>Just imagine. [Driverless cars] could, for a start, save the motor industry from stagnation...; and since [cars] would be able to drop off their passengers and drive away, the lack of parking spaces in town might not matter so much.
Strange that the Economist would catch the diminished need for parking spaces, but miss the real economic impact of driverless cars: many fewer cars would be needed as utilization rates rise far above the current ~4-7%[1]. This would cause a total collapse of the car industry, not save it as suggested by the article.
[1] 7500-15000 miles at an average of 25MPH is 300-600 hours a year or or about 4-7% utilization.
Is utilization over time important? If we assume that people will still travel the same number of miles[1], then while there will be fewer cars on the road at any given moment, they will wear out more quickly as they are utilized more heavily.
Another way of thinking of it is that there is demand for a certain number of vehicle-miles per year. In the aggregate over the long term, it is no different if we buy 5 cars, each of which lasts 5 years, or if we buy one car every year for 5 years as the old one wears out[2].
Higher utilization should make fleet replacement a smoother function over time (whereas now, you can see dips and spikes as people decide when to put capital in their cars based on factors like the overall health of the economy).
[1] It is not clear what the impact of driverless cars would be on mileage. It would eliminate some useless trips (e.g., doubled miles for dropping somebody off). But the convenience may mean that people simply use it more.
[2] I'm assuming that wear and replacement time are purely a function of miles traveled. This is not entirely true, as age is a factor, but I think mileage tends to dominate in the average car (i.e., one that is being used, not one having its belts dry-rot over many years of neglect). Companies that maintain car fleets probably have data on this.
It's an old chestnut that buying a salesman's car with lots of miles is a lot better than buying the same vehicle from a housewife that only used it to go shopping and shuttle the kids to school.
Besides, who says that the driverless car isn't more like industrial equipment instead of the current consumer crap, made to go on "forever" to justify its high price?
While designing cars to last longer would increase the weight of some components, for example allowing more metal around the cylinders so that they can be re-bored a number of times, this could be at least partially by having a much reduced burden of crash resistance.
Some things could be alleviated simply by avoiding the maintenance / cost cutting shortcuts used today. For example fitting grease nipples to ball joints and greasing them regularly makes them last a great deal longer than the sealed units which are riveted to swing arms today!
You are missing the obvious: the cars could just as easily go electric and the severe reduction of moving components will already increase their service life dramatically (sans battery replacements depending on how battery technology evolves).
It's easy to forget that durability is a trade off because nobody makes ultra-durable cars. But carmakers do plan for cars to last "only" a few hundred K miles before becoming prohibitively expensive to maintain. It's planned obsolescence, and it's not a conspiracy, just good economics and a consumer taste for new things.
But other vehicles are made to last much longer. why not cars? Also, computer drivers can be programmed to be much gentler on the engines and transmission.
It's possible the incremental cost of a driverless car trip from a shared pool (like zipcar in that respect) would be higher than the cost of driving your own car, due to the fact that when you're not using your personal car it's just sitting around in your driveway collecting rust. That would be an incentive to reduce the number of trips.
By the way, I'm assuming a taxi-like shared car fleet here, where you just get in some car that is available, it takes you where you want to go, and then goes to pick somebody else up afterwards. Without that, you would not have the reduction in number of cars on the road and need for parking.
You are assuming that driverless cars will be just as inexpensive as the typical American car today. That's certainly not true today. For example the Google car has $150K in equipment costs. Sure that might go down in time due to more demand but I doubt it will become literally negligible cost wise. Besides that, there is the added cost of software development, and maintenance. And besides that there is money to be made in selling software for these new cars. Software like up to date datasets or more accurate traffic avoidance heuristics.
1. Optimized traffic flow that driverless gives you would be able to pack more vehicles on the road.
2. If we are treating all cars are like a fleet of autonomous taxis, it doesn't seem really crazy that you could also optimize carpooling where the car picks up other passengers to optimize the trip with respect to where you and they are going.
Yes, you could probably share cars to a greater extent than we do today, but not nearly enough to get the ~20x reduction in the number of cars on the road that the parent suggested.
If you have optimized traffic, you could live further out and the commute wouldn't take any longer, so that could lead to more sprawl. You also would be able to do something while commuting besides watch the road, making the commute more tolerable, which could lead to even more sprawl.
What would be the exact reason that less cars would be needed?
Are you referring to multiple cars in one household becoming superfluous? This would, of course, only be the case if driverless driving would be permitted entirely — I can very well imagine a prolonged transition phase where a human being needs to be able to intervene at all times.
Or are there already plans for automatic car sharing? This could be easily opposed by promoting the opinion that having an own car that is customized to your personal needs and where you can leave your belongings bears an advantage big enough to buy one.
Of course, ecologically, it would be great if both of this would be permitted, but my point is, autonomous cars could be introduced without car manufacturers incurring any immediate losses.
I don't think utilization (without taking into account the number of passangers) is important, as peff pointed out.
What will change demand is that the car occupancy rate will grow. And since one doesn't need to own a car anymore, the number of cars will be reduced.
Bringing together strangers on the same route will get a lot easier in the future. And if one isn't using one's own car but essentially a taxi, we'll see a lot more ride sharing. Especially, if some of the oil price horror scenarios (at least partly) play out.
Right now, the car occupancy rate in the US is around 1.6[1]. Imagine it going up to 2, which is around the rate of some Eastern European countries a couple of years ago[2]. I think it will be even higher.
Another thing to consider is the demand change, since the usage changes (to some degree) and the buyers change (renting companies instead of consumers). If that benefits domestic car manufacturers, idk.
We already have cars that don't need you to drive them: taxis. Where I live the various different competing taxi companies compete to give a pretty high level of service - I can order a cab via an iPhone app or through an IVR system that only requires me to press a single key if I want a taxi there and then - payment is to account (work) or chip-n-pin.
Even with a pretty decent taxi service I still own a car, as do most people I know.
So I suspect that even when cars become completely self-driving we will still generally end up buying the things for possibly less than completely rational reasons.
According to the article, at the end of a 12-hour shift, a driver goes home with $160 after paying $120-$130 to rent the cab & medallion and $8 for credit card processing. There's also gasoline costs, which the article doesn't give a number for, but as a guess, a driver might go through half a tank on a shift for $40, and that's in an inefficient large car with a V8.
So over half of the cost of an NYC taxi is the driver's labor, and a nontrivial portion of the taxi rental goes to pay for the taxi medallion, which has gone up in cost to a million dollars in recent years:
http://www.slate.com/articles/business/moneybox/2012/06/taxi...
The economics of taxi service in the US are largely driven by labor costs as well as regulations that have been perverted to funnel money to a rent-seeking set of license/medallion owners, not the running cost of the motor vehicle.
Why would you think that a self-driving car fleet will have less cost? They will be regulated just like taxis. Including insurance and most importantly medallions. Replacing the drivers will not cut the cost in an industry that creates artificial scarcity.
It will in countries that aren't completely bone-headed about it.
I guess a good measure of how corrupt a particular political environment is will be how long it takes to give in to the overwhelming reasons (ecological, economical and social) to allow the true, very low cost of self-driving cars to have its impact on the taxi industry.
I would be curious which countries those are? Is their a 1st world country that doesn't license their cabs to provide an artificial scarcity? Heck, some cities actually mandate the brand of car that can be used for a cab.
Clearly there are existing regulations that would have to be reformed - criminal record checks for self-driving cabs wouldn't make any sense, for example! What I think (and what I assume swombat means) is that these reforms will be made when self-driving cabs come on the market.
After all, why wouldn't they?
London is one place that doesn't have any limit or medallion system regulating the number of cab drivers - although they do have regulations regarding eyesight, criminal record and route-finding ability.
Some parts of the world don't have such silly laws. Arethuza mentions Edinburgh just has a £2k licence fee. That's a small part of the price and cost of operation of a car, particularly one that's self-driving and on the road 24/7.
At normal cab rates, this would bring in shitloads of money. So people would start cutting the rates. And cutting more. Soon, a £40 cab ride will cost £20... then £10... then £4...
When taking a cab for half an hour costs a couple of quid and the cab is there at the push of a button, you need a car even less (most Londoners already don't have cars).
Once this transformation starts hitting, some cities with politically corrupt systems will still maintain their protectionist laws... but for how long? The ones that keep them longest are de-facto the most corrupt (at least in transport policy/laws).
As far as I can tell, my home town of Edinburgh only has license fees that have to be paid by black cab and private hire companies - about £2000 or so (additional fees to license drivers as well). I can't see any mention of any artificial restrictions on the number of taxis operating.
The majority of the cost of a taxi is the driver. He has to be paid for a day's work, even when he spends most of that day waiting for a fare. No driver, no driver costs.
Also, many regions don't bother with the ridiculous monopoly system of "medallions". I can start a mini-cab firm in my area without any such artificial supply restrictions at all.
Agreed. The car industry would surely know this too. I wonder how the future will unfold; maybe the automakers will end up resisting the self driving car.
They are already building their self destruction with more automatic driving features. The only question is which carmaker wants to pull the trigger first and come home walking with the prize.
Strange that the Economist would catch the diminished need for parking spaces, but miss the real economic impact of driverless cars: many fewer cars would be needed as utilization rates rise far above the current ~4-7%[1]. This would cause a total collapse of the car industry, not save it as suggested by the article.
[1] 7500-15000 miles at an average of 25MPH is 300-600 hours a year or or about 4-7% utilization.