by Peter Diamandis: Elon Musk’s announcement of a semi-autonomous Tesla Model D this past week is one of many autonomous vehicle announcements coming your way…
And the implications of self-driving cars will be staggering.
In this blog, I want to outline and explore those implications, and give you context on the dematerialization, demonetization and democratization of transportation, an area I spend time thinking about in my Abundance 360 community.
The First “Real” Autonomous Car
During the 1980’s and 1990’s, the U.S. Defense Department spent hundreds of millions of dollars on autonomous vehicles, but it wasn’t until the 2005 DARPA Grand Challenge, a $2 million incentive prize, that the first truly autonomous vehicles (AVs) able to navigate long distances (a 150-mile route) at significant speeds (>30 mph) came into existence.
The Stanford University Racing Team, headed by Sebastian Thrun, won the competition with their car named ‘Stanley’. In addition to Stanley that year, four other driverless cars successfully completed the challenge.
Soon thereafter, Sebastian Thrun joined Google to start a Self-Driving Car initiative, ultimately building a fleet of autonomous Prius vehicles that have logged nearly 700,000 autonomous miles.
In late May 2014, Google revealed a new prototype of its driverless car – a cute 2-seat vehicle sporting NO steering wheel, NO gas pedal, and NO brakes. 100% autonomous.
And Google isn’t the only player in the game.
Audi, BMW, Cadillac, Ford, GM, Mercedes-Benz, Nissan, Toyota, Volkswagen, Volvo, and others are rumored to have autonomous vehicle initiatives underway.
Combine that with legislation passed in four U.S. states and the District of Columbia allowing driverless cars, and you have the beginning of disruption.
What will happen when the roads are ruled by autonomous vehicles?
Here are some of my favorite implications.
- Reduced deaths, reduced accidents: In the U.S. alone, there were over 33,000 automobile deaths in 2013. For those aged 5 to 34 in the United States, motor vehicle crashes are the leading cause of death, claiming the lives of 18,266 Americans each year.
- Saving LOTS of Money and Time: It’s estimated that AVs could save over 2.7 billion unproductive hours commuting to work. This in turn translates to an annual savings of $447.1 billion per year in the U.S. alone (assuming 90% AV penetration). This number was calculated by taking into account crash cost savings, congestion benefits, reduced travel times, fuel savings, parking savings, changes in total number of vehicles, and other factors.
- Massive Fuel Savings: Today, a 4,000-lb. SUV spends less than 4% of its energy moving a 150-lb. driver around. Imagine if a car could be significantly lighter (because they don’t crash), getting four times the mpg?
- No New Roads, Less Traffic: Autonomous vehicles packed with sensors can drive fast and efficiently at 8 times the packing density of today’s human-driven cars. This means no traffic jams and no need to build new roads. Plus, when they pack closely together, the reduction in wind drag alone could reduce fuel use up to 20 – 30 percent.
- No Ownership – Just “On-Demand” Usage: Today your car is an unused asset 95% of the day. Why own a car when you can have access to whatever car you want, whenever you want it? On-demand car usage will change the future. (Who wins? You do. Who loses? Detroit). It is estimated that at 90% AV penetration, we could actually reduce the number of cars on the road by 42.6%.
- No Garages, No Driveways, No Parking: In his book, Eran Ben-Joseph notes, “In some U.S. cities, parking lots cover more than 1/3 of the land area.” But what if you never need to park your car? What if it just drops you off and goes and does something useful? No need for parking garages, parking lots, driveways… Plus, one MIT study found that 40 percent of total gasoline use in cars in urban areas is spent while drivers look for parking.
- No Mandatory Car Insurance: Self driving cars won’t crash and will disrupt the $200 billion auto insurance industry.
A Cultural Shift to Sharing – The 6 D’s of Transportation:
The true future of Uber is autonomous Cars. Today an UberX in Los Angeles costs me about $2 per mile. But the majority of the cost of my UberX ride is the driver in the front seat. Take out the driver and the cost drops 5 to 10-fold.
So to summarize:
- Deceptive: While autonomous cars have been in a period of deceptive growth over the past 30 years, they are now poised for disruption.
- Disruptive: Every major car company is making investments and the value proposition of saved money, time and lives will drive disruptive change in the decade ahead.
- Dematerialization: Car ownership will begin to dematerialize as the cost per mile plummets and convenience skyrockets (Uber has already started that process). Why own a car when you can have access to a car (any car)? Plus, we’ll have no cost of insurance, maintenance, repair, parking…
- Demonetization: As mentioned above, autonomous cars have the potential to drop the cost of transportation (per mile) by 10-fold. Add to this, no cost of acquiring the asset up front. It is true demonetization. Add to this a future of fully electric vehicles, and in the sunny parts of the world, transportation gets even cheaper.
- Democratization: Everyone will have access to autonomous vehicles, including those who previously couldn’t drive: kids, senior citizens, disabled and the poorest among us.
So there you have a glimpse of the future of autonomous cars. It’s an area that I am monitoring closely.
Iif you’d like to join me, and learn more about this area from a business perspective, it’s a subject I discuss with the entrepreneurs in my mastermind, Abundance 360. If you’d like more info, and to apply, you can do so here.