Self Driving Cars: Implications You Might Not have Guessed
August 23, 2016
Autonomous vehicles will be here sooner than anyone thought, and they will have an internet-like impact on society.
That’s one reason why Uber has an estimated market cap 20 billion dollars higher than General Motors. Who knew?
The modern industrial economy is to a great degree centered around auto manufacturing and production. What if we suddenly need only 10 percent as many cars? What if a key bottom rung of the employment ladder, the taxi, truck, or bus driver, disappears?
Here, Robin Chase, Co-founder and former CEO of ZipCar, considers the landscape.
Simply eliminating the drivers from cars, and keeping everything else about our system the same, will be a disaster. Picture zombie cars — those with no one in them — clogging our cities and our roads, because it will be cheaper to keep them moving than to pay for expensive urban parking, and cheaper to bring retail to a customer than to pay rent on a retail store. While the number of vehicle miles driven skyrockets, our transportation infrastructure revenues, dependent on the gas tax, parking, fees, and fines will disappear. Unemployment will spike as professional drivers will be be laid off in droves. It will be a nightmare of pollution, congestion, and social unrest. Let’s break it down.
Congestion. The traffic alone will make people curse the technologists who brought AVs to our streets. Right now, our “congested” roads and cities are mostly filled by individuals driving alone in their cars (75 percent of all trips). Just imagine our streets and your frustration when 50 percent of the cars have no people in them at all.
When we don’t have to drive them, we’ll use our cars more. My 2004 Prius costs me about $1.50 for an hour of run time. It will be cheaper to have my car double-park or circle blocks rather than pay for a parking meter or, heaven forbid, pay for parking in a downtown garage. It’ll also be cheaper to have my car pick up pizza or drop off dry cleaning than to tip a delivery person. Endless double-parking and block circling already happens in places where the cost of a human driver is either very cheap (think Delhi) or expense is irrelevant (think about luxury black cars in New York City).
But there is so much opportunity to love! If we steer toward it, and plan for it, we will get benefits that once seemed as distant and unlikely as those science fiction scenarios I mentioned earlier.
Shared cars. For starters, getting away from our wasteful model of car ownership totally eliminates the congestion problem. If we share rides in shared cars, we will only need 10 percent of the cars we have today. That also makes a huge dent in our pollution problem. Just as Zipcar, Uber, and Lyft have demonstrated, wireless technology and smartphones have taken almost all the hassle out of sharing. AV technology removes all of it.
I feel pretty confident about this estimate. It’s from an excellent study by the International Transport Forum at the OECD that used actual origins, destinations, and timing for trips in the city of Lisbon. This is in line with numbers I’ve heard from a modeler at Google, a transport planner for the Bay Area, and taxi studies in Singapore and New York City. I can even see how this happens. A bold mayor will be the first mover, welcoming a discrete pilot within city limits. A hundred cars will shepherd tourists, students, late shift workers, and the curious. No one will die. It’ll be cheap and convenient.
After all, these first vehicles won’t be cheap, so unlike personal cars, which are idle 95 percent of the time, these will be intensively used — rather like Zipcars (the company I co-founded) or taxis. Today, 50 percent of all Uber and Lyft rides in San Francisco are shared — meaning that passenger-strangers going in the same general direction are sharing the trip and enjoying a reduced fare. If I use Zipcar’s economics (like self-driving cars, Zipcar doesn’t pay for drivers), the company is profitable earning about $70 per car per day. The cost of “fueling” and maintaining electric cars is one tenth that of regular combustion engine cars, and the parking would be cheaper since most vehicles could be stored in distant locations the little time they are not in use. When we take trips in shared cars, the cost of inner city travel will be the same as bus fare and the trip time will rival personal car travel (especially once you remember you never have to find parking).
The very landscape of our cities will change. On-street and almost all off-street parking, including parking garages, will be unnecessary and we’ll get rid of them. Communities and local governments can come up with criteria and priorities for how to repurpose that newly available public space: wider sidewalks, more street trees and plantings, bike lanes, street furniture. Progressive cities will make use of old parking lots, garages, and gas stations to fix what was lacking: affordable housing, green space, grocery stores, schools. Proactive cities will know their priorities neighborhood by neighborhood, as well as their criteria for action, before the transition begins.
Our energy grid will expand, while the climate benefits. As we move BTUs from fossil fuel gasoline to electricity, the incremental energy will come from renewables. Of course this will only happen if we demand that it be so, with state-based regulations. But we should, since installing new wind and solar capacity will mean jobs, to design, manufacture, install, and then maintain this new additional capacity. And, we have to because every nation has pledged to have zero emissions by 2050. There’s also a second order benefit: savings in military spending and wars avoided by weaning ourselves from fossil fuel dependency for passenger vehicles.
Detroit Free Press:
As head-spinning the pace of change, no one has found a way to make money from a service delivered through a product that may not be sold to consumers anytime soon, if ever.
If you think Apple making a car is a stretch, can you imagine the Detroit Three competing with Uber, Amazon or even iTunes, by selling shared mobility through apps? They may not have a choice.
Volvo’s tie-up with Uber is just the latest example of a car manufacturer hooking up with the ride-sharing giant. Toyota has made an unspecified investment in Uber. GM is committed to putting autonomous Bolts in Lyft fleets, but has not said when.
These cars won’t be sold at dealerships for personal use.
Lyft co-founder John Zimmer told Bloomberg News earlier this year that 80% to 90% of all shared rides occur in the 20 largest metro areas.
Today, about half the world’s population lives in cities. By 2050, that will grow to three out of every four people. In the largest mega-cities, owning, operating and parking a privately owned vehicle will be prohibitively expensive and inconvenient in gridlocked traffic.
“All the major automakers can see that their business model based around simply building a vehicle and selling it for a profit may not sustain them in the second half of this century,” said Ian Riches, director of automotive practice at Strategy Analytics in London. “Unless they do something they’re almost guaranteed to fail.”
Uber is well-established and well-financed, and is causing partnerships between manufacturers and mobility technology start-ups to accelerate.
Last month it sold its China business, which had lost $2 billion over the last two years, to competitor Didi Chuxing for $1 billion, while retaining a 20% stake in Didi. Before that it had raised about $15 billion from various sources, including $3.5 billion from Saudi Arabia’s Public Investment Fund.
Uber remains privately held, but venture capital firms estimate its market capitalization at $68 billion, or nearly $20 billion more than General Motors’. If the company pursues an initial public offering, investors will see how much it is making or losing, although CEO Travis Kalanick has said the business is profitable in the U.S. and Canada.