A Roadmap for a World Without Drivers

  • Uber, or someone like them, will offer autonomous shared vehicle services. Widespread adoption of such services would reduce the amount of vehicles needed to accomplish the same amount of transportation by between 75% and 90%, depending on assumptions about utilization rates and consumer preferences for sharing rides.
  • Without the need to pay drivers, Uber-like services with autonomous vehicles (AVs) will cost 50% to 90% less than they do today.
  • The improved safety of AVs will reduce insurance premiums between 50% and 90%.
  • Much of the urban real estate dedicated to parking will get re-purposed.
  • There will be much less traffic, even if shared AVs do not take off, from the more efficient driving patterns of AVs.
  • Vehicle miles traveled per person will not change much from today.
  • The first vehicles on the market will arrive between 2017 and 2020, with rapid changes to the transportation infrastructure following in short order.
Source: http://mnordan.com/2013/02/28/the-very-curious-hybrid-boom/
  1. Car companies (or tech companies entering the auto business) will release AVs in limited quantities at first, perhaps no more than 10,000 units in the first year. These first AVs will be a rounding error in a new car market that moves 17 million units a year in North America, and in a fleet of over 250 million cars on the road today.
  2. Among the first 10,000 buyers, or the first 10,000 users of an AV service like Uber, will be people who use the cars in ways that frighten people, create news, and generate demands for regulation. It could be a confused 88-year-old who gets in a car in Kansas and inadvertently drives to Times Square. Or it could be a McVeigh type seeking to create real damage.
  3. After the first security event involving an AV, production of new AVs and use of the AVs already on the road will be stopped, reminiscent of 9/11. Every level of government, from your city’s taxi commission to the federal Department of Transportation, will want to get involved. The ground stop might last well past a year. The extreme novelty of the risks and challenges to be addressed will make this policy response more difficult than the local policy response to the rise of Uber and Lyft, and more challenging than the security response to 9/11. America created an entire new Cabinet level bureaucracy, the Department of Homeland Security, to address 9/11. We could expect a response similar in scale to the security threats posed by AVs.
  4. Sales will resume at some point. After that, market share will climb at a rate faster than the share gains for hybrid cars. We might reasonably expect 25% market share of new vehicle sales after ten years, and over 75% after 15 or 20 years. An adoption curve this fast would be roughly comparable to recent innovations like cell phones or DVD players, which were much easier to deploy than AVs will be.
  5. At that pace, it will take more than 30 years for the full benefits of AVs to diffuse into the economy. A protracted, generation-long deployment phase for an expensive, capital intensive new technology is highly congruent with past examples.
  1. We are not even in the installation phase yet, though we can glimpse it.
  2. During the installation phase, we will face significant security risks inherent to AVs that will be difficult to address.
  3. The government is likely to overreact to these risks.
  4. Once past the security risks, the low cost and high benefits of AVs will lead to much higher adoption, and many more miles travelled (by cars with humans in them, and without humans in them) than anyone is assuming today.
  5. The increase in VMT will have very few externalities associated with it, because the externalities are exclusively associated with human drivers and internal combustion engines.

Value investor and occasional investor in startups. Board of directors @SCScholars. If I mention a ticker, I have no position.

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Alex Rubalcava

Alex Rubalcava

Value investor and occasional investor in startups. Board of directors @SCScholars. If I mention a ticker, I have no position.

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