have the potential to make Turtle Garage itself obsolete—along with the car culture of an entire generation. It is hard to imagine the possibility that in twenty years we will no longer be driving ourselves. However, I am more and more convinced that this our new reality.
Link to story here.
Self-Driving Cars Will Kill Things You Love (And a Few You Hate)
By Jess Shankleman
(Bloomberg)
Electric cars, robo taxis and self-driving trucks are coming to change the society we live in—possibly sooner than you think.
Limited tests of driverless cars are already happening today and they’ll be in use everywhere within six years, according to Carlos Ghosn, CEO of the Renault Nissan Alliance. A change on that scale would reach far beyond the automotive industry to upend businesses, transform our daily lifestyles and reshape cities.
Even if the skeptics are right and the technology necessary for full level-five autonomy develops more slowly, the revolution could still claim many victims.
Bikes and Buses
In a future where anyone is able to summon a cheap driverless pod at the click of a smartphone button, the line between public and private transport would start to blur.
Ride-hailing services such as Uber Technologies Inc. and Lyft Inc. are already reducing demand for public transport across the U.S., according to a study from the University of California, Davis. People use ride-hailing apps instead of taking the train, driving, cycling or even walking.
Removing human drivers from the equation could make those services even more affordable and convenient compared with trains or buses following fixed routes. Dwindling passenger numbers could ultimately starve public transit of investment.
Domestic Airlines
In the U.S. people often fly between or even within states, but autonomous technology could make car journeys a more pleasant and productive alternative. The impact could be similar to Japan’s bullet trains, which diverted passengers away from airlines.
“Air travel in North America isn’t really good—the airports suck, the airlines are horrible,” said Ali Izadi-Najafabadi, an intelligent mobility analyst at Bloomberg New Energy Finance. “In a driverless car you could read a book, watch a movie and do other fun stuff.”
Insurance Premiums
Today more than 90 percent of road accidents are caused by human error, so once you take people out of the equation safety will probably improve, said David Williams, technical director at insurer AXA SA.
Initially, there could be two types of insurance—one for manual cars and one for autonomous—with premiums for the latter eventually falling as much as 50 percent, Williams said.
Car Culture
Tailgate parties, political bumper stickers, bored teenagers cruising the byways of small towns—all these could become things of the past as cars change from prized possessions to on-demand utilities.
Fewer young people are already learning to drive in the U.S., citing the cost of owning a car and ability to share rides as key reasons, according to a study by the University of Michigan. If that generation eventually loses the need to drive altogether, the link between American popular culture and car ownership will wither.
“We as Americans associate our identity with our car,” said Doug Seven, who leads Microsoft’s connected and driverless car efforts. “When the 20 year-olds become the 40 year-olds and the 40 year-olds become the 60 year-olds, the cultures will shift.”
Traffic Jams
Cloud-connected vehicles with advanced computer brains won’t just drive themselves, they’ll be able to communicate with other cars, traffic signals or emergency services. Even if the number of cars on the road increases, these systems could speed up city traffic and reduce jams by rerouting flows away from accidents or repricing toll routes. They might also curb the daily rush hour by allowing employers and local governments to encourage more flexible working hours.
“You would want to spread things out from 9 o’clock on the dot and 5 o’clock on the dot,” said Benedict Evans, a partner at Andreessen Horowitz, in an interview. “Driverless cars give you a lot of the tools to do that.”
Parking Tickets
Some of the most hated people on the planet may soon find themselves out of work. If shared driverless cars constantly patrol the streets awaiting a ride before returning for storage in centralized depots, rather than parking on the street, there’ll be little need for parking enforcement officers.
Even those that do seek street parking would have an advantage over humans. The U.K. tech startup AppyParking, which features a map of parking spaces in 11 cities, says it could also allow driverless cars to find a spot easily.
Truck Drivers
Autonomous vehicles may not be a such a bad thing for long-haul truckers because the industry is already facing a worsening shortage of drivers, said Evans.
In the U.S., fewer young people want to do the job and the average age of drivers is 49, so within 10 years many will be close to retirement, according to the American Trucking Associations. Before that happens, self-driving technology could make the job less stressful.
“The best analog is commercial air travel, which has been heavily automated for some time,” said Sean McNally, a spokesman for ATA. “Drivers will handle things like pickup and delivery similar to the way pilots are responsible for takeoff and landing but switch to more automated systems for long-distance highway travel.”
Mechanics
Auto repair shops may grow to hate the sight of autonomous battery-powered cars, on the rare occasions they actually encounter them. Many of the common repairs for gasoline-powered vehicles—replacing spark plugs or engine oil—simply won’t be needed for electric motors.
They’ll still have tires and brakes that suffer wear and tear, but the lack of a combustion engine makes a big difference. Analysts at UBS Group AG who stripped down a Chevrolet Bolt concluded that it doesn’t require any maintenance for the first 150,000 miles it drives, compared with servicing every 10,000 miles for a Volkswagen Golf. Fewer bumps and scrapes caused by human error also mean lower demand for repairs to headlights and body panels.
The Gas Pump
Rapid adoption of electric vehicles could mean oil demand peaks in just 12 years, according to Bank of America Corp. That would send shockwaves through an industry that’s counting on consumption growth for decades to come.
Some major producers, such as BP Plc, are already acknowledging the possibility that some oil resources will never be needed. This scenario raises difficult questions for Saudi Arabia, which has more than 70 years of crude reserves and hopes to achieve an IPO valuation of more than $1 trillion for its national oil company later this year.
The Winners
For Netflix Inc. or Nintendo Co. Ltd., time currently spent driving could be opened up for movies or games. Electric utilities in developed countries would see soaring demand after years of stagnating growth. For law enforcement, 3D sensors and high definition cameras would potentially make each vehicle a roving spy able to determine fault in an accident, witness street crime or spot suspicious patterns of behavior.
–With assistance from Samuel Dodge and Alex Longley.
To contact the author of this story:
Jess Shankleman in London at jshankleman@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at landberg@bloomberg.net
James Herron
it’s probably time to start having a public discussion about what we should be able and willing to expect from self-driving cars. Once you remove the driver from control of the car, you probably will see them less engaged in maintenance. So the car may be called upon to prompt same. For example, if the car detects that braking is starting to fail, the car should advise the owner it’s time to get the car serviced and also advise that if service isn’t provided within a reasonable timeframe the warranty or product liability insurance is voided. If that’s the case, the car could notify your State Farm agent to let him know that the auto liability insurance will be responsible for any accidents related to braking failure.
The car could recommend tire rotation schedule and prompt a regular safety check the driver could perform or they could take it to the EV version of a Jiffy Lube to get the basic maintenance taken care of.
We’ll have a lot safer fleet of cars on the road if this sort of functionality is built in.
Phil,
I live in Columbus, Ohio. Drivers are so distracted that I will welcome autonomous cars. As it is, people are (really) running red lights that have been red for over 15 seconds, waiting behind stopped cars until the car in front is long gone (Gotta text my boyfriend!), weaving in freeway lanes and in general being flakey drivers. Someone driving for these people will be a breath of fresh air. I think…..
Distracted driving is a dangerous epidemic. You notice it, even more, when you drive a motorcycle on the street!
Philip Richter, thanks for the article post.Really thank you! Great.
The times they are a changin….
I do not dispute the possibility that all of these predictions could come true. However, at my advanced age I have seen a lot of predictions that vastly overstated the effect of new technologies on our world. When I was a kid in the 50’s we all thought that people by now would be zipping around in their personal helicopters, and cars would be gone, and that nuclear power would replace fossil fuels. More recently, many said (Steve Jobs included) that the “old technology” CD would disappear in favor of the Cloud and iPods. Hasn’t happened. People want to own their own music. Wired phones should be gone by now according to prognosticators. Didn’t happen. They predicted that books and magazines would disappear, completely replaced by ebooks and the internet. But the most recent data shows that books and magazines are coming back. People don’t want to spend all day in front of a computer monitor or iPad. People like tangibles. Cursive handwriting was supposed to disappear since “everybody types or dictates now.” Some school districts are now reinstituting the teaching of cursive writing because the alternatives are no substitute for rapidly writing things down, and reading what others have written. “Nobody is going to shop in stores anymore because it’s so easy to order online.” Yet more than 80 percent of sales by revenue are made in stores. “Automatic transmissions will cause stick shifts to disappear.” Yet eighty percent of the cars sold in Europe and Japan have manual transmissions. Fuel economy is no longer relevant to transmission type. So why haven’t these folks all switched over to the newer and more convenient technology?
“Everybody is going to be driving electric vehicles.” I have two plug-in cars in my garage but I don’t know anybody else who has even one. “Libraries will wither away because everything is available on the internet.” Yet our local library remains the most active place in our town.
All of these new technologies give people more alternatives in how to live their lives and spend their time. But to argue from the advantages of one technology that “everybody” is going to change to the newest technology has in so many cases proven to be wrong.
Nobody writes of the difficulty of having cars at your beck and call. It’s just not realistic to think that people are going to give up ownership of their own car because of the availability of self driving cars at their beck and call. A person will have to sign up and commit to a travel schedule in order to reserve a car for a particular time. There won’t be enough available cars to meet everybody’s wish to always have a vehicle available for a spur-of-the-moment trip. That disadvantage alone is highly significant, since Americans will not tolerate waiting around for a car to pick them up for a trip to the 7-Eleven. But there are many other hurdles all requiring investment of huge capital with uncertain possibility of returns in order to create conditions sufficient to substitute for car ownership.
Bob, your points are well said and persuasively argued. Yes, this is going to be a bumpy road. No matter what, there is going to be a lot of change coming as advancing technologies collide with human preferences and habits. Thanks for your thoughtful comments!