Will everyone win in a driverless future? - An expert’s perspective
Private Life and Mobility
Ex investment banker Shiva Kumar talks us through some of the bigger impacts of driverless tech, and how the fleet model could counter them.
"I have two boys, 11 and 7-years-old, I do believe that my 7-year-old may never have to drive. Ever."
Autonomous vehicles are coming. There's no question of that. The technology already exists, the testing is in full swing, and the regulation and supporting infrastructure are slowly clicking into place around it. There are children alive today who may well never have to learn to drive, which is an exciting prospect. But there are still many unanswered questions about how driverless will change the world – including how some of the more obscure risks – such as how socioeconomic accessibility will be addressed. Something which could potentially be solved by a shift away from the traditional transport business model.
Ex-investment banker Shivas Kumar understands risk better than most. With decades of professional experience firmly rooted in the tech industry, and a new post as the EVP of the fleet management software company Ridecell, he understands the deeper impact of disruptive tech. He is in the perfect position to watch the driverless revolution unfold, and to see the real-time effects. He also has a unique perspective on how some of the negative impacts may be countered, and theories about how the big automotive brands involved will not only survive – but thrive.
Autonomous technology is expensive to purchase, maintain and repair, which means ownership will be out of reach for many. But looking at the benefits in terms of immediate financial impact may be a little short-sighted.
"Think about people who are affected by distance, who cannot afford to travel, to gain necessary skills, expertise or even going to work. It'll be possible for many to tap those, because of due to economies of scale, the prices of autonomous mobility will come down.
Accessibility is indeed important, which could mean a greater level of "social mobility" for all, regardless of their socioeconomic status. Of course, location also comes into play. But driverless tech could help solve that age-old conundrum too, in a very unexpected way:
"Another significant implication to me is real estate. Think about California – which is pretty expensive. People have to live closer to work and the commercial offices in the Bay Area, like Palo Alto, or in the city, and all of those places are very expensive. But with autonomous vehicles you could have a city job, but live in the more suburban areas and in bigger places, increasing your standard of living by getting a lot more for your money."
But, as there are currently so many unknowns regarding the cost of driverless cars to operate and use on the day-to-day, do we really know if there will be a big enough universal consumer cost saving?
"Yes, it's really expensive now. But over time the prices will come down. Autonomy will unlock transportation to lower-income families because now they can afford to ride a car instead of buses."
How will public transport be affected by autonomous vehicles?
Should autonomy take off to the extent the experts predict, the transport industry as a whole could be transformed. It is widely believed could even be that autonomous vehicles will eventually replace public transport altogether – but is that what Shiva believes?
"There will be a shift, yes. Although it won't be a complete replacement. You might use trains for the long distances, and then the cars will be used for the short to mid distances once you've alighted."
Of course, there are additional environmental concerns when it comes to using more vehicles to transport less people, but many believe that autonomous vehicles will be almost exclusively electric.
"Trains move people in their masses, whereas cars can only transport two to four people at a time. Yes, that is a downside to it, but as you move from a combustion engine to what is likely to be an electric one in autonomous vehicles, the impact promises to be diminished from an environmental perspective."
The rise of driverless fleets
It's clear that if driverless cars are operated under the same circumstances as traditional cars have been, there might be a big problem in terms of cost, accessibility, and environmental impact. But the economy has long been slipping to a subscription-based model, and fleet-based transport could well solve all of these problems, and more. In fact, it could ultimately lead to more choice for the consumer, regardless of their socioeconomic status – just look at what happened with Spotify and Netflix.
"As the economy goes from ownership to subscription model, there will be a rise of the driverless fleets. There will be a demand for all sorts of transport, for all sorts of reasons, and it depends on the day and the time, whether it is raining, shining or snowing. I think more transportation will exist and it will exist in an equal system where the consumer can make their own choice of vehicles rather than have it made for them as they do with the existing public transport model."
Right now there are approximately a million non-autonomous fleet vehicles operating in the world – largely in the US and Europe. Shiva predicts that, in the next 20 years, over half of the vehicles in the world will be fleet, whether they need drivers or not, and they are all more than likely to be electric too. But how could the big-name automotive brands fit into this changing landscape if their models have, up until this point, been based almost exclusively around ownership?
Big brand survival
Let's say that Shiva is correct and, by 2040, fleets will dominate the roads. Maybe they will be autonomous too, if his "eight to ten year" timeline to autonomy is to be believed. Will the same big automotive players be in the game, or will they have been replaced by the tech start ups we are only just starting to hear about today?
To know the answer, we have to look at the brands which are already operating with a fleet mindset.
"Uber and Lyft will continue to gain strength and own the consumer experience, hence they will start dictating the type of cars in fleets, the type of insurance, the type of charging, maintenance and even cleaning. It will all come from them, as opposed to the consumer."
Assuming that the original equipment manufacturers, or OEMS, take to this new twist in demographic well, there may be ample opportunity for an entirely new way to do business.
"The OEMs who will survive and thrive are the ones who will continue to innovate and transform. The German car industry have been at the forefront. So far, we've seen VW, Daimler and BMW all coming up with their own mobility services, with Daimler and BMW combining on the services side too. I think that open-mindedness of acquisitions, innovative culture and manufacturing muscle will lead to a bright business future. Those who innovate will survive."
A move away from ownership to subscription worked for the music and movie world – but will it work for the auto world too? Well, if autonomy is wants to realise its full potential of benefits I guess it’s going to reap the full roster of the benefits that it promises, including: less congestion, less pollution, more accessibility – it might well have to.
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