Thursday, May 7, 2015

Fasten Your Seatbelts – Driverless Cars are Coming

By Ryan Regan, Project Associate

I’ve been hearing a lot lately about self-driving cars. In March, a Delphi Automotive autonomous driving SUV completed a cross-country 3,500 mile trip from San Francisco to New York making it the first driverless vehicle to ever drive coast to coast. Supporters of the driverless vehicle allege that this invention will completely revolutionize just about every aspect of modern life, and after reading up on the topic, it’s hard for me to disagree. However, regulatory, ethical, and political issues that come along with the driverless car movement will be numerous, and it will be interesting to see how these issues are dealt with by skeptics and supporters alike. Regardless, their eventual adoption into our lives will change the way we approach everyday tasks, and that includes the way we approach community economic development. Below is just a sampling of the impacts expected from widespread driverless car usage, which are either directly or tangentially related to community economic development.

Whole industries will dissolve while others prosper: It is hard to quantify the number of industries that will be disrupted or fold entirely in a world populated by driverless vehicles. The auto insurance, auto finance, replacement car parts, trucking, oil and gas, and rental car industries are just a few of the industries that will be affected. However, with disruption comes opportunity. Ride sharing service companies like Uber will surge as they integrate driverless car fleets into their business models. Inter-industry linkage opportunities between the automotive manufacturing and information technology sectors will be abundant, and potentially result in new jobs in fields that don’t even exist yet. Logistics and utilities industries will see upticks in efficiency as many of these company’s operations become automated and less prone to human error. In fact, some mining companies are already using driverless trucks, a move that has resulted in greater operational efficiency, increased productivity, and safer working conditions in an industry that is notorious for its safety issues. 

Millions of workers will need to be retrained in new careers: In 2014, there were 4.1 million people employed nationally in motor vehicle operator positions. The widespread adoption of driverless cars will render many of these occupations obsolete, and thus, require a concerted effort at the community level to retrain workers with the job skills that a post-driverless car economy willdemand. Community colleges, technical schools, and other workforce development partners will be relied on to reequip these workers with competitive skill sets. The short-term unemployment challenges that this dynamic creates are daunting. However, the availability of new labor will benefit additional industries that are starved for workers. The key will be making sure that these workers with service industry and manufacturing backgrounds receive adequate job skills training in the STEM fields that are increasingly in demand in the national economy.  

Public safety benefits will be dramatic: Over 30,000 people die each year in the United States due to motor vehicle collisions, and car crashes are the primary cause of death of Americans between the ages of 15 and 24 years of age.[i] According to the Department of Transportation, there was an average of one alcohol-related driving fatality every 51 minutes in 2012.[ii] The proliferation of cell phones, especially among inexperienced teen drivers, has also created a budding public safety crisis for anyone driving in the 21st Century. All of these difficult public safety realities would be erased by driverless cars. Up to this point, seatbelts, antilock brakes, and airbags have been the most important safety features to become commonplace in standard vehicles. Still, these inventions do little to solve the primary root cause of almost all accidents: human error. McKinsey & Co. released in March what is perhaps the most comprehensive study conducted to date on the benefits of autonomous vehicles. The study found that self-driving vehicles could eliminate 90 percent of all auto accidents in the United States, and save the country nearly $200 billion annually in costs associated with wrecked vehicles (mainly healthcare).  

Traffic congestion will fall and worker productivity will rise: One study by researchers at the University of Michigan Transportation Research Institute estimates that driverless vehicles could cut average household vehicle ownership rates by 43 percent, as families consolidate vehicle usage in favor of more efficient driverless cars that can operate independently with or without a passenger. Fewer vehicles on the road will in turn result in less traffic congestion. The average commuter in the United States spends 38 hours a year stuck in traffic, which equates to nearly a full work week. The previously mentioned McKinsey study estimates that commuters worldwide could shave off 50 minutes a day in a world where driverless cars are the norm. The resulting increase in labor productivity can help to spur innovation throughout the global economy. 

Spending potential for individuals, families, and small businesses will be freed up: Amazingly, cars sit unused about 90 percent of the time. When you calculate both the upfront costs and the long-term maintenance costs, they are a big financial burden for many individuals and families. Conventional cars reduce the disposable income that someone has to spend on other things, and they can wreak havoc on a credit score. Small business owners and entrepreneurs can be especially burdened by the debt associated with car ownership, since additional debt obligations represent just another hurdle to hiring people and purchasing capital. Reducing the financial costs associated with car ownership may help to usher in an era of unprecedented innovation, commodity spending, and small business growth. 

A potential game-changer in combating global warming: In 2013, greenhouse gas emissions from the transportation sector accounted for 27 percent of all greenhouse gas emissions in the United States. Passenger cars and light-duty trucks were responsible for over half of the emissions in the transportation sector. Reducing the number of these types of vehicles on the road will greatly reduce the carbon footprint of your average U.S. family. Driverless cars will predominantly be electric and far more fuel efficient than conventional hybrid or gasoline-powered cars, which are hampered by the clunky driving patterns of humans. In 2014, the United States consumed 136.78 billion gallons of gasoline, and there’s no telling how drastically that number could fall with widespread adoption of driverless cars. 

Urban renewal opportunities will alter our built environment: Driverless cars won’t have the same parking demands as a conventional car, and thus, parking lots and parking garages may soon become ancient relics just like pay phone booths. It is estimated that as much as 30 percent of the land in many urban cores in the United States is devoted to parking. Paved parking areas are eyesores that have unfortunately become the most recognizable feature of the built environment in metro areas around the world. They also increase runoff, which increases the threat of flooding and contributes to the contamination of our waterways. As parking lots and garages become obsolete, there will be tens of millions of square feet of prime real estate freed up in downtown areas across the United States. This will help pave the way (pun intended) for exciting community economic development opportunities. Imagine if every parking lot in the United States suddenly became either a public park, or a community hospital, or a small business incubator, or a new public school? The potential impact on residential development will be equally significant. Housing could become much more affordable once land that was formerly devoted to parking spaces is freed up for new residential development opportunities. On the flipside, driverless cars may exacerbate problems with suburban sprawl as people become comfortable living further away from urban jobs centers due to the reduction in commute time that driverless cars will afford them.  

Even in the most optimistic scenario, driverless cars are a few decades away from being widely adopted by the consumer market. What impact will driverless cars truly have on society? Nobody knows the full answer yet, but one thing is for certain – we won’t have to stand in line at the DMV to find out.

[i] “Preparing a Nation for Autonomous Vehicles: Opportunities, Barriers and Policy Recommendations.” Eno Center for Transportation. October 2013: p. 3.
[ii] “Traffic Safety Facts: 2012 Data.” U.S. Department of Transportation: National Highway Traffic Safety Administration. December 2013: p. 1.