Ripple Effect: Implications of Autonomous Cars on Society, Markets, and the Environment

Subscribe to The RSS Feed

Innovation is good. If you disagree, consider the stagnation of our world without it. But with innovation comes implications, ripple effects yielding unintended consequences. Autonomous cars – not long ago considered a theoretical pipedream – falls in this category. First launched with tremendous promise, the concept seems to have rebounded after a couple of years of intense scrutiny. Now it appears that every car company has something in its pipeline, or is experimenting with the concept at various levels of market-readiness.

No longer a novelty, we’re getting more and more used to the idea: self-driving cars are becoming less of a futuristic concept, and more of an imminent reality. Arguably, driverless cars would already be a reality if they didn’t have to deal with the unpredictability of human drivers and pedestrians: if all cars were self-driven, they would probably be able to negotiate traffic more efficiently than any combination of human and automated drivers.

Everyone who has to drive (I am purposely excluding those who want to drive) is excited about the possibility of having the car take over the wheel and deal with the rush hour, thank you very much.

But we don’t always take a look at the extended impact of driverless cars beyond the fact that we could read the news, catch up on our series, or check our social media on our way to work every day.

Of course we can anticipate that taxi and truck drivers, some delivery drivers, mail trucks, even garbage trucks, will be affected. After all, they all follow relatively predictable routes that require little interaction with humans. 

But let’s take this a step (or two or three) further: imagine a future where all (or most) cars are self-driven:

  • Our attachment to the car would be greatly reduced: cars will become this fungible commodity that we rent rather than own. Think Transportation As A Service (TAAS) – like Uber minus the drivers. Audi has been experimenting with this concept since 2016, and there is an independent thinktank that produced a very interesting report in 2017, with predictions on how this development might impact many industries, markets, and other economic variables, including:
    • Automobile manufacturing industry will suffer, especially combustion engines (fewer cars, being used more intensively, will render the combustion engines no longer viable, since electrical vehicles are far cheaper to maintain). Jobs will be lost there.
    • With such drastic decline in the number of automobiles manufactured, the oil industry will also suffer. A drop in the demand for oil will effect a general disruption throughout the industry’s entire value chain. This includes a shift away from the geopolitical epicenter of oil-producing nations and toward those producing other natural resources.
    • This otherwise ominous scenario is not without some good news: transportation cost savings will translate into increased disposable income, and society will benefit from reduced carbon emissions from the transportation sector.
  • For those who don’t even own a car, is there need for a garage? Consider the impact on how we allocate the space in our houses, and on the future of the self-storage industry.
  • Disruption of the car value chain: reduced car ownership will serve as the death knell for dealerships, service stations, car washes, car insurance, etc. More likely, it would be the big companies that own fleets of cars that would buy, maintain, and insure the cars, rather than the final users.
  • Car utilization patterns will also be completely revolutionized: if you use your car primarily for your daily commute, you’re probably not using it more than a couple hours a day. The rest of the time the car is idle, either parked in your garage, or in a lot near your workplace. Imagine instead the efficiency of a publicly owned fleet of (almost) constantly moving cars, offering a just-in-time approach that would actually be required by the Transportation-As-A-Service approach. Such a paradigm shift would also have an impact on parking facilities.
  • During the baby boom era of the 1950s and 60s, the ubiquitous nature of the automobile played a critical role in the creation of the American suburb. The ease of travel provided by the driverless car could allow even greater suburban expansion, yielding a commute beyond what we experience today, thereby completely transforming the value of real estate.
  • If we can safely entrust driving to our cars, combined with the remote workplace, our car becomes our workplace. It wouldn’t be unthinkable that someone would have a workday composed of 4 hours of self-driving commute, and 4 hours of in-person meetings. This would effectively extend the radius of what is considered a reasonable commute, with similar impact on the radius of accessible labor markets. The implications are vast and force us to think in paradigm-shifting ways about the workplace – and the worker – of the future.
  • Take it even further: nomadic workers who spend their night sleeping in the vehicle that will bring them to their next destination. After all, companies like Cabin are already changing the way we conduct travel by bus.

The question remains: Do we give enough credit to the impact one innovation can generate? In any case, it’s going to be an interesting ride.