Investment Insight: The rise of self-driving cars
Nick Ryder, NAB Private Wealth Investment Strategist, provides insights into the emerging self-driving car industry.
Self-driving cars are vehicles capable of sensing their surroundings using advanced control sensors like radar, laser rangefinders, satellite positioning and computer vision to interpret road signage and navigate to the desired destination. Also referred to as ‘autonomous’ or ‘driverless’ cars, their rise has wider implications for road congestion and productivity.
Currently, the only commercially available self-driving vehicles are open-air shuttles for pedestrian zones operating at 20 km/h. However, work on commercial vehicles is underway by companies including Google, Tesla and Volvo. Some companies aim to sell vehicles with an advanced form of cruise control/autopilot that will keep cars in a particular lane and control speed, braking and distance (in relation to the car in front) while companies like Google are working towards fully automated cars without a steering wheel and brake.
In the United States, four states, including California, have already passed laws to permit driverless cars. In July 2015, Google announced that its fleet of 23 driverless cars had already driven more than 1.6 million kilometres encountering 200,000 stop signs, 600,000 traffic lights and 180 million other vehicles.
The cars had been involved in 14 minor traffic accidents on public roads, which Google claimed were either the fault of another vehicle or, in one instance, where the vehicle was being manually driven by an employee. So far, the Google vehicles have not been tested in heavy rain or snow, due to safety concerns, and current technology is unable to spot some potholes, identify when rubbish can be driven over rather than veered around and discern when police officers are signalling the car to stop. However, Google expects to resolve these issues within the next few years.
On-demand mobility is used to describe ride-sharing, car-sharing, bike-sharing and goods delivery services (which can include pilotless drones) that involve moving people, goods or services on-demand, potentially using a phone application, reducing the need to own a personal vehicle or delivery truck. According to The Economist, car-sharing alone will reduce car ownership at an estimated rate of one shared vehicle for every 15 owned vehicles. In India, only 5% of the population owns a vehicle and yet roads are already gridlocked and the same is happening in other countries such as China which will push people, particularly “millennials”, towards on-demand mobility services.
What it all means
The benefits of this transport technology mean our relationships with our cars will change. Ride sharing firm Uber’s CEO was recently reported as saying that if electric car company, Tesla, can develop a fully-autonomous electric car, Uber would buy its entire 2020 forecast production run of 500,000 vehicles. If this vision of the future plays out, it will result in higher driver safety with fewer deaths, reduce the number of cars on the road, as well as associated infrastructure requirements.
Other benefits include cutting travel times and allowing greater productivity as people can work while being driven around. Google employees already work on their laptops while being driven in their Google autonomous test cars. In addition, cost per kilometre travelled will fall. People will not need to own a car if can order a driverless car on their phone which will turn up in less than one minute. And, the cost will be cheaper as they won’t need to pay a human driver, while registration and insurance premiums will be lower as autonomous cars have fewer accidents. If they are also electric cars, then they are also cheaper per kilometre than petrol-driven cars.