Every day, we hear of one company or the other planning, developing, testing or launching a self-driving vehicle. So much so that we tend to tune out this information. There is clearly a lot of corporate interest in self-driving. Dozens of companies are pouring hundreds of millions of dollars into various self-driving ventures. Clearly, self-driving is here to stay, whether we like it or not.
These are not fake cries of Wolf! It is the elephant in the room. Millions of workers will soon be displaced. Many industries will be forever changed or destroyed. Not all these workers in all these affected industries will be able to retrain and/or find other jobs.
There are many positive aspects to self-driving as well. Many new industries will be spawned creating many new jobs. We can also expect fewer traffic fatalities, safer roads, lower stress commuting to work, billions (or trillions) of land devoted to parking spaces unlocked, lower insurance rates, new industries catering to drivers during their commute, development of suburbs and so on.
As with any rapidly evolving technology that has the potential to impact so many people and so many industries, the jury is still out as to how it will play out. The fact is, there will be a few years (a decade or more?) when there will be a gut-wrenching period of adjustment for affected workers. They may be too old, or lack the ability and willingness necessary, to acquire the skills needed to transition to new roles in the self-driving world.
Jobs will be lost…
Jobs lost to self-driving cars
Self-driving cars are set to displace millions of delivery drivers and people transporters. The list of delivery drivers includes drivers delivering pizza, take out restaurant orders, groceries, office packages, medicines, online shopping orders and many more. Car drivers who transport people for a living include millions of taxi drivers and ride-hailing app drivers. Some of the popular ride-hailing apps are - Uber and Lyft in the US (and worldwide), Grab, and GoJek in Malayasia, Easy Taxi in Brazil, Hitch-a-ride in Australia, Didi Chuxing in China and Ola in India. As self-driving cars become more widespread these drivers will have to find other ways to make a living. There will a period of pain and adjustment. Not every Uber driver will be able to take up Python or AI programming or find work related to autonomous driving devices and systems.
Jobs lost – no wait, CREATED! – to self-driving trucks
Millions of people are employed as UPS, FedEx, DHL and other delivery drivers, not to mention the millions more of long-haul truck drivers. Initially, a lot of people thought that self-driving trucks would displace these truckers. Now, however, a consensus seems to be emerging that it is going to be the other way around. Many of these drivers will still be in their trucks, similar to how a pilot sits in the cockpit of a plane even when the plane can fly on auto pilot. Even if there are unmanned trucks on the long-haul “middle” sections, truckers would be needed to navigate the first and last sections - of inner-city roads, rural roads and suburban subdivision lanes. However, the job of the drivers could change. They will not only be making deliveries and doing the necessary documentation, but also and other tasks, such as monitoring the cameras and computer systems in the truck.
Jobs lost due to reduced car ownership
Car ownership, especially in the developed world, is on a down sloping path. This slope may become steeper sooner than most people think. Car sharing combined with self-driving will reduce car ownership. Why own a car when you can subscribe to a car? For example, if I need the car from 8 am to 4 pm and you need the car from 5 pm to 11 pm, why do we need two cars.
This will have profound implications not just for the millions of people around the world who employed in automobile manufacturing, but also for industries such as home building, insurance, urban real estate, suburban development, tourism and parking businesses in city centers.
Money will be made…
A lot of money is at stake. A lot of companies are lining up to get a piece of the action. I have listed some of the current players in this space. To be sure, nobody knows who the winners and losers are going to be. This is a rapidly evolving landscape. Also, the list below is not comprehensive. There are many private and public companies not listed below, which are developing self-driving cars or equipment that will be used by self-driving cars.
Some of the companies at the forefront of the self-driving revolution
Uber’s Advanced Technology Group is on a mission - “To bring safe, reliable self-driving transportation to everyone, everywhere”
None months after an Uber self-driving car killed a woman in Arizona, the company has resumed testing in Pittsburgh. On December 20, 2018, Uber became the fourth company to be designated an “authorized highly automated vehicle tester” by Pennsylvania’s Department of Transportation. (The DOT began authorizing companies in mid-October).
Waymo LLC is a self-driving technology development company. It is a subsidiary of Alphabet Inc. which is the parent company of Google (GOOG).
Waymo’s mission is to make it safe and easy for people and things to move around. We aim to bring fully self-driving technology to the world that can improve mobility by giving people the freedom to get around, and save thousands of lives now lost to traffic accidents.
On December 5, 2018, Waymo launched its first commercial autonomous ride-hailing service in the suburbs of Phoenix.
It is no secret that Tesla is working on self-driving cars and self-driving trucks. The cars that the company is selling today already have “Auto-Pilot” and Tesla owners with Autopilot currently can rely on the car to stay in its lane, help steer, brake suddenly, and drive itself out of a driveway or parking spot.
On December 28, 2018, Tesla’s CEO Elon Musk asked employees to test out Autopilot’s full self-driving mode!!
“…The new self-driving program has "over 1000% more capability than [previous hardware]!" Musk exclaimed in the email. Now he needs "a few hundred more internal participants" to test out new capabilities made possible by Tesla's neural net, which the company has called the "world’s most advanced computer for autonomous driving." Musk also revealed in an earnings call that Tesla is developing its own AI chip instead of working with a chipmaker…”
On Jan 23, 2019, Amazon announced on its blog that it's testing Amazon Scout, autonomous electric delivery devices, in Snohomish County, Wash. The rolling robots, which are about the size of a small cooler, according to the blog post, will "roll along the sidewalk at a walking pace" delivering packages during the day.
Aurora has been testing its autonomous vehicles on public streets in Pittsburgh since late 2017. In April 2018, it announced that it had become the first company officially authorized by the Pennsylvania Department of Transportation to test its vehicles on public roads.
Starship, an autonomous delivery robot startup, is deploying its first batch of robots as part of a commercial service. Starting today, Starship will begin delivering food to the 40,000 students, faculty and staff at George Mason University in Fairfax, Va. in partnership with Sodexo, a food and facilities management company.
The Apple electric car project, codenamed "Titan," is an electric car project undergoing research and development by Apple Inc.
More than the cars themselves, Apple is focusing on autonomous systems or software that could power self-driving cars. Also, Apple software such as Siri, CarPlay and others will probably get used more once autonomous vehicles become a reality and drivers are free to switch their attention from the road to their screens.
Intel, Cisco, Nvdia
The list goes on and on. There is a long list of public and private companies that have one or more products or projects related to autonomous driving.
Multiple industries will be affected…
Impact on the insurance industry
- Automakers will assume liability for accidents
- Insurance premiums will drop as accidents become rarer
- The insurance industry may struggle as more drivers reduce or drop coverage
Insurance companies will have to adapt. How? Perhaps with new offerings for autonomous fleet owners. Perhaps by creating new insurance products for recreational drivers, car racing enthusiasts and hobby drivers. Perhaps by insuring equipment instead of people. There will be whole host of cameras, sensors and other equipment, not to mention fleet management and servicing systems that will have to be insured.
Impact on car dealers
As mentioned before, self-driving combined with car sharing will reduce car ownership. More cars will be owned by car manufacturers or other corporate fleet owners who will get into the business of car leasing. Also, more automobile companies will offer a dealer-less option to buy cars such as those offered by Tesla and Carvana (CVNA). The future does not look very bright for car dealers.
Impact on car makers
Automobile manufacturers will combat reduced car ownership by cutting out car dealers and getting into fleet management and direct to consumer deliveries.
Impact on oil companies
Self-driving cars and self-driving trucks are more efficient and therefore consume less energy per mile as compared to a human driver. More and more companies are now making electric cars and trucks and moving away from the Internal Combustion Engine (ICE). Car ownership is already declining, and this decline will accelerate as more people start subscribing to car rides
All this translates to a downward sloping demand curve for oil.
Impact on parking spaces in city centers, valet parking and other knock on effects
People will begin to commute longer distances to work. Car ownership will be reduced. The need to park within walking distance of your workplace, restaurant, grocery store or movie theater will be reduced. The impacts of these changes will ripple through various industries. Valet parking, for instance, may become unnecessary. Why do you need a valet when you can ask your park to go park itself and summon it when you are ready to leave? What about all the prime high-priced real estate in city centers devoted to parking spots and parking garages? Will cities need parking enforcement officers? Will city and state governments see shrinking revenues because of reduced car ownership, reduced fuel consumption due to efficient driving and fewer speeding tickets?
Positive effects of self-driving
Jobs will be created…
As I mentioned earlier, jobs will be created in the trucking industry. There are many other industries that stand to benefit from the spread and adoption of self-driving. As seen from the long list of companies above, many jobs have already been created in the development of autonomous systems. Many more will continue to be created in the development of autonomous systems, cameras, sensors and other monitoring and road safety technologies.
Self-driving cars will make long commutes easier. This will increase development in the suburbs as people stay farther away from the high-priced real estate of city centers. New homes, shopping centers and entertainment complexes will have to be developed in the suburbs. This will create jobs.
New jobs will be created in tourism because people will take more vacations in their cars.
There will be new opportunities in entertainment. People will want to watch movies, play video games, shop online or get work done in their cars. All this will mean new jobs for developing the apps and systems to cater to these developments.
Road accidents will reduce. Many people are killed in road accidents every year. In the US alone, 37,133 people were killed by motor vehicles in 2017. The number of people killed by road traffic injuries for the year 2010 was 1.25 million!
Many more are hospitalized and suffer lifelong injuries such as loss of limbs and brain damage. Not to mention the impact of these accidents on near and dear ones, damage to property and financial ruin for those impacted.
Many lives will be saved.
Daily commutes will become pleasurable instead of being looked at as a stressful chore. People can read, play online games, shop or watch TV or work on their laptops as their cars drive them to work.
Lower road rage incidents and higher productivity can be expected.
Many people who are unable to drive because they are too old, too sick, physically handicapped or otherwise unable to drive, can now gain the freedom and independence that comes with car ownership.
Lower car ownership and reduced energy consumption through more efficient driving will also help the environment.
A quick note about autonomous driving versus self-driving
Self-driving cars of tomorrow may look and feel very different from the cars of today that have many elements of autonomy such as self-parking.
“…Autonomous cars will look like the vehicles we drive today, according to carmakers, with forward facing seats and a steering wheel. These cars will take over from the driver under certain circumstances. Some elements of autonomy are already available. Self-parking, adaptive cruise control—which adjusts speed to keep a safe distance from cars ahead—and automated braking are available on quite modest machines. In the near future autonomous vehicles might take over driving completely in heavy traffic or on motorways..”
The self-driving landscape is still evolving. Whether it is people or companies, there will be winners and losers. Many jobs will be lost. But for those workers who are willing and able to adapt and retrain, many new and better paying jobs will be available. Many industries will shrink or disappear altogether. However, new industries will take their place. Many lives will be improved through lower stress, fewer accidents, cleaner environments and improved flexibility for work, travel and recreation. How all this plays out is anyone’s guess. If history has taught us anything, it is that, betting against human ingenuity is a losing game.
Disclosure: I am/we are long GOOG, AAPL, AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.