Six Industry-Altering Implications of Autonomous Cars
No. 2 in the series,
The Future of …Seniors can keep their freedom even if they can’t keep their car keys.
And drunk and distracted driving? History.” – Time1
Revolution is in the Air
American competitive juices are flowing as companies scramble to capture the leadership mantle for driverless cars. The repercussions of autonomous vehicles will spread far beyond the auto industry.
A study by McKinsey estimates that auto accidents could decline by 90 percent in an autonomous driving future.2 The impact on auto insurers will be profound.
Initially, it may increase profits, but eventually the demand for insurance coverage will decline sharply. Some companies have already introduced usage-based policies that are priced based on the number of miles driven, reflecting changing driving habits that will accelerate with self-driving autos. Auto insurance may become a very low margin business in the years ahead.
Auto Repair Shops
If driving becomes accident free, the business of auto repair may go the way of the local blacksmith. Moreover, as cars get smarter, it should provide owners with greater transparency, which may prevent less scrupulous shops from padding the bill with unnecessary repairs. Auto parts stores will suffer as well.
If autos are able to drive themselves, then why not trucks? In fact, the trucking industry may lead the revolution, reducing the need for drivers and those ubiquitous highway truck stops.
Uber, Lyft, et. al, RIP?
On-demand transportation companies like Uber disrupted the taxi industry, but they may soon fall victim to what economist Joseph Schumpeter called “creative destruction.” With traditional car companies and technology companies each racing to build autonomous vehicles, the need for drivers may evaporate, leaving an Uber or Lyft to bear the burden of a huge capital investment in cars (presently, that cost is borne by the drivers).
Media and Entertainment
On average, Americans drive about 46 minutes a day.3 How will they fill their time when they don’t have to pay attention to driving? Expect the consumption of media and entertainment to rise, especially as more cars become equipped with screens.
As the tide of autonomous driving rises, expect a fundamental shift in the make-up of the American labor force. Jobs will disappear; not just truck drivers and cabbies, but rental car agents, driver-ed instructors, operators of industrial road construction equipment, insurance claims adjusters, traffic reporters, traffic cops and psychologists treating road rage, among others. Of course, new jobs will be created, but will likely require different skills, much like the mechanic replaced the blacksmith.
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See referenced disclosure (2) at http://blog.americanportfolios.com/disclosures/
Want to learn more about what our futures may hold? Check out other blogs in “The Future Series“.