Category Archives: Impact of driverless cars

PwC predicts collapse of car sales because of self-driving cars

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PricewaterhouseCoopers – the world’s largest professional services firm – has just released an analyst note about the effects of autonomous cars on the auto industry. While the report is extremely positive about the technology (predicting a reduction of traffic accidents by a factor of 10) it cautions that the fleet of vehicles in the  United States may collapse from 245 million to just 2.4 million. This is a reduction by the factor of 100 and significantly higher than the factor of 10 provided in a recent study by  the Earth Institute which we highly recommend.

It is encouraging that the major consulting firms and think tanks are beginning to take note of the tectonic shifts which will occur in the auto industry within a few years – and which we have emphasized for the last 3 years. The study contrasts with a recent report by KPMG on “Self-driving cars – the next revolution“. While KPMG’s analysts briefly mentioned on-demand mobility services (autonomous car sharing), they failed to see its disruptive potential.

It is time for the auto industry to seriously plan for this future. Contact us – we can help!

 

 

Driverless cars needed to reduce greenhouse gas emissions!

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By the end of this century, global warming could increase the world’s mean temperature by 4 degrees Celsius, warns a recent report by the Potsdam Institute for Climate Impact Research. The effects would be dramatic: “unprecedented heat waves, severe drought, and major floods in many regions, with serious impacts on human systems, ecosystems,
and associated services“.

Road transport is responsible for about 5 billion tonnes of CO2 annually (data: 2008) which is almost 20% of total global CO2 emissions. Growth in global transportation is likely to further increase these numbers. Global policy makers are searching for ways to limit this growth in greenhouse gas emissions but they still fail to see the potential of autonomous vehicles:

1) Autonomous vehicles could greatly decrease greenhouse gas emissions in urban traffic because
– Car-sharing services could offer local mobility for a highly competitive price based on a fleet of smaller, lighter cars which therefore cause fewer emissions
– Local car sharing fleets would be ideal adopters for alternative, low-emission drives (electric cars, hydrogen, fuel cells). Because of their higher utilization levels, higher initial capital costs for the new technology as compared to the gasoline engine would not matter as much. Autonomous cars used for local trips would be an ideal application for getting electric cars into operation in high numbers.
– Increased use of car-sharing for local transport reduces the overall demand for vehicles which in turn reduces greenhouse gas emission for manufacturing automobiles.

2) Especially in emerging nations which don’t yet have a large percentage of car ownership driverless cars could be the basis for a much more effective transport system which uses a combination of shared driverless vehicles for short distances and buses, trains etc. for medium and long distance travel. Autonomous cars would establish an optimal link between individual and mass transit; small, local driverless vehicles could serve as feeders for the last mile by transporting individuals to/from local bus stations, train stations etc.

3) Driverless cars use roads more efficiently (fewer emissions because of less road construction), can reduce emissions by driving in convoys and don’t induce traffic jams.

Overall, autonomous vehicles could be a major technology to fight against climate change. The technology can even pay for itself: It is probably the only technology which lowers overall costs (of mobility, maintaining the infrastructure etc.). Policy-makers, take note!

The dangers of mixed-mode autonomous vehicles

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Will autonomous cars de-skill their human drivers? In a thoughtful presentation MIT researcher Bryan Reimer points out the dangers of letting cars drive themselves autonomously part of the time. As people rely on automated driving more, they drive less themselves and their experience shrinks which may make them more likely to err at the steering wheel. He also dismisses the idea that humans would be effective at monitoring an autonomous car’s actions and take over in difficult situations: Besides having to be constantly alert, they would need a much deeper understanding of the autonomous car’s capabilities and limitations to be effective in such situations.

These are important insights for the evolution of autonomous vehicles. They have direct implications on the way that driverless vehicles are conceptualized and for the legal frameworks. Current driverless car laws are are based on the idea that a human is in control or should be able to take over immediately in critical situations. The reality will be different. The laws will need to address truly autonomous operation (where no occupant can be held liable for the car’s operation).

Reimer proposes to increase human-centered research and developoment to improve the interface between driver and autonomous vehicle. But it is hard to see how this could overcome the dilemma he has sketched. Improving the autonomous capabilities of these cars to the point where they perform verifiably better than almost all human drivers seems to be the only realistic alternative.

Google cooperates with German rails for travel planning

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Do you think of Google as a mobility service provider? While it does not yet offer its own transportation services, it is establishing itself as the leading provider of travel planning services. The cooperation with Deutsche Bahn, Germany’s leading rail network, which was just announced last week, is only one of many examples which show that Google  relentlessly expands its travel-related services. By establishing interfaces to many established transportation services – including mass transit systems, trains and airlines – it raises the barrier to entry for potential competitors and the value of its competitive position.

Google’s autonomous vehicles fit nicely into this scenario. Once they are ready to be released to the public, Google can become a full-service mobility provider: It then has the technology and all information to pick its customers up anywhere and bring them to their destination in the most time- and cost-effective way. It will be able to anticipate transportation demand, to react to delays of trains and flights and to optimize the placement of its vehicles. Its intelligent fleet will change the economics of transportation and significantly lower the costs of personal mobility.

Taken together, Google maps, its travel planing services and its autonomous vehicle technology, provide a strong foundation for becoming one of the key players in transportation in the next decade. Google is preparing itself to capture a much larger share of the transportation industry’s revenue than the great auto makers anticipate today.

Wall Street Journal considers driverless future

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An opinion piece in the WSJ on July 17 criticized investment in the proposed bullet train between Los Angeles and San Francisco. It then advocated preparing the road infrastructure for the advent of driverless cars: The number of lanes should be increased because driverless cars can cope with narrower lanes. Trucks should be limited to one or two wider lanes (ideally separate from car lanes). Traffic flow control systems would have to be installed to optimize traffic flow – both on the highway and in the city where stop lights often increase congestion.

The author points out interesting issues but fails to recognize the decentralized nature of the driverless revolution. These cars do not require modifications to the existing infrastructure. They will drive where a human can drive. But their behavior and economics differ. They will naturally improve the flow of traffic. Driverless cars increase the peak capacity of the existing infrastructure because they can safely keep shorter distances to other cars. Even a small percentage of driverless cars mixed into regular traffic can reduce congestion by adopting an optimal speed or by simply keeping side-by-side with another (automated?) car in two-lane pile-ups effectively preventing other cars from lane-hopping. The cost-structure of driverless car sharing and the need for demand management by mobility providers are also important factors that will reduce peak loads on the traffic infrastructure.

There is no need for driverless road infrastructure investment. Governments would be well advised, however, to invest directly into advancing driverless technology. Fewer traffic accidents would save hundreds of millions of dollars every year. Better road utilization exhibited by driverless cars will also greatly lower the costs for building and maintaining the road infrastructure.

 

 

 

Driverless technology may kill the auto insurance industry

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A recent report by strategy consulting firm Celent (Boston) looks at the impact of advanced technology on the auto insurance industry. Based on a review of available and emerging safety technology – including collision avoidance, automated traffic law enforcement, telematics and robot cars – it provides estimates for the reduction of accidents. One of its scenarios predicts total auto industry premium to drop from 25 percent of total insurance industry premiums to only 13 percent by 2022. Most of these reductions will be due to available safety technology; fully autonomous cars will make their impact felt in the decade thereafter.

The report entitled ‘A scenario: The death of auto insurance‘ analyzes the adoption of advanced car technologies. It sees the first robot cars becoming available for private use in the time frame between 2018 and 2022. Between 2023 and 2027 the author expects driverless technology to become a preferred feature of high-end cars. Its adoption may be subsidized through tax incentives. The timeline ends in 2027; the report does not give an estimate for when driverless technology will be required in new cars.

The report asks the auto industry to actively prepare for this scenario. It recommends to

  • expect the largest impact in activity and budget levels for sales service and claims
  • begin monitoring the evolution of technology-induced changes in insurance losses
  • draft a strategy for  addressing the impacts (expand non-auto business, grow through mergers and acquisitions, accept shrinking revenues)

The report should also be a wake-up call to other industries which will be affected by driverless technologies. While some industries are at risk (including car dealerships, repair shops and auto manufacturers), it presents great opportunities to many others – which will be able to introduce completely new services and business models.