We’re much closer to self-driving vehicles than most people realize. And while it’ll have an impact on all of our lives in different ways, larger questions persist. For example, how will it impact the larger economy?
Autonomous vehicles, driverless cars, self-driving vehicles – whatever you want to call them, they’re poised to explode onto the scene. According to estimates from Allied Market Research, the autonomous vehicle market is expected to grow from $54.23 billion this year to $556.67 billion in 2026. That’s an impressive compound annual growth rate of 39.47 percent.
Some of the major players in this market are General Motors, Ford Motor Company, Volkswagen Group, Daimler AG, BMW AG, Volvo-Autoliv-Ericsson-Zenuity alliance, Renault-Nissan-Mitsubishi alliance, Tesla Inc., and Toyota Motor Corporation. Companies involved on the supplier side of things include Aptiv, Robert Bosch GMBH, Denso Corporation, and Continental AG. In terms of technology providers, Intel Corporation, Waymo, NVDIA Corporation, Samsung, and Baidu have all tossed their hats into the ring.
In the state of California, the Department of Motor Vehicles has approved 52 different companies to actually test autonomous vehicles on the road. And while testing is still in the early stages, this represents a major shift toward making driverless cars a reality.
When it comes to the growth of the autonomous vehicle market, it’s hard to predict just how significant the ramifications and ripple effects will be. (It would have been like trying to anticipate the impact the internet would eventually have back in 1995.) Vehicles are more than blocks of aluminum and steel that move us from one point to the next. They’re integral fixtures in our everyday lives. Transitioning to a driverless system will have ramifications that go far beyond convenience.
In particular, it’s interesting to consider the impact self-driving vehicles will have on the American economy. There will be countless developments that we can’t anticipate or forecast, but there are also certain signs that provide us with an idea of where we’re headed.
Let’s dig a little deeper and do some forecasting on some of the most likely ways autonomous vehicles will impact the American economy over the next couple of decades.
Research shows that car accidents currently lead to $413.8 billion in damages – including loss of life and productivity – in the United States each year. But the economic implications go beyond the drivers who are responsible for the accidents. Drivers who are not involved in auto accidents eventually pay for 75 percent of the costs of car accidents through health and car insurance premiums and taxes.
One of the major predictions among car manufacturers and technologists is that driverless vehicles will make roadways safer by reducing the number of accidents and collisions. And if true, it stands to reason that a huge chunk of the $4413.8 billion in annual damages will disappear. This will represent a savings for almost every American on the road.
One of the more interesting economic byproducts of driverless vehicles is that they’ll lead to an increase in productivity. Economists suggest autonomous cars will improve traffic flow, reduce accidents, and result in shorter commutes to and from work. Furthermore, “drivers” will no longer have to focus on driving. Instead, they’re freed up to be productive while in transit. This essentially lengthens the workday and leads to greater output.
Then there are all of the indirect productivity boosters that most people don’t think about. For example, there will be less wasted time sitting in traffic court. Car insurance will be a more straightforward process, resulting in less time comparing insurance products and haggling with adjusters. Cumulatively speaking, all of these elements work together to boost productivity.
It won’t all be positive. On the labor side of things, driverless vehicles could lessen the need for police officers, traffic court administrators, car insurance agents, cab drivers, truck drivers, local delivery services, postal workers, etc.
Job displacement is something we’ll certainly have to work against as driverless vehicles become more embedded in our culture. On a micro scale – i.e., within individual households – this may create challenges and lead to career pivots.
It’s impossible to know exactly how this industry will unfold and what shapes, forms, and applications autonomous vehicles will adopt, but one thing is clear: They’re coming.
While the general public is still a little hesitant to embrace the reality of driverless vehicles – they’ve been told they’re on the horizon for decades, but with nothing to show for – this time is different. It’s more than a theory or an idea – working vehicles are actually on American roads as we speak. From San Francisco to Phoenix to Boston, a revolution is happening. It’s only a matter of years (perhaps months) before driverless vehicles enter the consumer marketplace. And when they do, the economic ramifications will be tremendous.