Self-driving cars will impact more outside than inside the car

Tesla moved one step closer to the self-driving car last week when it introduced the self-driving module to its Model S cars. While the software update does not enable the car to run completely on its own, it does bring us very close to leaving the steering wheel for good. Other car manufacturers are not very far behind; most have plans to launch partially self-driving cars over the next 1-2 years. Technology-wise, self-driving cars are much closer to reality than we actually think. While regulatory issues remain to be fully addressed, the self-driving future is inevitable. Be ready to really enjoy the ride… You are not ‘behind the wheel’ anymore!!

10 million self-driving cars are expected by 2020, and according to HIS Automotive, almost all vehicles will be autonomous by 2050. i.e. 35 years from now, all cars will be self-driving cars.

Not only will these cars be significantly different than those of today, they will also create massive impact and transformation beyond the vehicles themselves. Self-driving cars will not only change the automotive industry, it will serve as the center of change for several other sectors in the same way that the internet changed the world much beyond the technology industry. Industries that are adjacent to automotive are already thinking and starting to plan for the once-in-a-lifetime impact.

Self-driving cars are expected to reduce auto accidents by 90%. As per McKinsey, with the elimination of human errors, 90% of incidents will potentially be eliminated. In the US, this will save 30,000 lives every year, eliminate 250,000 hospitalizations and reduce $200B of annual healthcare costs. The reduction in auto accidents will also directly impact the auto insurance and auto repair industries. These industries will need to plan alternative business models. Many analysts argue that personal auto insurance will be replaced by OEM specific insurance; although this may evolve. It is quite possible that insurance will become tiered and become onerous in cases of accidents due to human error (to be paid by the individuals) versus on account of the cars malfunctioning (to be covered by the OEMs). This can also serve as an incentive for people not to ever touch the steering wheel and will act as a major accelerator in faster adoption of self-driving cars. In essence, save on personal auto insurance and enjoy a hassle-free ride with the car driving itself!

As self-driving cars will be programmed to never break traffic rules, a future entirely of self-driving cars will reduce the number of traffic law enforcement officials by 50% without affecting public safety. Local governments spend more than $100B every year to provide traffic police protection to residents which could potentially be routed to enhancing the healthcare or improving living conditions of local communities.

In the US, people spend, on average, 100+ hours a year driving to work. As per McKinsey, the commute drive globally adds up to over a billion hours each year. Imagine the productivity improvement even if half or one quarter of this time is spent towards economic output while the car drives itself to work! The freed up time can be utilized for work, education, relaxation or entertainment. Several analysts predict that self-driving cars will also become massive media-consumption devices, boosting businesses for media-related industries.

When self-driving cars go mainstream, and with millions of such cars on the road, there will be a need to securely provide real-time remote tracking and monitoring for these cars. This will open up new business opportunities for value-add, additional services. Consumers would want to monitor their cars similar to how they remotely monitor their homes on smart phones. Analytics on the massive amount of data that these cars will generate will create new avenues to provide predictive services to both consumers and businesses.

Self-driving cars will be a major catalyst of change and evolution for several other industries as well. The potential to change will be massive and so will be the impact. These cars will not be sitting un-used in offices waiting for their owners – they will be self-aware. For example, they will know what is missing at home for dinner and the retail industry will evolve to the next level of mobile-commerce when self-driving cars drive to retail outlets on their own to pick up groceries, etc. from the pick-up window. Mega-cities around the world have millions of square feet consumed as parking garages. Self-driving cars will not need costly parking lots. All of these parking spaces will be released for better and more effective commercial, residential or environmental use.

The world changed 107 years ago by the Ford Model T. Be ready to experience the revolution all over again when the car changes the world around us again. Self-driving cars will drive massive and fundamental changes to us individually and as a society, with long-lasting and once-in-a-lifetime impacts.