Written by Chelsea Virga
It has often been said “if you want something right, do it yourself.” However, this old adage may not continue to ring true in a time where consumer interest has spurred self-driving cars to become increasingly prevalent in the transportation sector. Industry experts classify vehicle automation on a scale of 5 levels. Currently, industry technology has allowed for automobiles to be manufactured on either level 3 (conditional automation in which the driver must remain vigilant in control) or level 4 (highly functional automation under most, but not all, conditions).
There are a multitude of players in the self-driving space right now, and each firm is fiercely exerting efforts to become the first major successful market entrant. Echoing the sentiment “bigger is better,” recent industry developments in the self-driving field have been focused on commercial trucking and semi-vehicles, rather than solely passenger utilized automobiles. About a week ago, Tesla declared a prototype on all-electric semi-vehicles to haul cargo. Days later, Waymo, subsidiary of Google/Alphabet, launched its pilot self-driving commercial trucking program. GM still maintains that its firm’s unique core competency is its ability to exclusively manufacture, sell, and also offer driverless ride-sharing services. Each firm is fully gearing up in attempt to win the race to become the first dominant entrant into the self-operating transportation industry.
Such a revolution will not only directly affect the manufacturing and service jobs in the automotive industry, but will also inevitably disrupt more detached facets of the community. Such innovative technology will benefit society in aspects such as safety and the environment; however, it is important to note the revolution will reduce demand for a plethora of service jobs and expose society to novel risks. Let’s explore the multitude of ways in which our society will be impacted by these new vehicles...
The transformation of the automotive industry will do wonders to deliver improved safety. The cause of around 90% of automotive accidents can be attributed to human error. Sensor technology and high-speed algorithmic traffic detection systems will decrease such devastating wreckage statistics. In turn, there will be decreased need for police service and regulatory forces for drunk driving, speeding, and parking violations.
However, the elimination of these issues may only allow for alternate conflicts to pop up in their place. Increased reliance on technology will expand the transportation industry’s exposure to hacking and distribution of data to unsecure sources. Historically, insurance firms have polished models for quantifying risk involved with automotive accidents and related fatalities, but will now have a steep learning curve to conquer in addressing the cyber security issues that will be faced as automotive systems and technology increasingly intertwine. According to Gresham College IT Professor Marty Thomas, “pricing the risk of hacking is a complete mystery,” but still a serious concern as exploitation by criminals could affect thousands of cars in a single day and put insurers out of business.”
The transformation in the automotive and trucking industry is expected to include a transition from fuel-powered to electric-powered vehicles. While this may be a short-term detriment to the federal government in terms of a reduction from fuel tax revenues, such a green switch will champion a victory for the environment. However, the reduction in society’s use of fossil fuels will be followed by an increased demand for electric batteries and in turn mining for elements such as cobalt. The global lithium-ion battery market is expected to double to $75 billion dollars in the next seven years. Furthermore, innovation in the self-driving space will make the days of traditional parking garages mostly obsolete. The U.S. currently has about 144 billion square feet of total parking, and as this space is converted into other uses there will be less man-made concrete pavement and more room for natural greenery.
In general, the transition into electronic vehicles will result in increased productivity through all sectors. Less time spent focused on controlling transportation will allow for increased employee productivity to and from work destinations. More recreational time in the car is also expected to create substantial inflows in revenue for media companies due to increased advertising consumption; a report by McKinsey and Company determined each additional minute the masses spent on the Internet could generate $5.6 billion annually.
In terms of the transportation sector, there will be reduced demand for service jobs, such as taxi drivers and U-Haul drivers, followed by increased need for employees in software coding, engineering, and manufacturing. Tesla has already released a semi-electric truck with autopilot features set to deliver meaningful cost savings for supply chain management, seeing as around 33% of costs in the $7 billion dollar US trucking industry is drivers’ wages. After just the next ten years, it is estimated electronics will account for a whopping 50% of automobile manufacturing costs, rather than just the 33% it sits around today.
This will ultimately reduce input costs and increase profitability for all companies utilizing logistics and supply chain management, but particularly impact automobile manufacturers and ride-sharing firms. GM President Don Ammann has stated each vehicle currently makes around $30,000 in lifetime profits; a firm entry into driver-less vehicles and ridesharing could allow for this figure to increase to hundreds of thousands of dollars. While ride-sharing has been prevalent in a society for years now, GM CFO Stevens notes the automation of such vehicles will increase margins substantially, eventually eliminating 40% of current ride-sharing service costs.
It will be extremely interesting to observe the plethora implications self-driving vehicles will have on our society. What are your feelings on the robo-car revolution? Are you resistant to accept such new unconventional technology or are along for the innovative ride?