Driverless cars will change the way we think of car ownership

November 6, 2015 by Hussein Dia, The Conversation
This is her first car, and it may be the last one she owns. Credit: Shutterstock

The transition to fully driverless cars is still several years away, but vehicle automation has already started to change the way we are thinking about transportation, and it is set to disrupt business models throughout the automotive industry.

Driverless cars are also likely to create new business opportunities and have a broad reach, touching companies and industries beyond the and giving rise to a wide range of products and services.

New business models

We currently have Uber developing a driverless vehicle, and Google advancing its driverless car and investigating a ridesharing model.

Meanwhile, Apple is reportedly gearing up to challenge Telsa in electric cars and Silicon Valley is extending its reach into the auto industry.

These developments signal the creation of an entirely new shared economy businesses that will tap into a new market that could see smart mobility seamlessly integrated in our lives.

Consider, for example, the opportunity to provide mobility as a service using shared on-demand fleets. Research by Deloitte shows that car ownership is increasingly making less sense to many people, especially in urban areas.

Individuals are finding it difficult to justify tying up capital in an under-utilised asset that stays idle for 20 to 22 hours every day. Driverless on-demand shared vehicles provide a sensible option as a second car for many people and as the trend becomes more widespread, it may also begin to challenge the first car.

Results from a recent study by the International Transport Forum that modelled the impacts of shared driverless vehicle fleets for the city of Lisbon in Portugal demonstrates the impacts. It showed that the city's mobility needs can be delivered with only 35% of vehicles during peak hours, when using shared driverless vehicles complementing high capacity rail. Over 24 hours, the city would need only 10% of the existing cars to meet its transportation needs.

The Lisbon study also found that while the overall volume of car travel would likely increase (because the vehicles will need to re-position after they drop off passengers), the driverless vehicles could still be turned into a major positive in the fight against air pollution if they were all-electric.

The introduction of autonomous driving technology will be gradual. Credit: Mojomotors, Author provided

It also found that a shared self-driving fleet that replaces cars and buses is also likely to remove the need for all on-street parking, freeing an area equivalent to 210 soccer fields, or almost 20% of the total kerb-to-kerb street space.

Other studies have also shown that dynamic ridesharing using driverless vehicles will increase vehicle utilisation up to eight hours per day.

Car insurance

A recent study by McKinsey on disruptive technologies suggests that up to 90% of all accidents could be prevented by driverless vehicles. So why buy insurance if automation makes accidents far less likely?

"The truth is, if it's a safer way of driving, it's good for society and it's bad for our insurance business," the US business magnate Warren Buffet said recently when asked about the impact driverless vehicles may have on his GEICO car insurance subsidiary.

"Anything that cuts accidents by 30%, 40%, 50% would be wonderful, but we won't be holding a party at our insurance company."

Other studies have speculated that premiums could be reduced by 75%, especially if drivers are no longer required to get coverage, and liability is shifted from drivers to manufacturers and technology companies.

Under this scenario, insurers might move away from covering private customers from risk tied to "human error" to covering manufacturers and mobility providers against technical failure.

A Rand Corporation report also predicts that drivers might end up covering themselves with health insurance instead of vehicle insurance.

Will driverless vehicles destroy the very idea of ownership?

Does all this mean car ownership is passé? In some ways, you may not own every facet of your driveless car anyway. Vehicle manufacturers are arguing that since they own the software that runs a connected vehicle, they also own the machine that runs that program.

In comments submitted to the US Copyright Office, vehicle manufacturers argue that purchasers are only licensing the product and it would be unsafe for them to modify the vehicle programming or even make a repair. The Copyright Office is currently holding a hearing on the issue. If it rules in favour of the manufacturers, it will set a precedent that can change the whole landscape of ownership.

Not everyone will be excited by this vision, and many would be sceptical and disagree that we are at the cusp of a transformation in mobility. Others still want to drive and not everyone is likely to want to rideshare on a daily basis. Many might also argue that better investment in public transport would achieve similar outcomes.

Whether you embrace or object to these scenarios, the reality is driverless vehicles are coming and they will have socio-economic impacts and other effects on our society – some good and some bad.

I see them, along with urban transport technologies, as having a role in delivering new mobility solutions as part of a holistic approach to improve road safety and promote low carbon mobility. The market will ultimately determine whether they can succeed.

Explore further: Where we are on the road to driverless cars

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5 / 5 (1) Nov 06, 2015
Car ownership is never going away as long as not all people live inside cities.

The whole thing is based on the myopic view of packing everyone in cities, so that public transportation and robotic cars could work efficiently and conveniently. Unfortunately this is just a practical impossibility, because the cities themselves don't produce much wealth - they're just logistics and trading and consumption hubs, and all the actual industry and basic production happens outside of the cities where land and property is cheap, and where all the actual resources are.

Basically, the more people we pack into cities, the poorer everyone (except the elite) becomes, and if we take away private mobility and make everyone rely on public transportation and "shared" corporation owned vehicles, they can't get out. Small business, entrepreneuship and job opportunities for the poor become decided by whether they're convenient for the transport corporation.

It all becomes a dystopia.
5 / 5 (1) Nov 06, 2015
It also found that a shared self-driving fleet that replaces cars and buses is also likely to remove the need for all on-street parking

Hmm...hadn't thought about this, but that would actually be pretty neat. On a lot of city streets (given only driverless vehicles) this would also enable the creation of a third lane which could be switched depending on time of day/majority flow direction of traffic. Which in turn could reduce congestion considerably.

In the end I really don't care how I get where I'm going as long as it's in reasonable comfort and in a minimum of time. For the occasional fun trip I can always rent a car/motorcycle (or, if the proposed type of traffic were to become reality, I'd just own the 'fun' vehicle and stash it someplace out of the city.)
5 / 5 (1) Nov 06, 2015
this would also enable the creation of a third lane

Considering that parking is usually on both sides of the street, you could have four lanes.

In the end I really don't care how I get where I'm going as long as it's in reasonable comfort and in a minimum of time.

I would also count affordability.

The thing about public transportation is that it's not really cheaper than owning your own vehicle, because you need to own the vehicle anyways for the trips you can't make on public and therefore the cost of ownership basically doesn't count on the cost of an individual trip.

So when you have to pay something like a default fee of €2.30 for a bus fare of 5 km in length, you could do the round trip in your own car for half a liter of gasoline and pay 75 cents. You have the car anyways.

Same thing with the shared car model - can you rely solely on it? If not, then using your private vehicle comes cheaper and makes more sense anyways.
5 / 5 (1) Nov 06, 2015
The fundamental problem is that a corporation that owns the means of transportation is in it to make a profit. That's why rental cars are ridiculously expensive.

So, you're paying for all the extra miles that the robot car has to travel between customers, plus your own miles, plus a commission on top. That's more expensive than buying your own car and maximizing the use of it, because you are not driving any more than you personally need, and you aren't paying yourself a profit - unless you want to stick something in a piggy bank every time you drive.

Furthermore, you can choose the level of luxury you want to drive, so you can choose between a creaky €2000 second hand sedan, or a shining new €20,000 hatchback, or a €200,000 luxury car. Not so with the public option, which is more one size and one price fits all: too expensive for the poor, too cheap for the rich.
5 / 5 (1) Nov 06, 2015
I have my doubts that public shared auto driven automobiles are practicable. Some people are filthy pigs. In my crystal ball I see piles of candy wrappers, chewing gum, fast food containers and leftovers, half drunk soda or milkshakes, sweaty trainers and clothes, spew from overenthusiastic revellers, on the floor, seats, steering wheel if there is one, windows scratched, or otherwise defaced, infective snot and slag, and other infective bodily fluids.
And if you want to guarantee a pristine environment it will cost you.
And besides, it is fun to drive, even in busy traffic.
not rated yet Nov 07, 2015
Fain your point is well taken. That would necessitate cameras inside each car to video passengers and charging the occupants credit card for cleanups and damage. For the whole process to work each ride would have to cost a lot less than a cab fare.

For the system to be economical each car's deployment needs to be controlled on a interstate basis and vehicle utilization rates kept very high. Perhaps long term passenger contracts could increase efficiency. Traffic jams could be predicted and avoided by utilizing alternate routes when needed.
not rated yet Nov 07, 2015
Individuals are finding it difficult to justify tying up capital in an under-utilised asset that stays idle for 20 to 22 hours every day.

Hence the question, why has the media decided that this trend is already going to happen??? A better public transit system would, by leaps and bounds, be more efficient than having millions of driver-less vehicles cruising down the road. Why are we stuck on the notion of cars, parking lots, and mowing down more landscape to pave highways?
not rated yet Nov 07, 2015
"A better public transit system would, by leaps and bounds, be more efficient than having millions of driver-less vehicles cruising down the road."

Only in the cities. As you move away from them the cost of 24/7 public transportation becomes prohibitive. Many people are are required to work odd hours and require a 24/7 transportation service. The cost of housing in most major cities forces people to the suburbs.
not rated yet Nov 07, 2015
As I think about it I don't really see how driverless cars can save the average driver any money. If you drive very few miles per year then perhaps they can. If you drive a lot of miles per year then the total mileage on the car and not old age will determine the replacement cycle. Thus you will be putting the same mileage on a driverless car and it will have to be replaced just as often.

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