Driverless Cars - Where Are They Going To Take Us?
The development of driverless cars is a poignant example of how technology can advance rapidly and has the potential to greatly impact various aspects of our lives and businesses. Despite the increased awareness and concerns around how urban sprawl, population growth and the increased affordability of cars contribute to climate change, there is no denying that cars will have a place in our world into the foreseeable future.
Not only do they give us individual freedom of movement, the extensive road networks that have been built to support them also allow the movement of goods and services. With the inevitable march towards ‘the internet of things’, consumers and businesses are now, more than ever, demanding ever-faster delivery of these goods and services. From the comfort of your sofa and with just your mobile or tablet device, you can order just about anything from a gift on eBay, to home delivery pizza, to your weekly groceries, and expect that they be delivered to your door in a matter of hours, if not sooner.
Development of driverless cars speeding ahead
The leaders in Silicon Valley have taken notice and are investing directly or indirectly in the automotive industry with a view to improving road safety as well as improve efficiencies in road transport generally. Google is testing autonomous cars, Apple has partnered with car manufacturers to produce seamless in-car entertainment and communication and then there is Tesla Motors, the manufacturer of fully electric cars founded by Elon Musk, who made his initial fortune through PayPal. Traditional players such as Ford and BMW are already testing their own driverless vehicles, with Volvo promising to have them on the road by 2017.
And then there is Uber, which has already shaken up the road transport industry with its so-called ‘ride-sharing service’. While controversial, it has been game-changing and continues to expand into new markets. Uber’s on-demand delivery division, UberRUSH, has recently launched its application program interface (API) to third parties with the idea of providing e-tailers another means of offering same-day delivery to their customers. In May 2016, the company revealed that it had begun testing self-driving cars in Pittsburgh, Pennsylvania. It has also been rumoured to have engaged in talks with Fiat Chrysler and other manufacturers regarding potential tie ups involving driverless cars.
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Winners and losers from driverless cars
The potential benefits of driverless cars are hard to quantify at this time but there is no doubt that there will be great savings in efficiency, time and overall productivity to be gained from vehicles that drive themselves. Examples include:
- Logistics will be greatly improved and peak hour traffic should lessen with better radar guidance control and telematics (gathering of information and communication between cars).
- Roads are likely to be safer with less reliance on human drivers and associated dangers such as drink-driving, speeding, fatigue and inattention, particularly as a result of unsafe use of technology while driving.
- Maintenance will be better managed as software increasingly becomes a key part of a car and becomes more adept at detecting and solving mechanical issues, preventing more expensive and complex repairs down the line.
It would be reasonable to assume that businesses would be the earliest adopters of such technology as they would be able to view the technology from an economic, rather than an emotional, perspective. Trucking companies would no longer have to worry about the safety of their drivers (and the goods they are carrying) who may otherwise be facing tough time pressures while driving over long distances. Courier services can save on labour costs and improve delivery times.
Industries which stand to be potentially worse off from such technology include:
- Airlines: increased efficiency and safety of roads is likely to reduce the need for short haul flights.
- Car parts: fewer accidents and better ‘driving’ means less wear and tear, and ultimately, less need for maintenance and consumables.
- Insurance: premiums are likely to drop with safer roads and fewer instances of accidents
- Car parks: as cars will be able to move around continuously, there will be less need for long and medium term car spaces.
Resource companies have also been using large driverless trucks in and around mine sites. Self- or assisted-parking has been a feature in mass production cars for a few years now. With so many large multi-nationals now playing in this space, the march towards an entirely new industry seems inevitable. Even Tesla expects to have a fully autonomous vehicle ready for production by 2018, although it notes that regulatory approval, not technological barriers, may be the biggest hurdle against seeing them on the road. Regulators will undoubtedly focus on public safety factors of this technology and the industry still has much more testing work to do to avoid instances like this recent Tesla crash.
Technology does moves fast - while flying cars may still seem like they belong in sci-fi films, it is not too far a stretch of the imagination that one day soon your taxi to the airport will come without a driver. Whether or not you will have to load and unload your own bags remains to be seen.
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Kent Kwan is a co-founder of AtlasTrend, a global equities fund manager that makes it easy for anyone to invest in the world's most thriving trends.
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