There were 5.6M traffic accidents in the USA in 2013. Self-driving cars from Google and trucks from Freightliner (owned by Mercedes-Benz) have been in the news recently. Self-Driving Vehicles (SDVs) will reduce traffic accidents, transportation costs, transit times, and road congestion. (See Google Self-Driving Car Project.)
A recent report estimates there will be 10 million SDVs by 2020.
(Note: While this report estimates various flavors of self-driving, in the rest of this post I am focused on 100% autonomous vehicles: no human driver.)
Self-driving cars, buses, and trucks while cause dramatic changes in many different industries. Government and school bus fleets will be history, the arguments for rail lines (light or otherwise) will crumble, and human drivers of all of these vehicles will be out of a job.
Why do I own a car?
I own a car because it gives me the freedom and flexibility to go where I want when I want. But that freedom has a big price.
My late-model Mercedes-Benz convertible is comfortable, stylish, and gets to 60 mph very rapidly (but the twin-turbo V8 gasoline engine sucks fuel like a 1970s automobile from Detroit). But it is very expensive to own when you consider all of the costs and divide those by miles driven.
Not only did I have to purchase my car, but I also have to pay for automobile insurance, any damages or maintenance, new tires and brake pads occasionally, and when I eventually sell it (to get another car), it’s value will have depreciated by 50-70%.
I have to put up with traffic, I have to spend time driving (225 hours over the last 5,130 miles traveled), and I have to pay for parking most of the time when I am away from home. [Of course I also pay for parking at home by virtue of having built a garage and paying property taxes, and if I lived in a condominium in big city like NYC or Chicago, I would likely pay even more for a parking spot at home.]
I think it is very likely that SDVs will make enough progress in the next 5-10 years that this may be this last car I own.
An SDV will be better than my convertible
I will save a lot of money (as detailed above) if I don’t own a car. But of course I will have to pay Uber, Lyft, or other companies for every trip I take.
Instead of boring you with a detailed cost analysis and comparison (I am confident Uber management and investors have already done this math), let me suggest all the reasons why an SDV will be both less expensive and more convenient for me than owning a car.
- An SDV needs to be safe, reliable, and clean.
- But since I do not own it, an SDV does not need leather seats, 19″ alloy wheels, low-profile sport tires, carbon fiber trim, a sexy body shape, Obsidian Black Metallic paint, or any of the myriad other cosmetic features that automobile manufactures provide to appeal to individual consumers.
- An SDV does not need any components required by human drivers: mirrors, instrument panel, dashboard, steering wheel, accelerator and brake pedals, gear selector, parking brake, spare tire, car jack, audio controls, interior climate controls, owner’s manual, …
- An SDV might have audio speakers and an LCD display, but more likely would rely upon the passenger’s smart phone to control the interior climate.
- An SDV will never attempt to surpass the laws of physics, so it will have a modest power plant (gasoline or electric), smaller brakes (computers have much faster reaction times, never get distracted), and much less expensive wheels and tires (only ride comfort and traction will matter).
- And SDV will not have a “lead foot”, so tire wear will be reduced and fuel efficiency will be improved.
- Without the need for a human driver to see out, the SDV will have a much more aerodynamic shape, which will be much less expensive to build and will increase fuel efficiency.
- Most personal cars spend 99% of their time parked, losing value. But an SDV can be in motion 24 hours a day, 365 days a year (except for refueling, cleaning, maintenance, and repairs).
- I never have to worry about refueling/recharging, washing the exterior or cleaning the interior, windshield wiper fluid, changing the oil, changing the radiator fluid, summer vs. winter tires, buying new tires, …
- I never have to spend time and money on parking — neither at home nor away from home.
- I suddenly have more free time for email, phone calls, work, or to just relax. And texting while being a passenger is safe. 😉
- I don’t have to worry about navigating between destinations, estimating travel time, taking a wrong turn, running into unexpected traffic or construction.
- If I want to haul a lot of people or a lot of stuff or head up into the mountains to ski or snowshoe, I do not need to own multiple vehicles.
- If I still had children in K-12 schools, I would not have to drive them around: to school, to soccer games, to after-school activities (but of course I would not be able to listen in on their conversations with their friends).
Uber in 2020 vs. Taxis and Buses
Uber had 162,037 active drivers in the USA in December, 2014, so it likely has north of 250,000 drivers today around the world. Uber is not only offering a valuable, convenient service today, but it is also collecting a lot of data from all of those trips that will allow Uber to optimize its fleet of SDVs.
Declining Price of SDVs
Self-driving technology adds $75,000 to the cost of a car today, but one recent study predicts that self-driving technology will fall to $7,000-$10,000 by 2025.
A basic Honda Fit — an award-winning small four person sedan — lists for $16,000 today. If you consider all the ways I listed above to reduce the cost of an SDV, you could probably halve the cost. The self-driving technology prices are falling rapidly, so you can estimate that an SDV Honda “Mini-Fit” might cost say $30,000 in a few years.
Uber will crush Taxis
If you have any experience with the yellow cab taxis in New York City (I have been to NYC 10+ times in the past 3 years), you know the cars are often smelly, unclean, have bad shocks, and the drivers subject your body to all sorts of roller coaster G-forces and visual upsets.
An Uber SDV will be cleaner, safer, more reliable, and less expensive:
- Taxi drivers are only allowed to drive at most a 12 hour shift.
- So taxi drivers naturally pick the 12 hours span that is most profitable for them, roughly 4:00 AM to 4:00 PM.
- Which means that between 3:30 PM and 5:30 PM, it is very difficult to find a taxi in NYC!
- But the Uber SDV will be constantly on call, and with the vast trip history Uber has accumulated, it can predict where and when future trips will be and “stage” SDVs nearby to respond to demand.
- With no human driver, there are no food breaks, coffee breaks, or bathroom breaks, and of course no human driver to pay.
- Uber will self-insure, as accident rates will plummet with no fallible human driver: (In six years and 1.7 million driven miles, Google SDVs only experienced 11 accidents.)
- As above, SDVs will have lower operating and maintenance costs because the software will drive more gently.
- SDCs trips will also be faster and more efficient, as the software coordination via the cloud will ensure optimal routing and avoidance of traffic jams.
- (Note: All of these apply equally to limousine car services.)
Uber will crush Buses
The vat majority of bus systems in the USA are government-run monopolies. With all of the features and inefficiencies you would expect:
- Fixed routes and fixed schedules.
- Inconsistent adherence to schedules — sometimes due to traffic, sometimes due to a lack of customer focus.
- High capital equipment costs due to government contracts.
- High labor costs: the average bus driver makes $63,040 in San Jose, CA (2013), and in some cities transit workers can earn more than $100,000 (2011).
Uber has been testing UberPool since at least August, 2014. As the name implies, this is a multi-rider “carpool” service. You share your Uber with one or more other riders, and it may not take the most direct route to your destination, but you pay less than you would for a solo trip.
Naturally, time, money, and comfort trade off in transportation. In the Uber smart phone app of 2020, you will select how many people in your party, how much luggage/cargo, and your starting and ending destinations, Uber will display a real-time list of price and travel time choices. You’ll pay the most for a large vehicle that travels directly to your destination. And you’ll pay the least for a multi-person vehicle that is projected to make (say) 3 stops on the way to your destination and take (say) twice as long.
Since Uber will dynamically optimize routing and pricing for UberPool, it will have both a convenience and price advantage over existing government bus systems. Similarly, public and private school buses will not be competitive, nor will charter buses. Uber will own and manage a fleet of Self-Driving Buses that can be deployed in specific situations (getting fans to/from a football game, a marathon start line, etc.).
Vast Positive Benefits of Self-Driving Technology
As more self-driving vehicles appear on our roads, many additional benefits will arise:
- There were 5,687,000 police-reported motor vehicle accidents in 2013: 30,057 fatalities, 1,591,000 injuries, 4,066,000 property damage only. As self-driving vehicles take a larger share of trips, these numbers will begin to fall dramatically.
- More road capacity for free in crowded cities, as the reduced need for parking will lead to the elimination of on-street, curbside parking.
- With more road capacity and the cloud-based routing of self-driving vehicles, traffic jams will become a distant memory, reducing transit time and fuel costs per mile driven.
- The Cloud Vehicle Coordination System (CVCS) will be able to track pedestrians (via their smart phones, of course), preventing vehicles from striking pedestrians.
- Speed limits will be raised on highways and many multi-lane streets, as the SDVs and the CVCS will be able to operate safely at higher speeds.
- Dynamic one way roads will be possible, able to respond flexibly to travel demands and increasing the available throughput on existing roads. (Today, there are “reversible” lanes in some cities, but they can take hours to switch directions, and follow a mostly static schedule).
- No more stop signs and red lights: with inter-vehicle coordination, SDVs will automatically interleave at intersections.
- Real estate devoted to below ground, surface, and above ground parking can be used for other purposes.
Disruptions caused by Self-Driving Technology
Naturally all this technology change will disrupt many existing industries and jobs:
- There will be a declining demand for personal vehicles, and the average selling price of self-driving cars will be dramatically lower than current average vehicle prices.
- There will be a declining demand for taxi drivers, chauffeurs, bus drivers, and truck drivers.
- There will be a declining demand for city, county, and state policemen to monitor traffic and respond to traffic accidents.
- There will be a declining demand for automobile mechanics.
- There will be declining demand for automobile insurance.
- There will be declining demand for automobile loans.
- Ignoring the effects of all-electric vehicles, there will be a declining demand for automobile fueling/service stations and automobile car washing stations.
- There will be a declining demand for traffic signs and signals.
A safer, faster, more comfortable, and less expensive future is coming our way.