Image: Wikimedia Commons
Driverless cars are coming, sometime. They’re going to be safer and more reliable than traditional cars and they’re going to make Google and several other manufacturers very, very rich. The only wreckage they’re going to leave behind is going to be the corpses of the scores of companies who make a killing on car accidents.
It’s no secret that computers are already much better drivers than humans. They don’t drive drunk, they don’t text, they don’t forget where they’re going or daydream. They might not reduce accidents by as much as 90 percent, as Google has suggested, but once driverless cars get any sort of real market share, the roads are definitely going to be safer.
“The immediate losers are the people who depend on accidents for their businesses,” Chunka Mui, a business consultant and author said at a Council on Foreign Relations discussion on the economic future of driverless cars Wednesday.
Auto insurers, which collect more than $200 billion in premiums each year in the United States, would initially see profits rise as accidents declined and payments to customers dropped but would eventually see something like 90 percent of premiums disappear. Health insurers would also have to give up revenue as car-related injuries plummeted. Governments would lose fines, because cars would obey all traffic laws, but police forces would need fewer officers on the road, and prisons would need less capacity as drunk drivers kept their freedom. Utilities would lose revenue because traffic lights would no longer be needed, and highways and streets wouldn’t need to be lit—after all, the cars can see in the dark. Parking lots, which cover a third of the ground in some cities, would pretty much disappear, while freeing land and reducing property values. And so on.
Even if all of that doesn’t happen, it’s important to consider. Driverless cars are a disruptive technology not just because they allow you to read or watch TV while a robot does the driving for you, but because car sharing instantly becomes more feasible, auto repair shops become less necessary, people manning the phones at insurance companies become laid off, long-haul truck drivers become obsolete. Instead of losing their jobs to cheaper labor overseas, they’ll lose them because they’re simply not necessary anymore.
“This is different than outsourcing. We’re not just talking about cost savings, it may come down to us choosing between lives and jobs. Not dollars and jobs, but lives and jobs,” Mui said. “I think you have to choose the lives.”
Legislators and policy makers are going to have to make some tough decisions as it becomes clear that regulation, not technology—or even price—is really the biggest hurdle standing between driverless cars and widespread adoption. Sure, there are still huge technological humps to get over, and driverless cars are still very expensive, but as with everything else in technology, the price is quickly coming down as the scale goes up.
Insurers are paying attention. A 2013 analysis by PricewaterhouseCoopers suggested that the company thinks driverless cars won’t impact their bottom line anytime soon, but that it will, eventually.
“At least for the foreseeable future, we think that business will continue more or less as normal for the industry,” the report says. “Self-driving vehicles have the potential to significantly disrupt the traditional auto insurance industry. While the vehicles currently are on the roads, their widespread use—as well as the infrastructure to support them—is not likely to become a reality for many years.”
That’s the key point. Right now, states and cities are tentative to become the first to open their doors to the kind of mass testing that automated cars need before they become commonplace. It’s one thing to have a couple Google driverless cars wandering around; it’s another to have them make up a significant percentage of what’s on the road. And the United States is quickly losing its lead in the space (Nissan's driverless car is already street legal in Japan).
“Right now, some of the people working at MIT on driverless cars aren’t even working in Massachusetts. They’re in Singapore, where they’ve set up a part of it to test autonomous cars in an urban environment,” said Erik Brynjolfsson, director of the Massachusetts Institute of Technology Center for Digital Business. “There’s a difference in liability there—they don’t have the same kind of democracy we have, and they’re able to push forward with some ideas that would be much harder to do in the United States.”
If it’s going to happen in the United States first, the frontrunner appears to be Florida, where driverless car manufacturers and legislators are in early talks to set up driverless car testing sites. But there’s still a lot of things that could go wrong, few of which have anything to do with the technology.
“There's a thousand ways where this could get derailed. You have entrenched business interests for whom this is a very bad day,” Mui said. “You have auto dealers with a lot of local political power, you have truckers and cab drivers and other entrenched interests that could delay this by throwing up regulatory issues.”