The Coming Impact of Driverless Cars

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One major trend several futurists continue to talk about, and you also see car companies and technology companies focusing billions of dollars of resources and investment toward, is driverless cars. Some believe that, as early as next year, we will begin to see driverless cars in several key cities. The trend will start on a limited basis and grow each year from there as pricing continues to drop (Moore’s Law) and technology breakthroughs reduce costs.

The first market that will be impacted by driverless cars will be the taxi industry. Uber’s and Lyft’s business models call for “high utilization” that creates efficiencies and profitability quickly. Here are some interesting facts and trends some “experts” are predicting will be happening by 2030:

  • One self-driving car will replace 30 traditionally own cars.
  • Driverless cars, because of utilization, will have a shorter life cycle (one year vs. 15 years today).
  • Fleet owner and technology companies will be big influencers on design and function of driveless cars.
  • More than half the driverless cars will be single passenger cars.
  • Driverless cars will threaten up to 40% of the traditional tax strams for local and state gevernments.
  • Retail businesses associated with car and personal ownership of cars will shrink. Currently 10% of the retail market is tied to to automobile up-keep and care.
  • Police departments will get smaller because there will be fewer vehicles on the road and there will be less need for those officers to work traffic (traffic enforcement and control). Think reduction in DUIs, speeding tickets and accidents. Driverless cars also mean lost revenues from tickets for local governments.
  • There will be a decline in health care costs (estimated %500 billion) related to traffic accidents. Each year over 38,000 people are killed in traffic accidents and another 4 million are injured. What is not clear is how deep the reduction will actually be because of the mix of driverless cars and human operated cars. The futurists are predicting big savings.
  • There will be a remodeling boom because fewer people will own cars and existing homes with garages will need conversion into more living space.
  • There will be a huge redevelopment effort with parking lots because fewer parking spaces will be needed for retail space.
  • There will be a huge redevelopment effort with parking lots because fewer parking spaces will be needed for retail space.
  • Transportaion costs will shrink. Currently, AAA estimates that the average person spends $8,698 dollars a year ($725 per month) on car maintenance and operations if they drive the average 15,00 miles a year. Some experts predict the average cost for driverless cars could be reduced to as little as $350 per month.
  • By 2040, 25% of the jobs around the world could be eliminated by driverless cars.
  • new market segments will develop because of the driverless cars. Today, a person can order Uber Lux for an upscale car. Markets have never been one size fits all and it will be the same with driverless cars.

Last week I wrote about change and the five stages of change. Change brings chaos and uncertainty, but it also brings opportunity. Remember, people were predicting the end of banking with the development of ATMs. Today there are more people in banking than there were in 1978 when ATMs hit the market. Remember to think of the opportunities that come with change.

See you in Mcallen!

As Featured in the Monitor October 22, 2017