Engaged in conversation with colleagues about the future of transport today, I got talking about the impact that autonomous vehicles will have on the advertising industry. If that seems like a strange leap to make, bear with me. In fact, if you think that fleets of driverless cars only endanger the jobs of taxi drivers, you’ll be surprised to realise that your bottom lines might be in danger as well, whatever your business.
To explain who is in the firing line, I want to start by explaining three key benefits of autonomous fleets— all being profoundly important improvements for human safety and productivity — before describing how each of those benefits is going to completely reshape our economy.
Road fatalities will be all but stamped out
Right now deaths on roads are high. Staggeringly high. In the US, the number of fatalities that occur on roads is in the vicinity of 40,000 every year. It’s right up there with influenza.
Seat belts, traction control, brake assist and many other automotive innovations have seen our roads get progressively safer. Yet, fundamentally, road fatalities are caused by humans. A report from the Eno Center for Transportation says that up to 90% of crashes are the result of human errors, rather than equipment or infrastructure failures.
Relinquishing control to computers that don’t speed, don’t get distracted and can see in 360 degrees at all times has already been demonstrated to be safer than driving yourself. Google driverless cars have been involved in over a dozen incidents in their 6 years and 1.5 million kilometres of operation, all of which were the fault of a human driver.
That same report from Eno expects that road incidents will be cut to 1% of current levels, while Volvo has even boldly claimed that after 2020 no one will die in one of their cars ever again, partly thanks to their plans for autonomous operation.
This outcome is obviously a very good thing, but what will this heightened level of road safety mean for the economy?
- Car insurance: worth $198 billion in the US, the industry will need to brace itself for a massive downscale as a consequence of less car ownership and less incidents in them.
- Medical practices: just in the US, a reduction of road incidents of this scale will see emergency rooms attending to millions fewer patients every year and hospitals would see many hundreds of thousands fewer people staying overnight. Then there’s the matter of reduced GPs visits and few scripts for prescription drugs.
- Health insurance: as car-related injuries plummet, so will health insurer revenue, with the cost of cover shifting significantly downward.
- Crash repairers: panel beaters won’t have much to do when incidents on the roads have been close to eliminated, becoming one of many small business types resigned to obsolescence.
- Law practices: personal-injury lawyers will see car-related cases evaporate, as incidents and subsequent injuries on the road patter out.
- Government: road offences will dramatically plummet, resulting in reduced revenue generation from fines. Autonomous cars don’t speed, don’t drink-drive, and don’t park illegally.
Road transport will be incredibly cheap and accessible
Owning a car is really expensive. The American Automobile Association estimates that all-inclusive, it costs an average of $10,000 annually to run a car on the road. Taxis are a far-too-expensive alternative. UberX is cheaper, but still couldn’t be used as a cost-effective total replacement today. Looking ahead, what if that UberX didn’t need to pay a driver, insurance costs became insignificant, and cars were always close by? Suddenly not owning a vehicle presents a far better financial position for most people, without 2015’s inconveniences of not having your own.
- Car manufacturers: as autonomous fleets rise, car ownership will fall. With fewer consumer customers, car manufacturers will live and die based on their agreements with fleet operators. Dr. Alexander Hars, MD of Inventivio GmbH, has forecast that only 20% of the US population still own a car in 2030 and PricewaterhouseCooper has made an arguably outlandish prediction that the number of cars on US roads will have dipped by an astounding 99% — from 245 million to just 2.4 million — when automobile autonomy has been fully realised.
- Public transport: why walk to the tram stop when a car will pick you up and drop you off for a comparable expense, with just a minute’s notice? A new report from the International Transport Forum bluntly states that “for small and medium-sized cities, it is conceivable that a shared fleet of self-driving vehicles could completely obviate the need for traditional public transport.”
- Hire cars: technically you’ll still be hiring a car amongst autonomous fleets, but traditional hire car companies will cease to exist, at least in their current form.
Traffic congestion will become a thing of the past
When the autonomous car you’re in knows exactly where all of the others are and what their status is, routes can quickly be optimised automatically. Pair that with the ability to accelerate and brake together — like carriages on a train — and you have an extremely efficient network of vehicles that don’t suffer from the “rubber banding” we see when groups of cars take off and slow down now.
Additionally, ride-sharing will finally become efficient and practical. Car pooling has always been a highly economical and environmentally friendly way of commuting, but soon autonomous cars will be able to respond to pick-up requests along dynamic routes, generated by rider demand, with extreme effectiveness.
- Oil: putting the drastic reduction in car numbers aside, even the autonomous cars remaining will consume less fuel by way of efficient routing and operation, including lowering wind resistance with perfect following distances. In reality they’ll use no fuel by 2030, as most cars will be electric, although in a similar fashion they’ll use less of their battery than a human counterpart would.
- Aftermarket parts and service: there will be fewer individuals needing to maintain cars in the future. For those that do, autonomous cars will apply less mechanical and tire wear than humans with every manoeuvre, prolonging periods between services.
- Highway stop establishments: autonomous trucks don’t need to rest, while humans inside driverless cars can recline back and get some shuteye as they continue on their automated journey.
- Construction: autonomous cars will be using existing roads far more effectively than human operated ones, ending the need for most future widening, expansion and new road projects.
- Parking: somewhere to store your car at the end of a drive into town is big business, a $100 billion industry in the US alone. With far fewer cars and far fewer of those needing to remain parked in dense metropolitan settings, the car park as we know it today becomes obsolete.
Beyond those knock-on effects are sure to be many more, including my initial remark about an industry seemingly far removed: advertising. Yet, as fewer people gather in transport hubs such as train stations and less people pay attention to roadside out-of-home adverts, even advertising will need to re-position itself to cater for this change in behaviour.
Amidst these changes are vast opportunities for money to be made, not just lost, which you will have probably have begun to imagine while reading this article. However, who makes money and who loses money in the future that has been described, will begin with the decisions that business leaders make today.