It seems everywhere auto manufacturers and Internet firms and electronics manufacturers are engaged in a fierce race to develop the first driverless or autonomous car, which experts say should hit the road by 2020. Indeed one source thinks there will be 22 million of these vehicles on the world’s roads by 2025 while another sees this figure at 71 million by 2030.  In other words, the digital revolution is about to enter the driver’s seat of your vehicle.

Currently several auto manufacturers are pushing ahead with driverless car plans including Ford, Volkswagen, BMW, Tata, Mercedes, GM, Honda, Hyundai, Nissan, Renault, Tesla and Toyota. Most expect their cars to be on the road within 4 years. cbinsights has a list of 33 organizations that are working on driverless car technology including high tech firms like Google, Apple, Intel, and Microsoft. To that list we can add Panasonic which has invested heavily in Tesla’s battery gigafactory in the US.

Governments are also getting involved by creating new regulations for driverless vehicles as well as funding testing infrastructure to study how they work under real life situations. For example, last week the UK government announced it was making available £100 million for infrastructure.

Apart from the legal and regulatory obstacles facing the auto and insurance industries as the technology evolves — such as who will be responsible in the event of an accident — a digital battle is being waged over the vast amounts of technical data that will be stored in such vehicles. As Intel Chief Executive Brian Krzanich said recently:

“Data is the new oil. If you have rich data, your car will be able to deal with complex route situations. If not, the car will stop.”

We are being told sensors, radars and cameras on autonomous vehicles will be able to exchange this data with other cars as well as with “intelligent” roadways that can help set speed limits depending on weather and traffic conditions. The passenger behind the wheel (or maybe sitting in the back seat) will be sending e-mails and text messages, listening to music, streaming movies, holding a conference call, making a restaurant reservation, or making on-line purchases. Even our homes will be connected to our vehicles.

According to research author Gareth Owen:

“The introduction of driverless cars will result in fundamental changes to the automotive world and society in general; and it is clear that the boundaries between private vehicle ownership, car sharing and rental fleets will increasingly become blurred.”

The experts seem to have no doubt that driverless vehicles will have a disruptive impact on transportation around the world and will ultimately lead to millions of professional drivers being made redundant. City taxi drivers and long haul truck drivers will be among the first groups to be affected.  Economists say in the US automated vehicles pose a threat to 2.9 million truckers and delivery drivers, 674,000 bus drivers, and 181,000 cab drivers and chauffeurs. Across China, 16 million drivers are responsible for intercity transportation of goods. These drivers account for around 40% of the costs incurred by trucking companies.

Here are some recent developments in the driverless car world to illustrate how close the future really is.

There were several reports this week on how driverless cars might affect the car insurance industry. Autonomous cars will impact everything from who pays for the cost of a crash to how many people are employed by the insurance companies. The changes raise issues around who will be liable for a crash. What happens if a car is in a crash while it is in autonomous mode and it turns out that the latest software update had not been installed? What if the car’s owner had opted to delay the latest software install, the way you can delay a computer software update? Does this mean the driver has voided the insurance policy and is liable for the cost of the crash?

Consulting firm McKinsey & Company estimates that by the middle of this century autonomous vehicles could reduce road deaths in the United States by 90%. This should lead to a sharp decrease in insurance premiums.

Business consultants KPMG predict that by 2040 the US automobile insurance industry could shrink in size by 60%.

The British insurance industry is leading calls for legislation that would require automobile manufacturers to provide a standard set of data from crashed autonomous cars. This would help the insurance companies to work out who is liable for any accident. The data would include information that would help determine whether the vehicle was operating autonomously or not, and what technology was in use. The information would not measure driver performance.

In the US state of Michigan work has begun on the American Center for Mobility, a new technologically advanced testbed for autonomous and connected vehicles. The 335-acre site will enable global automotive manufacturers, suppliers, and high-tech firms to test their cars, connected infrastructure technology, and vehicle communication systems.  All the parties involved will be able to interact with one another and conduct research in tandem. The new facility is designed for research, product development, and education.  The site will mimic cities and highways with off ramps, rail crossings, cyclists and pedestrians so as to offer a microcosm of most scenarios a car can expect to encounter in the real world.  In addition it will take advantage of testing in Michigan’s four seasons of weather including rain, ice and snow. The Center is jointly owned by Toyota, General Motors, Ford, Nissan, and Honda.

Concurrent with the work being done on the American Center for Mobility, the state of Michigan made it legal for fully autonomous cars to drive without a driver inside and opened up 122 miles of public road for testing. Someone must monitor the autonomous car, but they don’t have to be inside. This provides an opportunity for Uber, Lyft, and other ride-hailing apps to explore their driverless business plans.

The Canadian province of Ontario became the first region in the country to approve the testing of driverless cars. Testing is allowed on any road in the province and under 4 season weather conditions. While the vehicles are being tested, Ontario will require that someone sit in the driver’s seat and be ready to take control immediately if necessary.

Ford announced it will make its first fully autonomous car by 2021. However, Ford believes it will take another decade before we see autonomous cars that require no driver input. Between now and then Ford will be gradually adding technology to make their cars more autonomous such as braking and evasive steering.

Chinese automaker Baidu expects to have a small number of functional driverless cars on the roads by 2018. Mass production could begin as soon as 2021 and the majority of its cars produced in 2026 could be autonomous.

Ford Motor Co., Google, Volvo, Uber and Lyft have banded together to form The Self-Driving Coalition for Safer Streets and are calling on the US government to change federal auto safety standards that prohibit the operation of driverless cars. The coalition also wants new legislation to aid self-driving car deployment. This is the first time that companies developing self-driving car technologies have explicitly called on regulators to issue new rules or amend current ones. In particular the group wants one national standard for driverless vehicles rather than having to face many different state and local government standards.

Swedish research firm Berg Insight put out a research paper on the The Future of Autonomous Cars. The study predicts there will be 71 million self-driving cars on the world’s roads by 2030. However, true driverless cars (ie. no human driver) are not expected to be widely available until after 2030.

US Investment banker Morgan Stanley has its own views about the our driving future here. “A future of shared, fully electric, driverless cars on demand is closer to reality than it might appear.” Car ownership will become a thing of the past. Fully electric, autonomous, shared vehicles will eventually be cheaper per mile than automotive ownership.  Fewer cars will be owned, meaning that fewer cars will be sold and fewer vehicles insured, especially in urban areas. No longer will we be talking about how many vehicles companies sell. Instead, we will analyze how many miles are driven. And, when we say “driven”, we do not mean by people. By 2030 26% of all car rides will be in a shared vehicle.  That compares with the 4% today in taxis and Uber and car sharing services.

To sum up our future shared, autonomous vehicle experience we defer to Jeffrey Sobel at Foley & Lardner LLP:

What does this mean for airlines? For public transportation? Why take the train or bus when I can hop in a shared, autonomous vehicle and go to work? Especially for shorter haul flights, why fly given the headaches and delays instead of ride (no one will be driving). Already, many people consider driving for trips 3-5 hours (or more). Imagine if that same trip can be done in an autonomous vehicle and spent working, or reading, or watching a movie.


UPDATE: I note that Collision Repair has a weekly update of events in the driveless world.

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