By Jay

Driverless Car Economy When I set out to research what a driverless car economy might look like, my main focus was the impact on jobs. After all… the autonomous vehicle has become the poster child for mass unemployment.

The future of work will require a new way of thinking. The ability to spot trends, adapt, and learn new things on a daily basis. To think like entrepreneurs (rather than employees).

But before I get to jobs… researching the driverless economy has opened my eyes to something far more important in my opinion.

More than 3000 people are going to die TODAY in a road accident, and another 3000 will die TOMORROW.

I turned on the news this morning to see an aerial shot of a car torn to shreds and scattered across the highway. Another local fatality… just like yesterday, and the day before.

Yes… the impact of driverless vehicles on employment is what this post is about.

But, there needs to be a brief discussion on the BENEFITS of driverless vehicles to put the topic in context, because wide-spread adoption could potentially save thousands of lives every year.

It's true, this technology will in many ways decimate employment… but I couldn't help thinking of the family and friends who just had their lives shattered by a distracted (or tired) driver who crossed over the center line into oncoming traffic.

As a father, it's a terrifying reminder that parents can… and do lose their children.

Everyday, someone is losing a friend, family member, a lover… all because of poor judgement behind the wheel.

As good as we think we are… we get distracted easily, we have relatively slow reaction times, and our eyes can only focus on so much at a time.

Research looks at statistics…  but every statistic is a life, and every life is a story that statistics don't capture.

This may be a story of a driverless vehicle economy… but for those who have lost a loved one in a vehicle accident, it's also a story about saving lives.

 

There are 4 areas where technology is disrupting the automotive industry.


  •  Crash avoidance systems
  •  Autonomous vehicles.
  •  Alternatives to internal combustion (electric vehicles).
  •  Car sharing programs.

Now… fully autonomous driving is the ultimate goal… and up until a couple years ago, most people thought it was pure fantasy.

But it's not. In fact… there are very few (if any) experts on this topic today that think this won't happen.

And, for the most part, it already has.

Alphabet's Waymo car (a subsidiary of Google) has racked up over 4 million driverless miles. Uber another million, and Tesla says that it's customers have already driven over a 100 million miles using their semi-autonomous system.

Fully autonomous vehicles are not consumer ready yet, but they will be… and lost jobs will be in the millions.

I can hear people saying it (and I've been one of them)… my steering wheel from my cold dead hands (no pun intended)… and I get it.

Driving is one of my favorite things to do and even though I'm convinced the time is near… I still can't imagine the day I'll give up the wheel.

But it doesn't matter what you or I think, because this technology will be driven by commercial transport and logistics companies… not every day consumers.

It'll creep up on us slowly, and in some ways go unnoticed.

The ability to replace a human fleet with fully autonomous vehicles that never sleep, never get tired, never get hungry, never get sick, never get a traffic violation… and rarely (if ever) get into an accident… is far too enticing to be overlooked.

Expect the big logistics companies to go first.

And… even with a small (but measurable) reduction in accidents… and we'll see a big push by insurance companies and governments to get human drivers out from behind the wheel and let the AI take over…

And who would blame them?

It's hard to argue with saving lives… especially when driving kills thousands every day.

Autonomous Vehicles and Jobs


The most common statistics quoted are for US truck drivers (1.8 million) as well as 800,000 light truck and delivery service drivers… which add up to 2.6 million jobs that will mostly disappear by the end of the next decade.

Globally that number balloons to several million, and accounts for billions in wages and consumer dollars.

But these are the obvious numbers…

The title of this post is “The Ultimate Job Killer”… and that's because driver jobs are not the only jobs that will be lost.

Let's face it… fully autonomous vehicles will certainly disrupt our economy, but the entire idea is still abstract. It could be right around the corner… but it might also be a decade or more away.

However… we don't need fully autonomous vehicles to upend our economy.

The effects may be felt much sooner…

Crash Avoidance and The Impact on Jobs?


The debate about WHEN driverless cars become the norm is still out.

Estimates range from 2 to 3 years… all the way up to 20 or 30 years.

Personally, I see them gaining traction around the mid 2020's… but as far as jobs being lost, that doesn't matter.

There's a technology in cars today that will begin eliminating jobs in the next few years… one which few people are talking about.

Crash avoidance systems.

These systems aim to reduce accidents (a good thing)… but they'll also do some serious economic damage on their own.

Let me share just one example…

For more than a decade, both my wife and I operated distribution centers in the automotive parts industry. Our primary products were found in the front of the vehicle… radiators, air conditioning condensers and cooling fans.

In most accidents, at least one vehicle receives front end damage. Therefore, much of our business was dependent on selling parts to repair that damage.

If front crash prevention systems are effective (and they have been), people working in the auto parts and repair industry might find their businesses changing, or disappearing completely.

In our case, fewer accidents due to crash avoidance systems would not only have hurt our business (if not shut it down completely)… they would have prevented us from opening in new markets entirely. Fortunately, we're not in that industry anymore.

When Accidents Become Rare


While we're only discussing a narrow line of products here (automotive parts), the impact of crash avoidance systems is tremendous. And remember… we haven't even removed the driver from the front seat yet.

Jobs will be lost in the following areas…

  • Aftermarket parts engineering
  • Aftermarket parts manufacturing
  • Manufacturing supplies, equipment etc.
  • Packaging, and packaging materials production
  • Shipping
  • Warehousing and distribution
  • Sales and administration (related to automotive aftermarket parts)
  • Autobody repair
  • Autobody supplies (such as paint and equipment, masks and so on…)
  • Autobody estimations and insurance adjusters
  • General automotive repair and maintenance (wheel alignments and other mechanical damage from accidents)
  • Traffic enforcement officers
  • Paramedics and ER staff

Fewer accidents might seem like an irrelevant impact on the economy, but tell that to someone who earns their living responding in some way to vehicle accidents.

I already presented one example. It always felt strange celebrating a great month in auto-parts sales, knowing a majority of those sales resulted from someone being involved in a vehicle collision.

Yes… There Will Be New Opportunities, For Now…


The good news is… crash avoidance systems will require new skills, knowledge and parts to be manufactured.

Sophisticated sensors and control devices will need to be produced, installed and maintained.

Also… for all this talk about safety, there is a danger to these lifesaving features that could seriously harm us.

Hackers.

It's one thing to take down a website, or mess with banking information. It's something else to pin the throttle and disable your brakes.

As cars become fully connected and fitted with autonomous controls, the demand for experts in cyber-security will explode.

Those with skills in multiple disciplines (automotive, electrical, programming) could be in higher demand. The more connected devices that exist in a vehicle, the more opportunities for one to fail. Being able to diagnose and locate these problems efficiently will be important.

However… it's also possible that due to safety concerns, we may see a move towards more Apple-like “plug and play” modules that are simply replaced… not repaired.

Will These Systems Become Law?


There are two primary forces that will bring about the adoption of advanced crash avoidance systems and fully autonomous vehicles.

Safety… and money. And if you're particularly cynical… you might say, decision makers only care about safety because it saves them money.

Fewer insurance claims, fewer lawsuits…

If you're a government representative under pressure due to long wait times in the ER, or not enough hospital beds… a meaningful reduction in people coming into the hospital (fewer accidents) is a big incentive to legislate change.

And the numbers are big.

Statistics may not tell our individual stories, but they do paint a picture… and the statistics shocked me.

On average, road accidents cause 3,287 deaths per day, or 1.2 million per year according to The World Health Organization (WTO).

The WTO also estimates that 50 million people are injured every year.

50 million!

Nearly 90% of the world's countries have a population that's less than 50 million people. That's like every single person in Canada, Greece and Norway being injured in a road accident… every year.

Accidents are the leading cause of death for people aged 15-29. And yet, they are largely preventable unlike some other leading causes of death… like cancer.

But, we treat accidents as a simple part of life… an acceptable risk for the privilege of efficient transportation.

But, it's only an acceptable risk when there are no other options.

Soon, a lack of options won't be an excuse.

With an estimated 90% of accidents being a result of human error… people killing each other on the roads will no longer be an acceptable risk.

Prevention Methods 


There are 5 steps on the hierarchy of hazard controls.

  1. Elimination (don't drive or go outside)
  2. Substitution (Replace personal vehicles with other safer and more controlled public transit … trains for example)
  3. Engineered Controls (ABS braking, stability and traction control, daytime running lights, crash avoidance systems)
  4. Administrative Controls (better training, more stringent vehicle maintenance and inspections as well as stronger enforcement of the laws.)
  5. Personal Protective Equipment – last line of defense. (seatbelts, airbags, headrests)

When you look at the above controls, it's easy to see that crash avoidance systems fall directly within the bounds of government regulation.

While it's a stretch to legislate the first two controls (elimination or substitution)… every other control (Engineered, Administrative, and Personal Protection) are highly regulated.

Engineered Controls

A few of the accidents on my local news occurred because someone crossed the center line. This can happen to any one of us. It doesn't matter how attentive we are, how well maintained our vehicle is, or how quickly we can react. Someone can easily cross the center line in front of us and change everything.

We trust that every driver we meet on the road is fully capable and aware. But if that were true, we wouldn't have 1.2 million fatalities every year.

If we have the technology to engineer crash avoidance systems directly into the vehicle, we will. So, it's not a matter of IF these controls are become law, but when.

Front Crash Prevention

We bought a new SUV about four years ago. Of the 5 or 6 we looked at, two of them had a relatively new feature (at the time) called adaptive cruise control, which uses all weather radar sensors to maintain a set distance between you and the vehicle in front.

One of those vehicles, a Subaru… used it's radar sensors for an additional purpose. In a parking lot at lower speeds the Subaru EyeSight system would recognize if someone walked out in front of the vehicle, then automatically apply the brakes to avoid hitting them.

That was four years ago. Today approximately 50 percent of new vehicles have optional front crash prevention features. Autonomous braking is now available as an option on 27 percent of today's models.

These systems are new and statistics vary among manufacturers. However, the trend is promising. Depending on the type of claim and the manufacturer, reductions in claims vary between 15 and 35 percent.

As the technology improves and current vehicles get replaced with newer ones, the benefits will be significant.

More advanced versions of these systems can do things such as pretension seatbelts and adjust headrests to reduce the chance of injury if a collision were to occur. Some might use night vision to provide audio and/or visual alerts to let the driver know something is in the vehicle's path.

Other crash avoidance systems include,

  • Blind spot detection
  • Lane departure warning and keeping systems
  • Park assist
  • Back-over prevention
  • Curve adaptive headlights
  • Fatigue recognition
  • Vehicle to Vehicle communication (V2V)

More Jobs Lost…


Will Aut0body shops be shutting down all over the city? Will manufacturing come to halt? No, of course not. But, vehicles with autonomous braking will reduce collisions overall… and that will in turn reduce the number of jobs associated with the collision industry.

In competitive industries, even a small percentage drop in business can turn profit into a loss (which would have been the case for my wife and I, if this technology had arrived 15 years sooner).

As we've seen with safety devices such as seatbelts and airbags, there is a precedent for widespread adoption of safety features. So the ripple effect of fewer accidents is real.

The economic impact of fully autonomous vehicles is also well documented…

But what are some other factors that will disrupt employment?

Electric Vehicles (EV's)


This is another hot button topic. Will electric vehicles take over, or are they a temporary fad soon to die?

Passionate debates fill Social media threads, forums, blog comments…

Some claim they are no better than internal combustion vehicles, others disagree.

I fall firmly in the “pros” camp when it comes to electric vehicles.

It doesn't matter if we charge them with “dirty electricity”… because,

  • Renewable energy is on an exponential curve and by the time electric vehicles make up a significant portion of the global fleet… our energy production will be much cleaner.
  • No matter how you charge it, an electric vehicle stuck in traffic does NOT idle. In heavily congested cities, where driving is always stop and go, electric vehicles have a massive advantage.
  • Again… no matter how you charge them, electric vehicles have zero local emissions. In other words… pollution is moved out of the city (where people live) and into rural areas where it affects fewer people. Less pollution equals fewer health related problems, equals less strain on the healthcare system.
  • Even charged with dirty electricity… the energy input to output is far more efficient in an electric vehicle. They have far fewer moving parts which means less energy lost to heat and friction.

I could go on… but my point is, electric vehicles benefits are so great that an eventual switch is inevitable.

But let's be conservative and say that only 10% of global vehicles become electric.

A ten percent reduction in fossil fuel powered cars would be a devastating blow to the oil industry… which would have an immediate effect on hundreds of thousands of jobs.

Some have said this would be offset by mining for the minerals required in batteries… lithium and cobalt. But you can't compare oil extraction with mineral mining.

First of all… mining minerals is less energy intensive than oil extraction (particularly in hard to get at areas), and second… by volume alone, we need far fewer minerals.

You can't compare a the volume of a 20 gallon fuel tank that gets refilled every week… to the volume of minerals in a battery that don't need replacing for several years.

So there will be jobs lost in the oil industry that won't be replaced by mining minerals.

Also… one of the reasons dealerships don't like electric vehicles is because they don't require nearly as much maintenance as a gas or diesel powered vehicle.

That's more bad news for the automotive repair technician…

Jobs will be offset somewhat however as electricity demand grows and countries begin upgrading their infrastructure. Again… with the exponential value of renewables (particularly solar), these upgrades will be primarily in the field of solar, wind and geothermal.

Ride Sharing Programs


Another point of disagreement is whether the total number of vehicles on the road will increase, or decrease.

Conventional wisdom says increase. It'll go up because it always has… and that's a fair prediction.

But… when you pair autonomous driving with the trend towards rideshare companies like Lyft and Uber, owning a car is no longer the most convenient solution.

Studies that claim total vehicles will offset the reduction in collisions, jobs, and oil demand (a topic for a different post)… are not looking at the larger picture. We can also add to the list, technologies like virtual and augmented reality, drone delivery, and 3D printing… which will all reduce our need to leave our homes in the first place, and for better or worse… strengthens the argument towards a reduction in vehicle use and ownership.

Bank payments, insurance payments, maintenance costs, licensing fees, parking… these are big expenses that the next generation may choose to do without. Especially when there is little benefit to be had.

Imagine paying a simple membership fee, and being able to summon a vehicle whenever and wherever you choose. It's like having your own personal driver… for a fraction of what it will cost to own a car.

It's likely (again because of the cost benefit) that cities in the near future will make changes to curb car ownership… or at the very least, reduce the need for one.

The math is simple… in general, today's cars are parked 95% of the time.

However, one driverless rideshare vehicle in a large city can operate 24/7 transporting 10 or 20 people per day to their destination. In effect… those 10 or 20 people are sharing the cost of that one vehicle.

Ridesharing (like all of the changes talked about here) has it's naysayers, and they're right… this won't happen overnight.

Owning a car is almost a right of passage for many of us.

But 20 years ago, so-called experts were debating whether or not the internet was just a fad. Kodak refused to see the impact of digital photography, Blockbuster thought Netflix was irrelevant and more recently… giant retailers took a wait and see approach to online shopping.

The low cost and convenience of rideshare companies will eventually reduce vehicle ownership over the next decade or two… and it will be the next generation who lead the way.

Final Thoughts…


While most “studies” of the driverless economy only look at the number of people employed as drivers… the overall impact on jobs goes much deeper.

There are several areas employment that will be affected… and we still haven't talked much about the overall impact on the economy.

Economies are fragile enough, but a measurable drop in consumer spending… especially during a time of high debt and low interest rates… could send us in to one hell of a recession.

But ignoring the ripple effect… from collision repair and parts manufacturing, to traffic enforcement officers and medical professionals… a world where AI takes over the wheel (if only to apply the brakes) can significantly change the employment landscape.

What are your thoughts on autonomous vehicles? When are they coming, and will they have a significant impact on jobs?

Comment and share your thoughts below.

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