Trillions Will Depend on Whether Driverless Cars Require Human Drivers – Forbes

Posted: Thursday, April 23, 2015

Big auto players have made it clear that they intend to beat Google in the commercial development of driverless cars. The most vocal have been Nissan, Audi, Daimler, Volvo, Delphi and Tesla, though Ford and General Motors have their own efforts as well.

Trillions are at stake. In the U.S. alone, more than $2.5 trillion flows through car-related industries each year, including suppliers, automakers, dealers, financing, insurance, service, energy, etc. Worldwide, the stakes are more staggering. New vehicle sales in the U.S. in 2014 accounted for just 19% of global sales.

Into whose pockets these car-related trillions will flow in a driverless car future depends greatly on one question: whether or not driverless cars will require human drivers.

The answer to this question is often cast (and debated) in technical merits—with world-class scientists and engineers on both sides of the question. The more significant distinctions, however, lie in the competing business models motivating each approach—and the economic fallout that each implies.

On one side is big auto. All are pursuing driverless strategies that augment rather than replace human drivers. A spokesman for Tesla, which plans to introduce an “autopilot” capability this summer, reflected the industry zeitgeist when he told the New York Times:

We’re not getting rid of the pilot. This is about releasing the driver from tedious tasks so that they can focus and provide better input.

Google Google executives, on the other hand, argue for a direct leap to fully autonomous cars. As John Markoff wrote in the New York Times, based interviews with Sergey Brin, a Google co-founder, and Chris Urmson, the director of Google’s self-driving car project:

Google engineers realized that asking a human passenger — who could be reading or daydreaming or even sleeping — to take over in an emergency won’t work.

MOUNTAIN VIEW, CA – Google co-founder Sergey Brin and Google Self-Driving Car project director Chris Urmson in front of an early self-driving car. (Photo by Justin Sullivan/Getty Images)

 

If human drivers are required, even for 1% of each trip, strategic disruptions will be minimal. Automakers and suppliers will certainly battle over an expanding arsenal of driverless capabilities and features. But, there need not be dramatic change in industry structure or in how cars are built, sold and operated.

The implications for other downstream players will be mixed. Insurers, car repair shops and emergency rooms will have to contend with the business implications of dramatically fewer accidents. Most other downstream players in the car-related industries will have to adapt to new technology but will not be existentially threatened.

If human drivers are never required, however, a radically new model of transportation will unleash new entrants and business models to challenge business as usual.

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