Fast food, real estate, hotels, and airlines — many large industries will have to shift their strategies in the wake of driverless cars.
It’s all but a certainty that autonomous or driverless vehicles will be widely used in the United States at some point over the next two decades. Already, over two dozen major corporates including Google, Apple and Mercedes Benz are hard at work building their own self-driving vehicles. Tesla’s Model S already includes an autopilot mode where the car drives itself on highways.
Clearly tech and auto companies stand to gain, but many other industries could face serious upheavals unless they are able to adapt to the many changes self-driving cars will bring to the market.
Observers believe driverless cars will make automobile transportation a whole lot safer, and McKinsey predicts they could reduce US auto accidents by 90%. While this might save insurers money on payouts in the near future, demand for insurance will ultimately decrease as risks of a car crash drop. In anticipation of this shift, some insurers are rolling out usage-based insurance policies (UBIs), which charge consumers based on how many miles they drive, and how safe their driving habits are.
2. Auto repairs
Fewer accidents will also mean fewer trips to the body shop. On top of that, mechanics’ traditional expertise will become less valuable as cars become more connected and software-dependent. This information could give drivers more transparency into the repairs they actually need, and allow them to calibrate preventive maintenance and avoid more expensive repairs down the line. For instance, the startup Zubie offers real-time diagnostics to owners of connected cars, allowing people to know what’s wrong with their engine before they bring their car in for inspection.
3. Professional drivers and trucking
Driverless automobiles will reduce demand for truckers, taxi drivers, and other driving professionals. Instead, telematics technology — the use of telecommunications to facilitate communication and gather data from vehicles — will allow taxi and trucking companies to manage their self-driving fleets so that they provide services and run their routes with optimal efficiency. Humans will still be needed to manage these systems. Already, driverless trucks are being used to move iron ore at mines in Australia, and the Canadian energy company Suncor Energy is working to automate its own trucks in a process its CFO estimates will take 800 human drivers off its drilling site.
The hotel industry’s future looks very different to its present. Already, the big chains have been searching for a way to appeal to younger travelers, who have increasingly sought out lodging alternatives like AirBnB when vacationing. The proliferation of driverless cars will cut into another big portion of hotels’ customer bases: those who opt for a single-night stay at a roadside motel while driving from one place to another. Audi VP of brand strategy and digital business Sven Schuwirth has predicted that 20 years from now, many of these motel customers will instead choose to sleep in their driverless cars.
Cross-continental car trips don’t appear to be on the horizon anytime soon, but domestic and short-haul flights face a significant threat from self-driving cars. Once autonomous vehicles make car travel more convenient, many people will choose to take an on-demand car ride for shorter trips instead of going through the many hassles of air travel. As Audi’s VP Schuwirth explained, “Your car wakes you up at four o’clock in the morning, picks you up and drives you autonomously the entire way from Munich to Berlin. You can sleep, you can prepare for your meeting, you can call your friends and family, do whatever you want and you enter Berlin in a very relaxed mood.”
6. Auto parts
Not only will there be fewer accidents, but smart driving software, like brake assists, will put less wear-and-tear on cars, necessitating fewer replacements. By 2030, PwC predicts that electronics will account for 50% of automobile manufacturing costs, up from one-third today. Meanwhile, traditional parts manufacturers will likely face competition from more technology-focused companies like Nvidia, which has been tapped by several automakers to help build the computers needed for cars to make their own driving decisions.
It will be very interesting to see how self-driving cars change the game for ride-hailing companies like Uber, which is said to be considering its own autonomous car fleet, and Lyft, which is partnering with General Motors to build its own fleet. Though Uber has been able to wipe the floor with traditional taxi companies, it’s unclear whether it will be better at producing cars than major auto manufacturers like BMW, or even tech companies like Google that have spent more time working on self-driving vehicles.
Uber wouldn’t have to pay drivers anymore in a driverless future, but it likely would have to shoulder the costs of owning its cars — a burden presently held by third-party contractors. Nonetheless, the company will maintain a major structural advantage over rivals that don’t have vast troves of navigation and ride data to pull from. Plus, it’s entirely possible that the hardware aspect of driverless cars will quickly become commoditized, since the cars will be less dependent on mechanical components than they are presently (see #6, above).
8. Public transportation
Why wait around for a bus that will drop you off five blocks from your destination when a driverless car can show up at your doorstep immediately and take you exactly where you want to go? Without drivers, on-demand ride-hailing will be even cheaper for consumers, especially if fleets allow for on-demand carpooling similar to uberPOOL.
These fleets will be able to service out-of-the-way locations that are presently ignored by fixed-route public transportation, a fact that will allow more people to move to the suburbs without sacrificing all of the mobility we associate with urban living. Without drivers, Zipcar cofounder Robin Chase has predicted on-demand ride-hailing will will be cheap enough for consumers to replace the fixed-route public transportation that today leaves many areas under-serviced. She told The Transport Politic, “…buses, shuttles, minivans, school buses [will be] all gone.”
9. Parking garages and lots
The need for long-term parking will decrease considerably as driverless car fleets move continuously between the various places they are needed. According to McKinsey, these fleets could save 61 billion square feet of unnecessary parking space in the US alone. In some major American cities, parking spaces take up one third of the land, and owners of these spaces will either reshape them in a way that creates value in a driverless world or sell their properties to someone who will.
10. Fast food
70% percent of McDonald’s sales reportedly come through the drive-thru window, making the company and fast food companies like it extremely vulnerable in a driverless world. In self-driving cars, people will simply input the coordinates of their destination, reducing the chance that they will decide to take a detour for an impulse food purchase. Food stops will be determined more by choice, mood, and quality — less by convenience. Additionally, fast-food restaurants located near highway exits will take a hit, as people will stop for gas less frequently when they are being transported by a driverless fleet whose cars may refuel while they are not being used.
11. Energy and petroleum
Researchers from the University of Michigan concluded last year that driverless cars will lead us to consume more energy than we are currently, as the ease of use will encourage us to take more trips (electric vehicles will still tap the grid for power). However, the already interrelated shifts toward electric and autonomous vehicles like Tesla’s Model S do suggest that there could be a depressed demand for gasoline itself. A great deal of the infrastructure for self-driving electric cars is still nascent (e.g., networks of charging stations). This transition period will give oil and gas companies an opportunity to figure out how they fit into the new energy ecosystem.
12. Real estate
It’s not just parking garages — the ripple effects of self-driving cars will require the entire real estate industry to undergo a large-scale reimagination of how it allocates space. Bloomberg’s Noah Smith says faster and easier commutes will shift residential property value from properties in urban centers to those in surburban areas. In commercial real estate, spaces currently predicated on human drivers will be converted to other uses. For instance, PARTNER Engineering CEO Joe Derhake has suggested that there will no longer be a need for gas stations to be located on busy street corners to attract people’s attention or for industrial space to be located near ports to help truck drivers.
13. Media and entertainment
The average American drives 46 minutes each day, and without having to keep their eyes on the road, they’ll have plenty of time to consume news and entertainment. Broadcasters will compete to provide video content that travelers will be able to consume without risking their safety. For advertisers, it will also create a huge opportunity to present riders with location-based ads for nearby goods and services.
As telecom O2’s head of research and development Mike Short told The Drum last year, “In the future, we will have more screens in cars. If you don’t have a driver, those screens are likely to be there to add to passenger information, passenger safety, and give you better real-time mapping. This in turn means that the screens might carry some adverts alongside that relevant information.”
Uber has already started disrupting restaurant deliveries with UberEats, but self-driving cars will forever change the fortunes of countless delivery people. When users can program their empty, driverless cars to fetch pizza, laundry, mail, groceries, and more, the need for dedicated delivery folks will decline sharply. When a customer’s empty car can just roll up to Domino’s and an employee can gently place a large meat-lovers and order of crazy bread inside, there’ll be less of a need for delivery people driving from house to house.
15. Brick and Mortar Retail
As drones and autonomous cars begin taking over delivery, the location of brick-and-mortar stores may begin to matter less. Users could order from their favorite restaurants regardless of location and have autonomous vehicles do the fetching from farther afield; no more worrying about a shop’s delivery radius. Additionally, stores may also see less incidental, walk-in traffic from people just noticing them while driving or walking by. Convenience, in terms of proximity to residential areas or city centers, etc., may start to matter less when people can just slip into a driverless car and read, chat, and sleep instead of devoting energy to the act of driving, possibly making them more open to visiting farther-flung shops and restaurants.
16. Auto dealerships
With fleets of autonomous vehicles to hop in and out of, whether made available by car companies or through ride-hailing companies, more and more riders may abandon traditional car ownership models. It was suggested on stage at the CB Insights Innovation Summit that car ownership may switch to a subscription model of some kind, wherein the rental company provides a vehicle and all maintenance for one fee. The driverless car’s unique features and convenience may lead customers to seek on-demand usage models instead of committing to buying a car for their family’s exclusive use. And even in cases where people do decide to buy cars, the increased efficiency of a driverless car that doesn’t monopolize the time of a dedicated human driver may lead to an increase in one-vehicle households.
17. Oil-change shops and car washes
As vehicle ownership and maintenance moves to fleet owners and away from individuals as a result of autonomous cars, the responsibility for maintaining those vehicles will switch over to the fleets as well. Oil change spots, car washes, and even rental outlets will all vanish as fleet owners focus on their own facilities or other solutions to handle these needs.
One much-touted possible benefit of a properly-functioning, mature driverless car model is increased safety. A connected driverless car network would theoretically be largely free from accidental collisions. As a result of decreased collisions, the healthcare industry could lose approximately $500B annually.
19. Driving schools
While not as sizable a market as healthcare, auto sales, or insurance, the world’s driving schools will largely disappear as the ability to manually operate a car transitions from a necessary skill to a hobby. It’s even been suggested that driverless cars will work so well together that the greater threat is humans taking advantage of their orderliness. A shift away from licensing can already be seen in the sharp decline in millennials getting licenses.
20. Urban Planning
Most modern cities were and are being built to cater to the needs of cars. Subways and elevated trains can sidestep the restrictions of surface roads, but highways, bridges, and tunnels are designed with copious human drivers and cargo vehicles in mind. Autonomous cars will change how these roads are used. A linked network will be able to seamlessly let vehicles in and out of traffic in an orderly flow. Traffic signals will be redesigned and possibly eliminated in many situations, as autonomous cars will be able to take turns at higher speeds and move around each other more smoothly. Thought leaders warn that improved, more effortless travel could lead to increased urban sprawl as people stop prioritizing the convenience of proximity to city centers.
21. Internet Service Provision
Managing V2V – aka vehicle-to-vehicle communication – presents new concerns around wireless data exchange. Comcast recently mentioned V2V-related communication concerns in an argument for eliminating the 2015 net neutrality rules, telling the FCC that “prohibitions on paid prioritization [of faster internet] may actually stifle innovation instead of encouraging it” because autonomous vehicles demand instantaneous data transmission. Many European carmakers, on the other hand, have lobbied in favor of non-DRSC LTE-Vehicular (LTE-V) communication, in which cars communicate to cellular towers over LTE. With LTE-V still in the mix as a possible channel for V2V down the road, there will likely be a future in which internet service providers adapt their offerings to the driverless vehicle space.
22. ‘Interior’ Design/Manufacturing
What will people do inside their cars, once they no longer have to drive them? Shanghai-based Yanfeng Automotive Interiors is one of many companies trying to answer that question. The company is developing concept designs for four different “modes” of ridership – including “meeting mode” (where the rear seats stow away and the front passenger seat spins around to face the rear) and “lounge mode” (more akin to a living room). Also, such considerations relate only to human travel – what about animals, or packages out for delivery? As companies that specialize in vehicle-interior design refine visions for how travel will take place in AVs, companies that manufacture vehicle interiors will also change what they produce.
With new forms of wireless communication come new security and data-protection concerns for technology companies to address. AVs can (and have) been hacked: Wired reporter Andy Greenberg chronicled his “real-life” experience driving with researchers who hijacked the systems of a Jeep Grand Cherokee during the ride, ultimately disabling the accelerator. Startups are innovating to keep AV cybersecurity risks to a minimum: Karamba Security, for one, has built a solution that protects a car’s externally connected components by identifying and blocking attack attempts.
24. Traffic Enforcement
With smoother traffic operations and fewer humans actually behind the wheel, cities will see their revenues from traffic tickets and other infractions drop sharply and a more limited needed for traffic enforcement officers to direct vehicles. In addition, there’s the the question of who gets a ticket if an autonomous vehicle breaks a traffic law: The car owner? The software maker? What if the car is used as part of a subscription service? On a practical level, there’s also the question of how will police interact with autonomous vehicles. Will every officer have the ability to forcibly disable a vehicle? Will they even need to? With a connected network, every vehicle will know of accidents, obstructions, and police/fire/rescue activities along their routes and be rerouted accordingly. This type of on-the-fly route changing could also help reduce response times for emergency personnel and save lives.
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Image credits, in order of appearance: Pictures of Money, ::wintertwined::, Rennett Stowe, el-toro, Nick Harris, Ray Dumas, The Truth About, Massachusetts Office Of Travel And Tourism, O Palsson, Darren Snow, Open Grid Scheduler, Kristina D.C. Hoeppner,”Nytimes hq” by Haxorjoe, Licensed under CC BY-SA 3.0 via Commons, Cliff.