How Self-Driving Cars Will Change Cities Forever

The truth is that we (humans) are terrible drivers. Louis CK explains how it brings out the worst in us:

Replacing humans with software will not only tamper our anger, it also represents lives saved and huge profits for businesses. This is why everyone and their mom is getting into the business of self-driving cars:

The majority of the impacts are fairly well known:

• 15,000+ lives saved per year in United States [1]
• $2+ billion saved per year in costs from crashes [1]
• $153,000,000+ less fuel consumption / year (35% reduction) [1]
• Eliminate truck drivers (driving down cost & improving safety)
• Huge reduction in traffic (possibly to zero)

Reducing traffic will be massive — here’s a good explanation of why self-driving cars will do this:

Consider what would happen if it takes the same time to get to the beach 50 miles out as being 10 miles out today. When self-driving ubers are the norm, your accessibility to nightlife, activities & jobs will change massively.

So what does this “accessibility change” mean for my commute?

Using crowd-sourced data from Waze, I’ve put together a simple analysis of what self-driving Ubers will do to the commute between Santa Monica, CA and San Diego, CA when we don’t have traffic. As well, once self-driving cars prove themselves safer & with no traffic, we’ll be able to increase the speed limits. Overall, the potential impact of that future is four hours in saved commuting time.

A= represents the potential worst case if there’s rush hour & an accident happens along the way

D = represents the potential for self-driving cars (no traffic + increased speed limits due to improved overall safety)

Data based on crowd-sourced data from Waze (see below)

On top of this, you’ll spend your time in the back seat reading work emails & watching hilarious clips from Larry David:

So what does this mean?

With this increased accessibility, the most surprising impact will be on housing.

This accessibility change means that we’ll be comfortable living farther away from nightlife, activities & our jobs. And as this happens, the demand for highly clustered locations will decrease — meaning housing prices will drop and smaller communities will be built outside major cities.

Given that the average rent in Los Angeles is $1400 / month (~$17k /year) [2], this change may decrease rent by as much as 50% — effectively giving back $8,000+ to each person per year (meaning a 14% effective raise in standard of living).
(Given $57k / year [3], effective tax rate of 15.2% [4], $49k calculated)

Housing prices by location in Los Angeles County

As well, this will lead to huge opportunities to re-think how cities should be built from scratch. Y-combinator recently launched a research program called “New Cities” to explore this very subject:

It’s more important than ever to think about how to [make better cities]. The need for new supply continues to increase significantly. Many constraints related to where cities should be located (e.g. near rivers for trade) have changed. We now have major technologies such as smart grids, autonomous vehicles, etc. The internet itself allows for participation never before possible. Also, housing prices in many cities have become untenable and we need more housing in places people want to live. — Adora Cheung, Sam Altman

It’s time for more entrepreneurs to re-think cities.

This accessibility change of accessibility will improve our lives and increase our standard of living. Especially for the lower and middle class, the effect of decreased transportation and housing costs will be pretty massive.

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[1]http://www.auvsi.org/auvsiresources/knowledge/dailylossesinaworldwithoutselfdrivingcars
[2]https://www.rentjungle.com/average-rent-in-los-angeles-rent-trends/
[3]http://www.healthypasadena.org/index.php?module=DemographicData&func=ddview&varid=2406&varset=1&localeId=131318&ddloc=&regcomp=1&sregcomp=1&levels=-1&action=Refresh&ve=tab&pct=1
[4]http://taxfoundation.org/blog/how-much-do-people-pay-taxes