Self-Driving… You Out of Business

Autonomous vehicles will increase safety and convenience on the roads, but at what expense to other industries?

Automotive technology has made amazing strides over the last decade.  Features including facial recognition security systems, rain reflection cancellation, and quicker electric charging capabilities are just a few developments that enhance our ride experience [1].  However, the biggest advancement with the largest implications are with autonomous vehicles.  Companies such as Ford, GM, Tesla, Uber, and Google are investing heavily in autonomous vehicle technology in order to be the first to market [2].  There are levels of automation that a car can contain.  The levels range from no automation to partial or conditional to full automation, see Figure 1 [3].  On the road right now, we have lower levels of automation (i.e. self-parking cars, Tesla’s autopilot feature, etc.), but the companies listed prior plan to have fully autonomous vehicles on the market for commercial use in the next five years [2].


Figure 1 [7]

While the implications on safety and convenience are wonderful, what will the availability of autonomous vehicles do to the companies and agencies dependent on the adverse effects of human error while driving?  Once self-driving cars hit the road, there will be fewer accidents.  Studies show that accidents could be reduced by about 90% when autonomous vehicles are the primary mode of transportation [8].  This is great news!  Fewer accidents mean fewer injuries, fewer deaths, and savings to the economy.  This is great news, however, for everyone except for the auto repair shop owner to relies on accidents for 31% of their business (the next largest segment is paint repairs at 21%) and is a $22.4 billion industry in the United States [4].  The nature of these repair shops will need to change and adapt if they want to survive.  In the future, cars will be able to take themselves into the shop in order to receive the maintenance they require and which humans are typically too busy or lazy to administer.  The shops will also become more of a computer maintenance and repair shop focused on autonomous vehicles.  The repair shops that are slow or begrudged to adapt to the new technology will quickly run out of customers to service [5].

In addition to the auto repair industry, local governments will receive less revenue due to autonomous cars becoming a norm.  Approximately 41 billion people receive speeding tickets alone in the United States every year, paying out more than $6.2 billion annually [6].  Add parking tickets, towing revenues, and other violations to the mix and there would be a significant gap in funding.  There are a few options that local governments could implement to try and reallocate where their funds are coming from.  First, they could change their tax policy from an asset-driven revenue system to a utilization-driven system.  For example, instead of having registration fees for vehicles, they could tax on the number of miles driven during a certain period of time [6].  They could also designate a “fast lane” with a fee for those people in a hurry to arrive at their destination.  There are a number of options that local governments could implement in order to regain the funds lost by the adoption of autonomous vehicles.  It will be important that governments have these changes ready for when the new technology is adopted.  There will inevitably be at time where there is a mix of human driven and self-driving cars on the road, so governments will need to find a way to capture the most value from each type of driver throughout the adoption cycle.

Autonomous vehicles will be a major advancement in technology and inevitably make being on the road significantly more safe, convenient, and productive.  However, there are several complementary industries to the automobile industry that will suffer as a result.  In order to remain afloat, these industries will need to adapt and change with the adoption of self-driving cars.


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Student comments on Self-Driving… You Out of Business

  1. Great article Regan! I have to say, while I agree that local government revenue will decrease due to reduced numbers of speeding tickets, I suspect that would pale in comparison to the reduced cost of care for those injured in car accidents. As a result, I think the would have a net positive impact on the books of local government.

    I agree the auto repair shops also face a severe threat but wanted to expand this to reduced car ownership. Given that driverless technology will mean transport through methods such as Uber will become the norm, less people will own cars and the cars in use will be much more highly utilised. As a result, there will likely be less repair work required for everyday wear and tear.

  2. Great article! I normally enjoy driving, but a car that can take itself in for and oil change? Sign me up!

    I do agree with COG about the lost government revenues. The cost saving associated with the ability to safely reduce the number of emergency responders and traffic enforcement personnel should more that make up for the lost traffic fine revenues.

    I think the lost jobs you mention are a much more serious problem. Advanced robotics and smarter software have been replacing blue collar workers for years, and machine learning is on the verge of eliminating many white collar professions. On one hand, the technology revolution has enabled average people to access products and services that were unimaginable just a few decades ago. On the other, if members of the machine-replaced workforce cannot be retrained for other meaningful employment economic inequality will increase further, eventually necessitating huge welfare spending to support the unemployable. Political polarization would likely increase further, paralyzing democratic governments and compounding the problem. That may sound dramatic, but the pace of technological advancement is accelerating and we don’t really know how dramatically different the global economy may be in 20 years.

  3. Interesting – I had no idea that speeding tickets made up such a large portion of government revenue!

    I agree with your point that one of the biggest concerns is lost jobs in the auto repair industry. I think another large concern is that it seems our tolerance for accidents in self-driving cars is much lower than our tolerance for accidents that we humans cause ourselves. In other words, I’d be worried that even though 90% less accidents could happen in self-driving cars, the few accidents that do happen could have effects that resonate much more strongly – sort of like a plane crash in that we are injured by something that was out of our control. I’d worry that even a small handful of these crashes could bring down the industry, as people fear what is out of their control.

  4. There are enormous implications to self-driving cars. Based on my research, truck drivers will be the first to go. This is because highway driving is an easier problem to solve than city driving (only requires speeding up, slowing down and occasionally changing lanes). Interestingly, truck driver is the most common job in the US. What happens when they are out of jobs? What will they do? All the industries that cater to them, from road-side eateries to gas station convenience stores, will likely be decimated. What happens to those local economies that depend on truck driver business to survive? Are you worried about the truck drivers of America? I am.

  5. Great post – I was sad to read about the first death directly attributed to self driving cars – do you think that self-driving car companies should be allowed to iterate on software design on our roads without fully proving and testing the concept? It feels like the stakes might be too high? Forbes notes that ‘there has been scant regulation of the industry.’ Seems pretty concerning…

  6. Thank you for this awesome post! However, I disagree. We should not cry for industries whose time has passed – if that was the case, we should pray for cure for cancer to never be invented. There is no demand for public executioners and no one really misses them. And as for local government revenues – I’m sure they appreciate concerns, governments, however, will always find a way to reach into taxpayers pockets to compensate for lack of income from certain areas.

  7. Great post RR! The advancements in the autonomous vehicle space continue to accelerate– it will only be a matter of time until more self-driving cars hit the road! This post also made me think about other individuals impacted by the shift to self-driving vehicles. In addition to the auto repair shops and truck drivers BZ mentioned, do we know what will happen to taxi or uber drivers? How will employees at toll-roads be impacted? Although I am pro-technology and change, I am concerned our society is not taking enough steps to mitigate some of the potential economic and employment consequences that will arise from this.

  8. Interesting take considering how the loss of moving violations might affect municipal budgets. Do you see any offsetting effects of this shift though? For instance the city will now have a lot of now idle assets (parking spaces, garages, etc.) that they can presumably repurpose to generate revenue streams. I think it will be quite interesting to see how cities and companies react to the disruption in transportation. What will retailers do with massive parking lots if they’re no longer needed? How will car companies play a role in this? How will the business proposition of owning a car change? These are all really interesting questions that I think complement your article well and I’m very intrigued to see how this all plays out over the next 10 or so years.

  9. Great read, thanks for sharing. We’ve talked a bunch about driverless cars lately, but I keep coming back to a position where I don’t think driverless cars will take off as quickly as we think they will. It a great idea and fewer accidents will be great, but doesn’t this only work if all cars are driverless? I imagine there will be a few humans on the road, and the slow adopters are likely to be the worst drivers–therefore, I think the number will improve, but only slightly. Additionally, after the first accident–because I’m sure there will be at least one–the public may push back harder than what we’ve seen thus far. Either way, it’ll be interesting to see how fast we end up down this path.

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