Monday, November 28, 2016

Automation: Driverless Cars

What I love about automation is the fascinating technological barriers mankind is plowing through and the many use cases certain technologies can solve. Take driverless vehicles, for instance. The effects on the environment are substantial, and pair that with the economies of vehicle sharing - the savings to everyone can be limitless. However, automation throughout history has it's winners and losers.

Let's talk about the losers - right off the bat you think of truck drivers, UPS, FedEx, taxi drivers, Uber, Lyft, bus drivers and on and on - virtually anyone that drives for a living is at risk of losing their job. According to the American Trucker Association there are over 3 million truck drivers in the US alone - pair that with the nearly 10 million jobs reliant on a trucker's salary, like the motel industry, restaurants, truck stops, and bars, the economic effect of autonomous trucks could be staggering.

Uber, Lyft and taxi drivers amount to well over a half a million jobs. UPS employs 240,000 drivers, FedEx likely the same (but couldn't find any quick info on employed drivers), and what about Municipal Bus Drivers? There's 168,000 of those! Lots of job losses, or shifts, however you want to look at it. Businesses will have to retrain employees to provide other functions to support the driverless vehicle. But think about possibilities with automated buses - automation could drive the fare prices down, increase efficiency in route lines, and certainly improve delays.

Automation effects don't stop at the driver in these services industries. Consumers can benefit from owning or sharing an automated vehicle. Ride sharing means you can have a vehicle pick you up and drop off at any time during the day with scheduling apps. That's obvious today, but sharing that vehicle means LESS cars. My car just sits in my driveway all day until I need it at night typically to move kids around to practices. What if I shared it with several other drivers and using an app they just took my car to run errands, go to meetings, or whatever. Brian Johnson, analyst from Barclays, has written that the auto industry will produce 40% less cars in the next 25 years due to driverless vehicle automation. The auto industry is already steeped in automation that has completely redefined the "auto worker"; these types of production forecasts can only hamper job forecasts in the plants.

For consumers, less cars means less taxes to pay (excise, gas, sales), less parking to pay in big cities, insurance will shift the liability to the manufacturer or municipality away from the driver (cause there isn't one to blame). Some of that liability will have to stay with the driver, as with any auto-pilot type system, there may have to be a human at the wheel at some point which will require a variation of the traditional coverage offered today. But like the other industries effected by automation, so too will insurance companies. Lower premiums will require insurance companies to innovate to find replacement revenue streams lost to automation.

One of the scarier components to this automation is the hit to the local governments. Traffic violations are a $6 billion business for municipalities in the US, and that doesn't count parking violations. NYC raked in over $500 million in parking ticket revenue in 2013. Less revenue streams due to automation means governments will need to come up with new and innovative ways to pay for itself, or it will have to shrink itself, which means less jobs or more taxes. Therefore, everyone regardless of your profession is influence, good and bad, by autonomous vehicles.

There's so much more to automated vehicles than just what I've written here - in fact, these are just my observations and basic statistics that I've found reading only a handful of articles from McKinsey, Barclay's, US Bureau of Labor and Statistics, and other lesser known publications like Harvard Business Review! There are a lot of smarter eyes on this than you can imagine. But getting involved and really understanding the technological developments can really help refine the regulations that will come with it, understanding the shift in education for the salaries affected, spawning innovations that can lead to new job development, and all the other benefits to automating one simple thing: the driver!

My next piece of automation that I've been reading about lately is blockchain. Automating the financial transaction and it's worldwide effect on the banking industry.

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