In a January article on CreditUnions.com, Callahan & Associates partner Scott Patterson weighed the benefits and drawbacks of automated automobile disruption.
“The good news is this change is not a short-term problem,” he wrote. “But the bad news is, it is a problem.”
Well, what if this change is a short-term problem? What then?
According to a report from RethinkX, a think tank that analyzes and forecasts the speed and scale of technology-driven disruption and its implications across society, autonomous cars could be ready for widespread deployment and have regulatory approval by 2021.
This thinking is uncommon, sure. The Energy Information Administration predicts about 3% of miles traveled in the United States in 2050 will happen in electric cars. But in taking this optimistic view of autonomous adoption, RethinkX puts a lot of stock in quick and widespread market transformation.
The report states that by 2030, 95% of passenger miles traveled in the U.S. could be happening in autonomous electric cars.
How do we get there?
Per the report, the transition to a world of autonomous automobiles is not a disruption of energy, but of technology. That’s an important distinction, because technological disruptions don’t happen gradually. They happen fast.
And while pinpointing 2021 as the exact year when the switch flips may be a tad unrealistic, the authors of the report point to the explosion in self-driving automobile pilot testing. In April, Navigant Research released a leaderboard grading the 18 biggest companies perusing driverless cars. And while players such as Uber, Tesla, and Google (under the name Waymo) are represented, just about every major auto manufacturer is developing their own solution. Put forth this level of human and capital resource, and the authors of the report believe deployment will surely happen between 2020 and 2025.
Then, within 10 years virtually all trips will happen in electric taxis. That’s because, economically, there would be no reason to drive or own a car individually.
Autonomous electric cars could be four to 10 times cheaper per mile than buying a new car, and two to four times cheaper than operating an already-owned car. Sharing a ride in one of these autonomous taxis could cost as little as three cents per mile.
The cost savings of such a technological adoption were covered by Patterson back in January, and include the elimination of accidents and driver fees, lower insurance costs, and cheaper sources of fuel (or power).
Once adoption starts, it’s a slippery (and fast-moving) slope: fewer gasoline-fueled cars on the road will result in gas station and mechanic shop closures. When it becomes harder to fill up or find a part, it will make more sense to retire the gas car altogether. Also, as infrastructure changes to accommodate automated electric cars — think automated-only lanes — it will be difficult to drive, if not extremely dangerous. The report’s authors imagine a time when cities will have to ban human drivers.
For credit unions, this may all sound like bad news — or at least news that foreshadows an uncertain future. But there’s opportunity yet.
Because, theoretically, these automated electric vehicles would last longer than traditional gas-powered cars and be cheaper to operate, the report’s authors envision a time where businesses could purchase fleets to transport workers to and from the office as an added benefit.
In addition, there’s potential for new business models to develop. Imagine larger self-driving vehicles that could be used as co-working or retail spaces, saving companies in large cities potentially hundreds of thousands of dollars on real estate costs.
Because even as we continue to see the rise of the machines, there’s an important question to be asked: who’s going to finance that?