By now you’ve probably heard or seen all the commotion about driverless or autonomous cars that is due to take place some-time in the near future. But contrary to popular belief, driverless cars are already here and are already being developed by the big tech giants and auto manufacturers. In-fact every Tesla vehicle that has been produced has the hardware required for full autonomous driving at a safety level substantially greater than that of a human. The technology behind automated driving systems has been around quite a while. Since 2005 when America’s Military research agency DARPA held a competition that required driverless vehicles to drive a 132-mile off-road course. Stanford University built the winning vehicle and in turn started a driverless car manufacturing race. Fast forward to today and Google, Uber, Tesla, Apple and all the major car manufacturers are producing their own autonomous prototype. But the technology isn’t ready for mass deployment just yet. Firstly, our laws and regulations need to be amended so that they’re driverless ready. Secondly, the technology isn’t ready to handle all driving conditions for full autonomous driving. And finally, we simply aren’t ready to accept autonomous driving and everything that comes with it. The biggest hurdle facing this industry is trust. At the moment people are still deeply sceptical about driverless cars and simply do not trust robots to be in charge of their life. That’s despite the high safety statistics. Most people still don’t know what to think about this new technology and won’t know until politicians give it the green light and it becomes mainstream. It’s a massive leap in technology and will take time to seep into the fabric of society. It may take a few years or longer but either way driverless cars will be the next big thing. From an investment perspective, driverless cars is a story of disruption. In the same way Amazon disrupted bricks and mortar retailing by taking it online, the next disruption event will be in the auto industry by the tech giants. It will be a huge paradigm shift that will affect everything from the look and feel of a city, to the highways and roads, car parks and garages that cars were once parked in. A driverless world where people won’t own cars, but will subscribe to a car service.

How far are we from full autonomous?

An article in the Herald-Sun this week titled ‘Robot Cars to Rise’ talked about driverless cars hitting Melbourne in the next few years. EastLink MD Charles Griplas expects a third of the vehicles on our roads to be autonomous by 2028. That’s less than a decade. eTags will be done with and the younger generation won’t even bother applying for a driver’s licence. Freeways will need to be adapted to have driverless dedicated freeway lanes and autonomous cars will all be interconnected via a 5G mobile network. Of course 5G is the missing link between autonomous vehicles, smart cities, internet of things and eSports. See our article last week on 5G (click here). Driverless cars require a fast 5G data network to have the capability to communicate and operate with human-like reflexes that will prevent an accident. Of course that means that dead zones not covered in 5G will limit driverless cars to only the main CBD areas. Griplas says private vehicle ownership will fall and will be replaced with vehicle sharing.

In California however, things are progressing at a much faster pace. California is pro driverless cars and issued permits to companies wishing to test their autonomous vehicles on the state’s public roads. The first pilot program allows Transportation Charter-Party Carrier (TCP) permit-holders to test autonomous vehicles to provide a passenger service. A driver is required to be in the vehicle, and the company is not allowed to charge passengers for the ride. The second program allows TCP permit-holders to operate autonomous vehicles without a driver in the vehicle and for these vehicles be remotely monitored. It’s a massive step toward public acceptance of driverless vehicles especially after an Uber test vehicle struck and killed a pedestrian in Arizona.

Who are the main players?

What we’re seeing is the start of the driverless car boom. At first glance, our initial assumption was that Tesla was the main driverless car producer but after delving a bit deeper, we found 44 companies working on autonomous cars. From Mazda to Mercedes every major car manufacturer is ploughing big money into R&D into driverless cars and it’s becoming a very competitive space. It’s a race between the tech giants and the auto car manufacturers. Some have teamed up with each other to leverage their strengths. The main players in this game are: Apple, Audi, Autoliv Volvo, Baidu, BMW Intel Mobileye, Bosch Mercedes, DAF Daimler Volvo, Ford, GM Lyft, Honda, Huawei, Hyundai, Jaguar Land Rover, Microsoft, Renault-Nissan-Mitsubishi Alliance, NVIDIA Paccar, Samsung, Tesla, Toyota, Volkswagen, Waymo (Google) and Yutong (Buses).

When it comes to driverless car manufacturers the common assumption is that Tesla, Apple and Uber are the leaders in the space. But this is a misconception and according a study from Navigant Research, Tesla, Uber, and Apple are missing from their top 10 list. GM topped their list with their Level 4 self-driving Cruise AV. Waymo produced by Google was in second place. It was the first company to issue a public safety report to the federal government outlining the car’s features. And in third place is Daimler-Bosch the parent company of Mercedes-Benz who teamed up with Bosch to create a Level 4 and Level 5 autonomous car. The Chinese are also in the game, with their tech giants speeding towards autonomous manufacturing. In fact China’s entire BAT (Baidu, Alibaba and Tencent) giants are all in the self-driving race. Alibaba has a big team of engineers dedicated to building a car. Baidu is developing its self-driving system Apollo and Tencent has an autonomous driving system in place having already tested its fleet. China has set a hard-line target for developing driverless vehicles to make up half of new vehicles on the roads by 2020. Within the next five years, driverless vehicles will start to become mainstream. And to gear up for it, Transurban are making sure its roads and infrastructure are ready for this new technology. The company is currently running an automated vehicle trial using vehicles from BMW, Mercedes, Tesla and Volvo on the Monash-CityLink-Tullamarine corridor. The vehicles will not be marked and will have a driver inside to take control if needed. Click below to see this trial.

The Future

There are 5 stages of autonomous driving. Level 0, when the driver is in control and Level 5, which is full autonomous.

Within five years (2023) there will be Level 5 cars in which there will be no human control. In 10 years expect cars to be driving on all lanes of the freeway at speeds well above 100kph. The driving experience will be a back seat experience where cars will transform into an entertainment lounge with TV screens showing the news and advertisement. We will be able to get so much more out of the existing roads and carparks will be a thing of the past. Driverless cars will be owned by fleet companies like Uber. Free-floating agents that are continually circulating.

There will be an ownership model depending on how much you’re willing to spend. No one will own cars. The world will be a very different place. Cars will act like a private jet. At the push of a button, a car will arrive at your doorstep to take you where you desire. A long distance drive to Sydney could be done via a driverless luxury car that contains a bed and movie cinema. Steering wheels, traffic jams, and parking meters will all be a thing of the past. Even speed limits. Car credits will become the new currency and the car will become a media hot spot where tech giants like Amazon can advertise their products. A new generation will grow up with transportation being a convenient and door-to-door method of transportation. Either way we look at it disruption is on the way.

Who will be disrupted?

This is a case of disrupt or be disrupted. Car companies that aren’t able to adapt, will simply vanish. Big automakers should already have driverless production plans or they face extinction. Some may team up with tech companies to tackle automation such as Microsoft and Ford. This will be a quantum shift in transportation that will disrupt many industries. Here are a few areas that face disruption:

  • Automotive Industry. Obviously, the main industry that faces disruption are the car manufacturers. Most of the major car manufacturers are either producing their own driverless cars or have teamed up with a tech giant to tackle this new challenge.
  • Insurance. With safer cars and fewer people owning cars outright, the need for General Insurance is gone. McKinsey & Co expects car accidents to drop by 90%.
  • Taxi, Bus, Truck and Limousine Drivers. These drives won’t be required and the roles will become nonexistent. Instead, people will be required to manage these systems. Rio Tinto and other miners are already using driverless trucks to transport iron ore at their mines.
  • Car Repairs. Fewer accidents equals fewer repairs. Companies like AMA Group (AMA) will be disrupted. The demand for mechanics will drop as cars become software driven. The demand for car parts will also fall.
  • Hotels. Driverless cars will act as a portable hotel. Instead of staying at a roadside motel driverless cars will offer the same service while driving.
  • Domestic Airlines. Fewer people will catch short-haul flights if autonomous cars offer the same trip, at the same duration at a cheaper price.
  • Ride-hailing companies. Uber is considering its own fleet of cars and Lyft is partnering with GM. Autonomous cars will eliminate the overhead costs of paying drivers. Ride-sharing services may even eliminate the need for public transport.
  • Garages and car parks. Expensive city parking lots will become empty as driverless car fleets move continuously. That’s a lot of empty space that can be redeveloped. The real estate industry will undergo a change in the way houses are designed and how to allocate space that was once a garage.
  • Petrol stations. Driverless cars will be electric powered vehicles, which means a decrease in demand for petrol from petrol stations. To survive they will need to change to EV charging stations.
  • Energy and oil companies. The transition to electric vehicles energy & oil companies may need to figure out how they fit into the new energy mix. They may need to export if demand isn’t here.
  • Entertainment and advertising. Driverless cars will become a broadcasters dream. Media companies will compete to provide content to passengers. For advertisers, it will allow them to advertise their products on the screens inside the car.

Autonomous vehicles are here and within the next decade we will see a major shift in the way we use transportation. It such a big transformation that it will affect almost every facet of everyone’s life and almost every industry. Jobs will be lost and created. Laws and regulations will also have to be modified to ensure a safe transition. It won’t happen overnight, but the cogs are already turning and revolution is underway. Australia is readying itself for this change.

However, this article barely touches the disruption caused by automation and artificial intelligence. In our article next week, we’ll delve a lot deeper into this thematic and look at how autonomous driving will change the agricultural sector and how miners such as Rio Tinto will all be using driverless trucks. We’ll look at logistics, shipping, freight and air. So sit back and get ready to hand over control to a robot, autonomous cars and robots will soon be a reality.