Global Cultures

Reframing Perspectives: Robot Roll

May 2017

Re-inventing the wheel: why autonomous vehicles will be the most disruptive force in transport since the internal combustion engine.

Once the stuff of science fiction, autonomous vehicles (AVs) are now touted as the most disruptive force in transport since the internal combustion engine. AVs certainly have some great benefits – not least fewer crashes, low-to-no road rage and improved traffic flow. And demand for AVs looks set to explode, with the Boston Consulting Group predicting a US$42 billion market by 2025.

Dirk Hoheisel

APAC on track

AVs armed with artificial intelligence (AI) are making inroads across the Asia-Pacific (APAC) region. Last year, the German multinational engineering firm Bosch unleashed its self-driving car – a revamped Tesla – on the streets of Victoria.

“On the freeway, the car becomes the chauffeur and the driver a passenger," said Bosch executive Dr. Dirk Hoheisel.

In Singapore, the ride-hailing firm Grab is also letting the car play the role of chauffeur. Partnered with the MIT spin-off nuTonomy, Grab has put driverless cabs on the island's neat streets, aiming to have 100 working commercially by 2018.

According to the island's Economic Development Board, the partnership proves the vibrancy of Singapore's urban mobility ecosystem. News of the partnership surfaced last September - just as Grab announced raising US$750 million in funding that would boost its ability to compete with Uber across Southeast Asia.

Big wheel

Meantime, the Chinese tech giant Baidu is refining its self-driving model, to stave off rival titans – the inevitable Uber, industry leader Google (alias Alphabet), and Tesla for example.

Last year, Baidu ran autonomous vehicle trials in Wuzhen, southern China. Impressively, its AutoBrain cars maintained a speed of 60 kilometres per hour while changing lanes.

Baidu's progress reflects the fact that China is no longer all about knockoffs. Dubbed an innovation hub by Wired, China has its own Silicon Valley-style startup scene.

Unlike the US though, China has never embraced the romance of the open road. The gridlock that dogs cities such as Beijing strengthens the case for AVs, which will likely curb congestion. Autonomous vehicle development, especially in the trucking sector, is further aided by the lack of restrictions on testing AVs on China’s public roads, with government sources targeting up to 20 per cent of the cars on China's roads will be highly autonomous by 2025.

Meanwhile both Australia and New Zealand already have government-supported on-road AV trials underway and moves towards policy development.

The momentum being gained by autonomous vehicles in Asia and the Antipodes suggests that one day fairly soon AVs will inevitably nudge vehicles hosting impulse-prone human drivers onto the hard shoulder for good.

But as we bide our time behind the wheel, the advent of AVs across APAC comes with some big implications.

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Vivek Wadhwa

Breaking cover

One of the thorniest issues surrounding AVs is their impact on insurance.

A recent report from EY found that premiums overall could shrink because of the likelihood of fewer crashes across the board.

The price drop will please consumers, but also poses questions about the future for traditional insurance providers. Could AVs mean the end of the road for consumer auto insurance?

The strategies already embraced by today’s AV sector suggest that’s not a far-fetched scenario: just look at Tesla, which plans to bundle insurance into the price of future vehicles. Likewise, Volvo’s car manufacturer, sold to China's Zhejiang Geely Holding Group in 2010, has already promised to take full liability for the actions of its self-driving vehicles when they officially go to market.

Black box verdict

Traditional auto insurers' days really are numbered, according to scholar and entrepreneur Vivek Wadhwa, the author of The Driver in the Driverless Car: How Our Technology Choices Will Create the Future.

The Carnegie Mellon scientist, who holds a computing studies degree from the University of Canberra, says that software and hardware vendors will share liability for crashes, depending on where the fault lies.

AVs can also deploy “black box” technology to track who did what. “There is no 'he said, she said'. We will always know who is guilty," he says.

When accidents happen, Wadhwa continues, manufacturers will just accept liability if their hardware is flawed. “Don't forget that there is no guesswork here - we know what went wrong."

With liability covered by other entities, Wadhwa predicts that conventional insurance firms will go bankrupt.

Job market jitters

Wadhwa predicts existing car companies will also be decimated. A new breed of startups spread around the world – such as Tesla, will replace traditional car manufacturers – which is at least reassuring on the jobs front.

AVs may also spark another employment possibility, with human remote agents needed to tackle emergencies, or to become travelling concierges who knock on doors and lug packages.

Nevertheless there’s likely to be widespread transport sector unemployment, with pundits everywhere discussing the outcome of millions of jobs being "killed" or "destroyed". Mike Cannon-Brookes, co-founder of Australia's most successful tech company, Atlassian, recently told Fairfax Media the nation had better wise up.  After all, 2.5 million people drive a car as a part of their job, Cannon-Brookes said.

"Those jobs are all going away whether it takes 10 years, 15 years or 20 years, it doesn't matter," he said, warning against the dangers of complacency in caustic fashion.

As with insurance agents, fundamental structural change from AVs will see drivers of taxis, buses, trains and trucks facing redundancy. That will come with some dire fallout for other groups, like remote towns with economies that rely heavily on a constant flow of truck-drivers driving through.

Once AV trucks controlled by phantom forces come into play, these outposts may well lose any value they provide, and devolve into ghost towns.

AV trucks have already proved their worth in the field: examples include the mining giant Rio Tinto, which already operates over 50 self-drive trucks at its mines in Pilbara, Western Australia. Other trucks with a wider remit may be just around the corner, thanks to the work of firms such as Daimler and the Chinese AI Startup TuSimple.

Financial flipside

Despite the disquiet provoked by the driverless fleets of the near the future, the executive director of the Australian Driverless Vehicle Initiative Centre of Excellence, Rita Excell, predicts the advent of AVs heralds huge economic and social benefits.

The economic benefit for Australia is estimated at $95 billion per annum, including 16,000 new jobs, Excell says, echoing an earlier ADVI statement touting the potential for a new specialised high-tech export market it holds for the nation.

Excell also cites the potential for driverless vehicles' to save over 1000 lives every year, and the enhanced mobility it offers for the elderly and disabled.

Australia and New Zealand join only a handful of countries pioneering on-road driverless vehicle research, giving them the opportunity to become global leaders in the development and deployment of driverless vehicle technology.

A pioneering approach will invigorate both countries' automotive and technology sectors, she says.

ADVI-commissioned research conducted in 2016 found that 47 per cent of Australians agree that driverless vehicles will be safer than traditional vehicles. Seventy per cent want a self-driving car to take over when they feel tired or bored. “Early public sentiment is positive," Excell says.

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Rita Excell, Executive Director of the Australian Driverless Vehicle Initiative Centre of Excellence

William Smith-Stubbs

Triple division

But futurist William Smith-Stubbs is less optimistic.

For Smith-Stubbs, the advent of self-driving cars will involve a tough cultural identity shift for Australians: the end of our close bond with beat-up utes and hand-me-down Commodores.

In the driverless network world he foresees, the old ownership model is over. Car makers - now more accurately described as “Vehicle as a Service (VaaS) providers" - will offer competing plans and incentives.

A knock-on effect of the new service model could be that loans become moot and give way to driverless car plans that operate much like phone plans. Australia already has tried-and-true car share services with business models that have proved effective so far.

The fiscal development will benefit consumers - but not banks; car loans comprise a sizable chunk of bank revenue, and their demise could increase costs in other areas, Smith-Stubbs says.

Like Wadhwa, Smith-Stubbs reckons it is game-over for old-school insurance, too.

If you do not own your driverless car, why insure it? he asks.

Instead, your driverless car plan will come with inbuilt insurance, Smith-Stubbs confirms, explaining that consumers will only need commit to pay-as-you-go monthly fees. No more forking out tens of thousands of dollars for something that takes you to the shops or work then depreciates in the driveway, he says.

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Onwards and upwards

Overall, Smith-Stubbs says, automation will exponentially increase quality of life. In particular, the blind, disabled and elderly will have a new lease on life, he says, citing new access to services and facilities: no more reliance on the retirement home minivan.

Cities may no longer need to accommodate long-term parking, as driverless vehicles take themselves off to low-use areas to recharge.

According to Wadhwa, who sees human driving becoming a sequestered niche pursuit, the whole population will gain from AV mobility.

“Just as horseless carriages changed where we live, allowing us to move into suburbs and socialise, driverless cars will shrink distances. They will provide mobility to everyone: freedom of movement like never before."

What's more, the per-kilometre cost of freedom is unlikely to bust the budget. According to the research firm ARK Invest, shared autonomous vehicles could be cheaper than walking - if you include the price of food required to sustain the slog.

Future roadmap

There’s little doubt that driverless cars will be disruptive.

They look set to erode the concept of ownership, impact the financial services sector, hollow out rural outposts, and render driving obsolete: all while providing a low-cost, liberating, almost frictionless service.

“Soon the public conversation will be about whether humans should be allowed to take control of the wheel at all," says Wadhwa.

Humans taking a ride may have the sensation of being watched, because eventually, Wadhwa predicts, driverless cars will track everywhere passengers go and everything they do - just like smartphones now.

In fact, thanks to self-driving cars' swelling intelligence, our lives will be recorded in databases every waking instant, he says. What a long way we will have come from the days when a car demanded a driver and was all about getting from A to B.

We will have virtually reinvented the wheel.

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