When the use of self-driving road vehicles starts to become widespread, this is likely to lead to lower overall car sales. Nevertheless, automobile manufacturers could still benefit from the new situation.
Reducing the number of road accident victims, cutting down on greenhouse gas emissions, streamlining traffic flows…self-driving cars seem to hold out a great deal of promise. However, the idea of autonomous vehicles is also creating concern – and not just among people who dislike the idea of putting their lives in the hands of artificial intelligence software. Business interests that are likely to lose out from this new situation are also worried. The most obvious such sector is the traditional automobile manufacturers, and a recent study by the University of Michigan is unlikely to reassure them. The report predicts that the advent of the autonomous cars will entail a drastic drop in vehicle sales, as many households will be able to manage with one car rather than having to buy several. Based on a survey among 150,000 US households, the UM report shows that most of them only use one vehicle at a time – for example, one of the two parents uses one of the cars to go to work in the morning, while the other uses the second car to shop in the middle of the day. A single vehicle could theoretically suffice in such cases, but as the car is unable to drive itself over from where one family member has parked it to the place where the other person is currently located, the household needs more than one.
Lower car sales volume, higher maintenance
This situation is likely to change as self-driving cars become available, as people will be able to call one up at need. The study suggests that a household could cover as many as 84% of all its trips with just one car. If this is true it would slash demand for new vehicles by as much as 43%. And this calculation does not of course take into account a possible future scenario where the law forbids human beings to get behind the wheel, requiring people to make use of autonomous taxis instead. However all is not lost for the auto makers. Under the single family car scenario, individual vehicle use would automatically increase – by as much as 75% according to the UM report. Cars would therefore need more frequent servicing and maintenance, which would translate into extra income for dealerships and garages. There would simply be a shift towards a new business model, under which auto makers’ revenues would depend more on long-term customer relationships than one-off sales. In fact John Krafcik, CEO of Google’s self-driving car project, tried to get this bell ringing in the brains of the audience at the recent J.D. Power Automotive Forum in New York City. He sought to allay the fears of auto makers who might be persuaded to come out in favour of legislation authorising self-driving cars. The average number of miles per year driven by a car in the United States is likely to rise from 13,000 to between 100,000 and 150,000, a much larger increase than that predicted in the University of Michigan study, he suggested. Krafcik attributed this predicted surge in mileage per car to a forecast increase in car-pooling.
Moves to change the law
Traditional auto makers are after all likely to have a role to play in the manufacture of self-driving vehicles, perhaps through partnerships between tech startups and leading car manufacturers. Some partnerships have in fact already been forged, such as between Lyft and General Motors, and Ford and Amazon. Meanwhile Mercedes is reported to be in the process of selling 100,000 autonomous vehicles to Lyft’s rival Uber. As Krafcik put it: “Airlines don’t build airplanes. Airbus and Boeing do that.” Few people seriously doubt that the US auto market is set to undergo profound transformation over the next few years. In the meantime the legislators will still need to frame regulation to enable the use of autonomous vehicles on the roads. A few weeks ago, leading automobile manufacturers and tech company bosses gave their views at a hearing on the subject in the United States Congress. Meanwhile things are happening along these lines at state level, in tech-friendly California and in Michigan – historically the cradle of the automobile – but also in Massachusetts, where a panel of researchers and business people are due to meet the authorities to work on drawing up new state regulation. There are also plans to open a test track at Fort Devens, a US Army Reserve complex in the state.