Have you started thinking about the impact of self-driving cars?

Enrique Dans
May 31, 2016 · 3 min read

An article in Mashable, “Own, share, or subscribe: car ownership in the self-driving era”, foresees a future in which autonomous cars dominate the market — and if Elon Musk, founder of Tesla, is correct, human-driven cars will be banned.

Google cars are already trundling about Mountain View (CA), Austin (TX), Kirkland (WA), and Phoenix (AZ), while Uber self-driving vehicles are being road tested in Pittsburgh, the Volvo XC70 is ready for production and will be on the market in 2017, and there are any number of other prototypes on the way. In other words, it really does look like the self-driving car will be on our roads by 2020. Some forecasters predict up to ten million of them on the road by then.

According to Mashable, there will be five ownership options in this new age of self-driving vehicles:

  1. Private ownership. This will be the preserve of the very rich, who will park their car 99 percent of the time.
  2. Multiple ownership. You pay on the basis that you use the vehicle, which would be leased by a company to a group of people.
  3. Car sharing. You own the vehicle, but rent it out when you don’t need it.
  4. Mobility services. You pay a monthly amount to guarantee availability when you need it, via an app. An efficient and cheap solution, and better than public transport.
  5. Pay as you go. Companies like Uber or Lyft will have fleets of their own vehicles, unlike at present.

Then there is the question of insurance. Companies will deal directly with the manufacturer, rather than the owner, who after all, will never drive the car. This will bring down the cost of insurance, given the reliability and safety of self-driving cars. Google’s vehicle has already built up 40 years of experience with virtually no accidents. At the same time insurers will have little negotiating room with manufacturers producing millions of vehicles.

It is also possible that car manufacturers themselves decide to offer an all-inclusive price, taking insurance into account.

Next up is the impact on the car industry itself. After decades of benefitting from the private ownership model, with brutal devaluation on vehicles, as well as hefty service fees and rapid turnover, car makers now face reconversion along Tesla’s vertical integration model, meaning no more dealers or workshops.

Electrically powered vehicles are much more reliable than the delicate and complex internal combustion engine, meaning that there will be little money in the repair game. Instead, carmakers will seek a more active role in exploiting their vehicles, in the same way that Daimler has with Car2go or BMW with DriveNow, either alone or with car hire firms who would share part of the management and operational costs and expertise.

Banks and loan companies will lose out in the self-driving car future, given that it will be a tiny minority of the population that buys a vehicle for their own, sole, exclusive use.

And finally, the impact on our cities. In general, a substantial reduction in the total number of vehicles in circulation will mean less cars on the road, creating more space for public transport or bikes. Also we will no longer need as many car parks or parking spaces as now, thus freeing up more room. We should also remember that self-driving cars are far more pedestrian and bike friendly, and of course, perhaps most importantly, as they will be mostly electrically powered, our cities will be quieter and cleaner, and oriented toward people rather than cars.

There will doubtless be other repercussions, but we can already see that the changes coming our way will be drastic, and what’s more, they’re just around the corner.


(En español, aquí)

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

Enrique Dans

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Professor of Innovation at IE Business School and blogger at enriquedans.com

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)