Self-driving vehicles will change the face of driving as we know it, but along with the mind-boggling technology swirls a host of questions and concerns. The potential impact on the car industry, the economy, road safety and U.S. laws is huge. With such a new concept, it is impossible to consider all the implications; however, some are obvious.
Although many people aren’t taking them seriously, pilot projects for automated vehicles will start in the U.K., as well as in several U.S. cities this year, starting small, in college campuses, airports, theme parks and downtown areas. Comet LLC, a consulting firm that deals with automated vehicle commercialization plans more trial programs, adding 12 to 20 in the U.S. next year. This means driverless cars will hit 30 U.S. cities by the end of 2016.
Shaking Up the Automobile Industry
The U.S. automobile companies have a history of being slow to adopt technological innovations. An example of this is the electric car, which relied on Tesla Motors to develop the best full-function innovations. The same goes for driverless cars. Technology companies like Google and Apple may end up leading the way, stealing potential profits from traditional companies, like Ford and General Motors.
Car company profits will be in peril. The big auto companies may feel the pain when private ownership of cars declines rapidly due to driverless cars. Where people are now using services like Uber, they will be able to summon a driverless car to pick up, drop off and then zoom off to pick up another person. Large fleets of driverless cars could serve the needs of those who now own vehicles, which will cause a drop in both new and used car sales. With less vehicle sales, cities and states will lose much needed car dealership tax revenue, as well.
Insurance companies will feel the pain. Driverless cars will be safer and reduce accidents greatly. Although this is good news, the incident of accidents will drop sharply, reducing the cost of insurance and hurting the bottom line for large companies like Allstate, GEICO and Progressive. Although these companies will not have to pay out the amounts they do now in claims, those claim costs factor into policy pricing.
Gas consumption will decline. Driverless cars are going to be much more energy-efficient, which will have an impact on the demand for gas. Less demand means higher gas prices for everyone.
According to research from Morgan Stanley, driverless cars could add up to $488 billion in annual savings from lowering the number of traffic accidents and another $158 billion in fuel costs.
An Economic Evolution
Just like taking public transportation, commuters in driverless cars can use the time they would spend behind the wheel productively. Morgan Stanley estimated trading traditional automobiles with driverless cars in the U.S. could contribute $507 billion to the economy due to increased worker productivity. In addition, travel will be more efficient, reducing tie-ups and congestion, saving approximately $138 million. They estimated the total yearly savings to be more than $1.3 trillion, or over seven percent of gross GDP, which will seriously impact the U.S. economy.
There is a downside to this scenario. Some industries will suffer, such as trucking and other transportation services that use human drivers, which will become nearly obsolete by driverless trucks, buses and cars. Unemployment will run rampant in those sectors, including delivery, bus, taxi and truck drivers. In addition, those workers with low skills will find it hard to find new careers to replace their current jobs.
The ability to adapt is what will make all the difference. Although automated automobiles will cause changes in the automobile and other related industries, it will impact the profits of those companies who don’t adapt in a timely manner. Driverless cars will bring many benefits to society as a whole, as well as the general economy, but there will also be a small number of workers who the new technology will impact in a negative way unless they too, adapt, along with the car manufacturers.
Driverless cars may seem like the answer to prayers everywhere, but drivers will still need licensing and specific skills to operate them. If they malfunction or have mapping problems, drivers may need to switch to manual mode. This means states will need to draw up laws and regulations for the operation of automated vehicles, which California is currently grappling with right now. Drivers still need insurance, as always, so here’s a place to compare car insurance rates.
For now, drivers, lawmakers and manufacturers must be flexible, because it is still too soon to determine what level of skill drivers will need to have. Will they need more skills, less skills, or no skills at all? It is as if the entire world is holding a collective breath while waiting for what’s coming down the pike for driverless cars.
Joe Moore has spent considerable time in the insurance industry before moving onto provision of auto insurance information and quotes on his blog. He likes sharing his automotive insights online. His articles can be found on many vehicle and technology websites. Keep up to date with Joe on Twitter.
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