What Changes Could Self-Driving Cars Bring in Different Sectors of the Economy?

The fundamental usage of transportation is going to change in the future. And now the world is at the inflection point of transportation. This will have implications in all the sections of the economy and this will automatically change the way of life of most of the mankind. With the self-driving cars, these four aspects of the economy are expected to change.

1.  Health and Safety

According to the reports from the World Health Organization and the Association for Safe International Road travel, about 1.3 million people across the world experience death due to the road accidents, every year and around 20-50 million are injured or disabled by the road accidents. There are no exact numbers on the economic impact.

In the U.S these road accidents cost $230 billion a year. It is aimed that the autonomous cars will reduce the number of road accidents, which will reduce the number of deaths. Some of the experts in the industry predict that self-driving cars will be safer than the human-driven cars and these self-driving cars will also reduce the time.

It is expected that about 650,000 lives will be saved every year from the road accidents. So, by the self-driving cars, there will be more advantages for the health and safety industry.

2.  Auto Industry

It is estimated that about 75 million cars will be sold by the end of 2016, so by this, the industry may acquire the revenue of $4 trillion. Some people consider a car is the biggest asset next to their house.

The cars are used only 5% of the time, rest of the time it is parked. Self-driving cars will change the way people think about this asset. If the self-driving cars are always available to the public, then they will not think about their second vehicle.

Some of the people would have bought cars due to the lack of public transportation or they may feel comfortable with their own vehicles. Whereas, the self-driving vehicles would be reliable, efficient and they would offer point to point services with cheaper cost when compared to the human-driven cars.

It is expected that there will be 20% shift in automobile buying habits and by this, the world economy experiences a $1.8 trillion impact.

3.  Real Estate

The cars are left parked for about 95% of the time. So, people spend a considerable amount of acreage on parking. The substantial amount of space is left for parking in all the garages, homes, offices, cities and almost all the places around the world and the economics is tied to the notion regarding the parking space. In the world of self-driving cars, offices need not have separate places for parking and houses can use the garage space as the living space.

4.  Financial Services

In the U.S, the size of the auto market is about $850 billion. The autonomous cars will change the way, in which the cars are bought and financed. There may be some situations in the future, where people might experience different business models, which will be focusing on utilization and annual recurring revenue and this model are different from the capital expenditure model.

With the driverless cars, people need not worry about parking, because these cars will come near to the passenger. People underestimate the effect of a technology in the long run and overestimate the effect in the short run. It is predicted that by 2021 in the U.S about 5% of the cars will be self-driving.

Price of a Ride with Uber’s Self-Driving Cars

With Uber’s self-driving cars, the price of the rides will be less than the current scenario, but may have added costs; however, it is going to be a benefit for the people.

Uber conducted the test drive of the self-driving car in Pittsburgh. If this project becomes successful, then Uber will eliminate some of the drivers from the company, which may result in lower fares and added the cost of maintaining the cars. Some experts predict that this cost will balance the bridge between the larger addressable market and the increased demand and others say that, Uber will enter into the new unknown business model.

With the current model of Uber, the vehicle cost lies with the drivers, who own or lease their own cars and they are responsible for taking care of maintenance and gas. Uber takes the percentage commission from the fares, this commission can change based on the demand.

Read More: Get your Uber Taxi App for Android Developed with the Best Technology

An industrial innovation analyst at ARK investment management, Tasha Keeney, predicts that Uber will lower the fares of the self-driving cars, because it eliminates the labor cost, as the drivers are not required. Uber expects these vehicles to be available on the road 24 hours a day; therefore, the cars can be used more.

The market can be expanded by reducing the price of the rides. Generally, by estimates, the cost of the self-driving taxi ride will be 35 cents per mile; whereas the cost of the normal taxi is $2.86 per mile and in the U.S the cost per mile is $3.46.

By 2020, the cost of the driverless vehicle is expected to be $15,000. As it is the growing technology, it is difficult to evaluate the secondary market for these vehicles. And some of the experts expect a lot of usages and wear and tear from the extended driving spans of the vehicles.

Uber may defray the cost of the vehicles. Many companies are trying to build a partnership with Uber in this regard and experts predict that Uber will have a partnership with the automobile manufacturer, who owns or maintains the fleet. Now, Uber has built a partnership with Volvo, the company which provides some autonomous sport utility vehicles to Uber.

Rather than the human safety monitors, third party operators will be the biggest cost for Uber. In future, Uber may employ engineers to take care of the control room activities. The control room is similar to the air traffic control. The role of a control room is to monitor several self-driving cars and to give directions to them if they need it.

Though there may be a price drop and additional labor cost, self-driving business will be a successful one, as per experts’ prediction. Keeney said that the market will be measured in trillions. By 2030, in North America, the market will be $1 trillion.

ARK investment is predicting that the individuals who buy a car for $30,000 and if they send it to Uber for offering the rides, the ride would cost 30 cents for a mile, then the owner can get back their amount, which they spent on buying a car in five years.

A luxury model like Tesla Model 3 would charge more as it offers a luxury ride.

In the future, Uber will aim to provide a mixture of self-driving and the human-driven cars. But, experts predict that self-driving cars will be largely found in larger cities and in these cities there will be a great demand for the transportation. Human driven cars will be operating in rural areas and suburbs.

Uber drivers play a major role in Uber’s share in this regard. The advantage for Uber is that they have signed up with many drivers, who are the individual contractors not the employees of the company. Without the drivers, Uber needs the help of some superior technology to be a leader in the industry.

Over To You

So Now it’s your time to say your opinion about automatic self-driving cars and it’s prospect in our future. Share your thoughts in the comment section.

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