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April 29, 2013

Driverless Cars: The Coming Green Transportation Revolution

CC_May2013_Driverless-CarsAnalyst Insight by Damian Shore, Contributing Analyst, Euromonitor International

Long the stuff of science fiction, the self-driving car is an emerging technology that has the potential to deliver huge environmental benefits. These include reducing levels of car ownership, lowering energy demand and reducing the amount of urban space required for roads and parking spaces. This technology is on the verge of becoming a viable form of personal mobility, and if it does, road travel will never be the same again. When a real revolution is in prospect, it can be difficult to distinguish between the signal and the noise. Unlike adding an extra blade to your razor, self-driving or driverless cars are the real deal.

Possession of a Passenger Car in selected countries: 2012

Possession of Passenger Cars in Selected Countries 2012

Source: Euromonitor International data from trade sources/national statistics

How it will work

It’s 6pm and you are finished work for the day. You open up an app on your smartphone and request a pick-up. A driverless car arrives five minutes later, you get in, say “home” and it drops you off, before moving on to its next job. No different from a taxi you might say? But imagine a city with thousands of these cars at your beck-and-call and paying a fixed per-km charge (or even a fixed annual fee) that is much lower than a taxi fare because the labour cost involved is effectively zero (sorry, taxi drivers!)

Google has been at the forefront in the development of this technology and has test vehicles on the road of several US states. According to Audi’s Wolfgang Duerheimer, “autonomous” cars could be a daily reality “within five to eight years.”

What are the potential benefits?

Driverless cars would make car ownership much less attractive by virtually eliminating the convenience advantage they currently enjoy. Consumers effectively “share” driverless cars by only having one when they need it. Reduced automotive demand means huge savings in terms of energy and materials, not to mention reduced pollution.

Meanwhile, the amount of urban space given over to roads and parking spaces could also be reduced. Perhaps most importantly of all, hundreds of thousands of lives (and substantial medical costs) would be saved by eliminating human error – the cause of most road accidents.

Gaining consumer trust is crucial

But what about computer error you may cry? That will take time, but if the technology proves to be robust (and the early signs are very promising), consumer trust will gradually be gained. After all, consumers already largely put their lives in the hands of computers every time they board a plane.

Nonetheless, legal changes are required to legalise driverless cars, and some interest groups (particularly car manufacturers worried about going the way of Kodak) could exert political pressure to delay their implementation. However, in a globalised market economy, the economic advantages of driverless will inevitably win out in the long run.

Once consumers become accustomed to driverless cars and their manifold advantages are demonstrated, they are likely to be spread rapidly: A survey conducted by JD Power and Associates in the USA during early 2012 found that 20% of vehicle owners "definitely would" or "probably would" purchase it as a feature in their next vehicle if it cost US$3,000. When real revolutions happen, they happen fast. After all, beyond a tiny coven of geeks, who had heard of the internet 20 years ago? 

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