Forget science fiction. The age of the Jetsons’ family is finally here, or at least it is right around the corner. We are on the precipice of seeing what future transportation will look like – namely self-driving vehicles. While there are so many parts in making it happen that it feels like molasses, in reality, it’s moving fascinatingly FASSSST!
Understanding Self-Driving Cars
Driverless cars have actually been in the making for decades. While they stopped short of self-driving technology as we know it today, some of the automobile functions we think of as standard in new vehicles were actually components of driverless technology. Advancements like cruise control and GPS laid a foundation for self-driving vehicles. These developments have been buffeted by airbags that deploy on impact and more recent technologies such as back up cameras, vehicles that can parallel park, obstacle detection, blind spot detection, and lane change assistance. Vehicle autonomy is the natural next step in the evolution of cars.
Adopting Driverless Technology
While a completely autonomous vehicle may still be in the realm of the Jetsons, some amount of driverless technology is already gaining ground. The Society of Automotive Engineers (SAE) explains classifies vehicle autonomy using a scale of 0 to 5: Level 0 vehicles have no automation while Level 5 is completely automated. Most cars being introduced today rank at Level 1 thanks to technologies like adaptive cruise control. Level 2 vehicle autonomy is upcoming. At this level of self-driving, steering is automated, but driver interaction is still required. The Tesla AutoPilot is a good example.
The analysts at Franklin Templeton believe that Level 3 could be a reality very soon. At this level, drivers can intervene in vehicle operation, but steering and monitoring are autonomous. “I think the technological evolution and change that’s happening with autonomy has brought down barriers to entry, and it’s allowed new players to come in,” says Robert Stevenson, Portfolio Manager at Franklin Equity Group. “As we look to the race to get to Level 4 autonomy in 2021, as Ford has said and as others have said, well, it’s still pretty wide open. There doesn’t really seem to be a clear lead in terms of who’s going to get there first.”
Adopting driverless technology successfully depends on three primary factors:
Light radar technology is the first requirement. Also called LiDAR, this is the technology that allows a vehicle to map its surroundings and effectively “see” by using pulsed lasers to measure the distance between the objects and landscape around them.
Driverless technology is evolving step-in-step with electric vehicles – and that’s a problem. Right now, only 1% of cars on the road use electric technology in place of fuel. The economies of scale with such low rates of adoption drives up the price of buying an electric vehicle, possibly to the point that it doesn’t cancel out any fuel savings. Driverless technology is similarly vulnerable.
Also, battery technology could limit the adoption of self-driving cars by limiting their availability. If current estimates are correct, the number of electric vehicles is going to rise exponentially over the next 10 years. The supply chain – especially battery production – could have a hard time keeping up.
Driverless Car Safety
Driverless car safety is the first hurdle. “Safety is a paramount concern, both as a selling point and a potential liability,” explains Franklin Templeton. “Before any public rollout can happen, autonomous vehicle manufacturers will need to perfect multiple technologies, involving sophisticated software testing over billions of miles of road conditions in virtual settings, in addition to performing even more of the actual highway and road testing that began several years ago.” While new forms of virtual testing can complement these tests by offering next-level simulations, traditional road tests with crash test dummies and multiple scenarios are still necessary.
One factor that may serve to bolster driverless technologies is the adopting of ride sharing. Most people only use their vehicles for 1.5 hours per day on average, so why not share the cost of vehicle ownership, either through car-sharing, rentals or ride-hailing services? Many millennials in urban centers are already adopting the car-sharing trend, assisted by smartphone technologies. As ownership dynamics shift, self-driving vehicles could be put into constant, shared use.
Implications of Vehicle Autonomy
Driverless technologies also carry some serious benefits for industry, like fulfilling the need for truck drivers. As online shopping becomes the new norm, millions of packages need to be delivered and stock needs to be moved every day – and there are not enough truckers to do it all. According to Josh Switkes, CEO of Peloton Technology, “Almost every fleet we talked to says if they could hire more drivers, they would haul more freight.” Self-driving vehicles could help meet the demand – to a point.
There are more than 4.4 million people in the US who work as drivers. If freight transportation was 100% automated, many of these people – if not all – could be out of work. While the loss of jobs to technology typically results in the creation of new, but different work, it is still a consideration.
The insurance industry will also see some changes. Auto insurance may need to shift from the driver to the manufacturer of the software provider – or come up with alternative insurance structures. For instance, the UK Vehicle Technology and Aviation Bill requires two types of car insurance – one driver-controlled actions and the other for driverless activities. Other countries may follow suit. In either case, the implications for insurance providers could be significant.
Car dealerships and manufacturer will also see a shift. No longer will they be selling to individuals with their own unique preferences. In a ride-sharing situation, self-driving vehicles will be marketed to the companies who manage autonomous transportation options. In turn, there will be fewer models and fewer levels of customization.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
“Along for the Ride.” Franklin Templeton, Franklin Templeton Thinks, Mar. 2018, www.franklintempleton.com/content-us/campaigns/en-us/self-driving-cars/pdf/GLB_WP_0318.pdf.