Driverless Disruption

September 28, 2015

There is much discussion within business and technology circles on the future of driving and driverless cars. While it offers the prospect of potentially safer and more comfortable journeys, there are far-reaching ramifications for our society and economy.

From a societal point of view, the most prevalent benefit is the reduction of road injuries and fatalities. However, the corresponding job losses and reduction in taxation receipts could equal, or even outweigh, the overall social benefits. The economic implications are also multifaceted.

To quantify the overall impact is an extremely complex task as it effects government policy and taxation, personal liability and insurance, as well as each individual’s earning and spending patterns. One thing however that is certain, is that as the pace of this change hits our communities, governments will need to be proactive in their approaches and policies to ensure that the societal benefits outweigh the negative impacts.

Anyone imagining a world with virtually no vehicle crashes has to be excited by the prospect of the removal or reduction of the needless loss of lives on our roads. Most accidents, in varying degrees, are the result of driver error and research from the Institute of Engineering and Technology indicates that “for every 10,000 errors made by a human driver, an autonomous vehicle will make just one”. With such incredible predictions on the safety of driverless cars, it is little wonder that manufacturers are bringing the technology to our vehicles as it becomes available.

What is occurring, is that driverless technology is appearing in waves rather than as a big bang scenario. We have already seen an increase in partial driverless technology with cars purchased in the past decade. For example, some cars are already capable of breaking when the car in front is getting within a distance that a human would be unable to stop in an accident; of warning the driver if lanes are changed; and of changing cruise control speeds to suit the traffic levels. Step by step cars are doing more than humans to stay safe on our roads.

In the future, this will expand to a point where a car is completely automated but a driver will sit at the steering wheel as he or she currently does, able to take over if an emergency presents itself. The 2017 release of the Audi A8 is expected to be one of the first production cars with a driverless capability. Up until this point, progress has been slow, and it is only in the final phase that the big shake up that we have seen in other industries is expected.

This is the phase where cars go truly driverless. Where there is no longer a driver, or even a steering wheel, and the passengers can sleep or read, or do whatever else they like. Elon Musk, chief executive of electric vehicle manufacturer Tesla Motors, believes this is just eight years away. If Musk’s prediction is accurate, from 2023 we will start to see some massive changes to the entire transport industry. The impact won’t just be felt in the motor sector either, liability and insurance will become a big issue.

Whilst every care will be taken with the release of this technology, there is clearly, unfortunately, going to be some fatalities especially as the technology is in its infancy. Most countries assess the liability issue by determining “who was in control of the vehicle” at the time of the accident. This responsibility becomes complex once a car has no driver. The fault could sit with the manufacturer who built the car, or potentially with the driver who directed its course, or a combination where decision patterns are derived in certain scenarios after input from both groups.

Looking at some of the philosophical (and awful) scenarios being pondered by manufacturers where the car must chose to drive into five people or drive into two, it is possible to argue that the reduced injury and loss of life potential of driving into the two people is preferable – that is unless you are one of those two people. Their two lives have been prioritised as less valuable than the five others in this scenario, raising legal issues around culpability and even manslaughter in the event of death as the car “chose” to direct itself into them as opposed to other possible paths.

Another big impact will be the effect the introduction of this technology has on jobs. According to the Society of Motor Manufacturers and Traders (SMMT), the car industry in the UK currently employs 770,000 people, producing 1.53 million cars a year. In addition, figures from the UK government show that there are 297,000 people licensed to drive taxis or private hire vehicles and 375,000 with licenses to operate heavy machinery like lorries and busses. If cars are able to be “summoned” or “sent” as required to drop passengers off or collect from work or school, families will no longer need to have multiple cars and the requirement for taxi and lorry drivers will fall. Moreover, driverless cars will not get fatigued, will presumably be more reliable and can operate 24 hours a day as necessary. Only deliveries which need a person at each location would require a person in the vehicle.

As a result, fewer cars will need to be manufactured and less journeys will need to be made, severely impacting those employed in the automotive sector. Unfortunately, there is no guarantee that any technology jobs will be created in the UK to offset these losses.

Another area to consider is the impact on government taxation revenue. The policy changes here appear to be substantial. The reduction in jobs in both manufacturing cars and transportation-related activities would without doubt have a negative impact on taxation receipts collected from PAYE. There would also presumably be the almost total disappearance of revenue from speeding fines, which generated £284 million in 2012/13 as cars would be programmed not to speed or at the very least, to know where cameras are placed.

Local councils would see a reduction in parking fine revenue as driverless cars should either be smart enough to work out parking regulations which we humans can’t, or simply drive themselves around the block whilst you shop, removing the need to park the car at all. Governments should also expect reductions in tax collected from car taxes as there are fewer cars on the road. Finally, there is the potential for reduced tax collection as companies increase the use of offshore tax structures and hybrid and electric vehicles become more prevalent reducing fuel duty.

The final area of concern is around the potential hacking of driverless vehicles. Vehicles need to assess each situation on its merits and follow the best course of action. Vehicles, if hacked, could on a potentially massive scale reverse the braking to accelerating actions putting the lives of those in proximity to the vehicle at risk.

There is however one massive positive to the introduction of driverless vehicles, and that is time. The act of summoning a driverless car will save hours. Mothers would no longer need to drop the kids at school, or collect grandma for Sunday lunch, the car could do it on its own, freeing up massive amounts of time for leisure.

Without doubt, driverless technology is an incredibly exciting prospect which is not going to go away. It has enormous social benefits as casualties are reduced both for passengers and pedestrians. However, the social and fiscal ramifications will be substantial and governments will need to plan carefully to ensure that the overall benefit to society outweighs the negative impacts on jobs and revenue to pay for services.

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