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What will self-driving cars do to your world?

Is it time to discuss self-driving cars?

Five years ago, I started telling my clients to start thinking about autonomous vehicles. At the time, I admit that I thought I was engaging in a bit of science fiction. Whilst it was important to imagine the consequences of a world in which vehicles drove themselves, in 2010 it was difficult to envisage the circumstances in which such a phenomenon became commonplace.

I trust you’re not too sceptical anymore?

Consider what we know in 2015. Google, an early entrant in this endeavour, has been testing autonomous vehicles in the US for several years now and has already clocked more than 2 million miles. Volvo and Audi have been making great strides in safety and human-interface testing. Mercedes, Germany’s oldest carmaker is planning to introduce a large fleet of driverless limousines that will be available to hire, not own. Toyota, a little late to this party, announced a US$ 50 million budget for autonomous vehicle research. Both Google and Tesla predict that fully autonomous cars will be available to the public by 2020. And now Apple, that great usurper of traditional industries and products, has entered the fray for the car of the future.

Japan has announced testing of self-driving taxis, and hopes to have thousands in play for the 2020 Tokyo Olympics. Singapore has indicated that the crowded island-state expects its transportation future to centre on driverless buses and trucks.

A year ago on this page, I warned about the “Uber effect.” Since then Uber has made a dramatic entry into Nairobi and swept all before it. Nowadays I discuss the Uber effect with many taxi drivers, Uber and non-Uber. The latter are a worried bunch. Many have given up and signed up with Uber. I usually urge them to go further and think beyond being a driver. There’s no future there. Uber does not plan to be using drivers for too long: it thinks a self-driving car could supplant as many as 10 ordinary cars, and reduce peak-time traffic in cities by two-thirds.

Are you paying attention now? If you are, let’s consider a world in which autonomous vehicles become the norm, rather than a wild idea. What would such a world look like? Let’s begin with car ownership. You’re thinking you’ll own a car that lets you sit back-left, no driver needed, right? Think again. Cars are funny things to own: they are the second-most expensive asset owned by most car-owners, require an ongoing spend of thousands of dollars every year, and yet they only go down in value and are used less than 5 per cent of the time on average.

If a nice car can rock up quickly at your gate to take you places, summoned by a couple of clicks on your phone, how many people would still want to own cars? Perhaps you feel the trip costs would be prohibitive? No, 70 per cent or more of the cost of a taxi ride pertains to human labour. What happens when you take out the labour element? A recent Columbia University study suggested that with a fleet of just 9,000 autonomous cars, Uber could replace every taxi cab in New York City – and that passengers would wait an average of 36 seconds for a ride that costs about $0.50 per mile.

Certainly, driving is not just about transporting yourself from one point to another. For some people, driving gives intrinsic pleasure: of handling a powerful machine; of luxuriating in a private swanky interior; of making heads turn. Being a “Kalasinga”, I understand those feelings. A small group of petrolheads will always want to own cars and drive them, for the sheer pleasure of doing so. But how many such people are there? There is no doubt in my mind: when the economics and convenience of car-sharing change dramatically, so will car ownership.

What I’ve described today is just the beginning of the change we are about to see. Industries that have little to do with today’s vehicles are also going to find themselves bushwhacked. Ponder on what you’ve read here for a week, and I’ll see you next Sunday for the rest of the story.

Update: Toyota has subsequently indicated it will spend $1 billion on artificial intelligence and robotics for its vehicles.

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