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5 Market Predictions for Self-driving Cars

With all the recent buzz around self-driving cars, it’s easy to get carried away with visions of a distant future where everything from road trips to city layouts has changed dramatically.  There’s a lot less buzz around what will happen shortly after self-driving cars hit the market and start entering our daily lives.  Here are five predictions for what changes we can likely expect due to self-driving cars in the near future.


1. Vehicle sales will decrease

In my last post, I showed that services like Uber will be able to use self-driving cars to offer transportation at a lower cost than owning your own car.  This is largely because car-sharing utilizes cars for many more hours per day than an individual driver can, and also capitalizes on economies of scale.  As more people start doing the math for themselves, they will reconsider buying a new car instead of putting that money toward other expenses.  We might even see a resurgence of the corporate car, with companies offering workers rides in company-owned self-driving cars as a perk.  The result will be a downward trend in the total number of new vehicles sold each year, and a shift away from individual ownership toward large corporate fleets.


2. Miles driven will increase

An often overlooked outcome of self-driving cars is that they will likely increase the distance people commute on a regular basis.  The biggest reason people avoid long commutes now is that driving for an hour or more each morning and evening is both tiresome and a waste of time.  But if you can do whatever you want while on the road (sleep, work, Facebook, email, etc.), long commutes become a moving extension of normal life rather than a chore to be avoided.  With rents and housing prices continuing to skyrocket in many cities, this will likely mean that workers choose longer commutes to save money and maintain their standard of living.  As a result, we will likely see a reversal of the recent trend toward fewer miles driven each year [1] as economics overpowers the desire for city life.


3. Median car prices will increase

Building on points one and two above, the types of cars that people will actually want to buy will shift considerably.  Many people who would have bought a low-end car will instead choose a car-sharing service as a cheaper alternative.  Those who still want their own car won’t want a typical “car” experience, they will want a mobile living room and office that also gets them from point A to point B.  The combination of these two forces will push automakers to produce more expensive vehicles catering to the demands of tech-savvy and highly discerning customers.  This is on top of the increased cost self-driving cars necessitate due to the need for advanced sensors and software systems [2].  The result will be a net increase in the price of new cars sold each year.


4. Traffic will decrease, but not by much

Self-driving cars are often seen as the holy grail for solving traffic.  They can choose optimal routes, avoid rubbernecking, don’t cause accidents, and safely follow closer than human drivers can.  However, it’s important to remember that road congestion has more to do with the number of cars on the road at a given time than it does with actual driving behavior.  The maximum speed of travel on a road is given by the number of lanes, number of cars, and safe following distance [3].  If you add more cars, traffic must slow down to allow them in safely.  Self-driving cars won’t magically circumvent this rule, so don’t expect jam-packed freeways during rush hour to be a thing of the past.  Traffic will certainly get better, but it will continue to be a problem for as long as millions of people commute to and from work at the same time each day.


5. Real-world working hours will increase

Do you remember the working world before laptops and smartphones?  Back then, you might bring home a briefcase with some paperwork to do, but going home largely meant that you were done with work for the day.  Not these days.  The modern knowledge worker is often expected to be available via email (and sometimes text) around the clock, weekdays and weekends [4].  Until now, commuting has been something of a refuge from work expectations, but when cars drive themselves, you’ll be able to work on the road.  And if you can work from the road, chances are you’ll be expected to as well.  The net result will be a further increase in the “off the clock” hours people work on a regular basis.



[1] http://www.census.gov/hhes/commuting/files/2014/acs-32.pdf

[2] https://www.bcgperspectives.com/content/articles/automotive-consumer-insight-revolution-drivers-seat-road-autonomous-vehicles/

[3] http://www.ops.fhwa.dot.gov/Speech%20Files/Congestion%20Paper.doc

[4] http://www.gfi.com/blog/survey-81-of-u-s-employees-check-their-work-mail-outside-work-hours/

Michael Dorazio