How self-driving cars will change our world

  • Car ownership –
    • Economies of scale will make using an on-demand, self driving car an order of magnitude cheaper than today’s cabs/rental cars.
    • A side effect would be that owning a car will become much more expensive, since the cost of car production will be spread across fewer buyers.
  • Use of land –
    • The amount of space occupied by parking garages inside buildings, houses and on the streets will decrease and free up space causing changes in real estate prices, specially in big, dense cities.
    • Self-driving cars would also mean that road usage will be much more efficient than human drivers can achieve thus minimizing the need to keep expanding roads and highways.
  • Travel time – 
    • Travel time on highways and freeways could be improved dramatically by introducing dedicated self-driving car lanes allowing for much higher speed limits.
    • A real-time centralized road monitoring system in each city will be constantly recording car density on different roads and travel times to different routes. Such a system will be much smarter and powerful in analyzing and distributing traffic and constantly optimizing travel time across the city.
  • Safer roads – 
    • Self-driving cars would eliminate all the top causes of road accidents – distracted driving, drunk driving and speeding.
  • New types of users – 
    • Traveling for people who can’t themselves drive such as young, old and disabled will become much easier.
  • Car manufacturing and design –
    • Research and development in car industry will be much more focused on the software components (software’s eating the world!)
    • Car design process will change to prioritize function over form, since most cars will be owned by companies that operate fleets of cars rather than individuals concerned about style, color and other non-functional factors.
  • Car distribution – 
    • Most car buyers (~90%) would be institutional buyers such as rental car companies, cab companies and new types of franchises that emerge in the self-driving car world. Such drastic changes in the buyer profile would also hugely impact the car distribution and dealership market.
  • New competitors in the market – 
    • Google is already the biggest player in the market and unarguably the only player at such an advanced level. Given the complex research and interplay of hardware and software technologies that is needed, it’s hard to imagine any traditional auto manufacturers to reach this level without partnering or licensing from Google.
  • Effect on other modes of transportation – 
    • Other forms of transport such as airlines would lose business. Specially for short distances (~300 miles) travelers would find it cheaper, time efficient, comfortable and flexible to book a self-driving car rather than book a flight months in advance, travel to the airport ahead of time, wait at the airport, deal with flight delays, and travel in a cramped economy class seat.
  • Effect on adjacent industries – 
    • Other industries such as car insurance will be see drastic changes. Lesser people driving and owning cars would mean fewer accidents and fewer cars to insure.
    • Other services such as warranty companies, roadside assistance and mechanics would also see dramatic change in their business model and margins. Mostly because institutional car owners would benefit by having their own in-house maintenance and support teams, by spreading the fixed costs of such an operation over a much larger total pool of cars they would own.

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