Part 3: Self-Driving Cars, The Next Five Years (2018-2022)

Part 3: Self-Driving Cars, The Next Five Years (2018-2022)

(This is the third in a series of articles about self-driving cars. The views expressed in this article are my own, and do not represent the views of Travelers Insurance Company.)

In Part 1 of this series, I propose that, over the next five years, self-driving capability will go from that of a poor student driver to driving better than any human driver. This is due to the exponential nature of technological advancement in general, and self-driving technology specifically. As we move through this progression, I give my opinion (based on my own thoughts and projections) on what is going to happen each year with self-driving cars (SDCs.) In case you missed it, here’s Part 2.

Before going through the timeline, the issue of legislation…

Many people will argue that, no matter how good SDCs become, legal challenges (such as requiring a driver or a steering wheel in a vehicle) will slow down progress and hamper development. The most compelling counter to this argument are the 40,000 road deaths each year in the United States. SDCs have already been shown to cause less accidents than human drivers, and they will improve rapidly. It will get to the point where it is socially and politically unacceptable to stop the implementation of self-driving technology on a large scale. Additionally, there are already twenty-one states where SDCs are legal and a large number of cities where these vehicles are already driving on public roads, with one state close to legalizing cars with no driver at all. Finally, there is legislation already approved by the House (currently stalled in the Senate) that will increase the number of SDCs on the road; GM is also lobbying for legislation to allow the use of a SDC without a steering wheel.

Because of the reasons above, I assume no significant legislative opposition impacting progress. Here is my timeline. Enjoy!

2018 – Skill level (at end of year): Newly licensed driver                 

Cost per mile of SDC ride-share: $1.41

2018 will still be a pilot year for self-driving capability. There will be a few companies rolling out services in select areas that have significant numbers of self-driving vehicles on the road. Waymo will continue to expand and test its “no driver” taxi service in Phoenix, also piloting service to a few new locations. Their use of hybrid Chrysler Pacificas incurs a significantly higher cost of operation than using fully electric vehicles. GM will announce the cities where it will run a pilot of its self-driving ride service, but the program won’t pick up speed until 2019. A few autonomous tractor trucks will be sold and used on the highway, but they will still have a driver in the cab. All in all, a pretty sleepy year, but don’t be fooled…

2019 – Skill level: Average driver                             

Cost per mile for SDC ride-share: $0.87

Waymo, Nissan, and GM (and others) all announce expansion of their own self-driving car services, with rides available for actual purchase and in multiple cities, but these will still be considered pilot programs. The location of operation for these services will be geo-fenced to very defined areas, but these will begin to expand. Use of electric vehicles starts to dominate in these services, lowering the cost per mile significantly by lowering maintenance costs and increasing total vehicle life miles to 250,000+.  Because of this, the price per mile drops well below that of services like Uber and Lyft (using a driver), but the cost is still only on par with the that of owning your own vehicle. Some early adopters are willing to drop car ownership and use these services exclusively.

GM is successful making it legal for vehicles with no steering wheel to drive on US roads, and they begin placing these sparingly into their Cruise fleets. Many of the new tractor trucks sold will have some level of self-driving as a feature, with more in-city driving capability. By the end of this year, an all-electric vehicle will go on sale for under $30k with a range of 250+ miles. A significant number of new model cars have all-electric motors as an option. Things are picking up steam…

2020 – Skill Level: Good Driver                            

Cost per mile of SDC ride-share: $0.57

Use of commercial self-driving services expands rapidly. Legislation has opened the way for fully autonomous vehicles (with no steering wheel and no driver) to be allowed to drive anywhere in the United States.  The price of adding commercial self-driving technology to any vehicle drops to $100k, and this cost (along with an increase in lifetime mileage of electric vehicles) is low enough that the charge per mile drops 35% from 2019. Self-driving services have now become less expensive than owning your own vehicle. More people are deciding to switch to a self-driving service for their daily transportation. Many new model vehicles are also being sold with some kind of self-driving technology, with trucking beginning to be overtaken with the technology. In 2020, an all-electric vehicle will go on sale for under $25k, with a range of 300+ miles. Houston, we have lift off!

2021 – Skill level: Professional driver, race car driver                             

Cost per mile of SDC ride-share: $0.42

Self-driving services have become common in large cities and begin to expand into more rural areas. Geo-fencing is no longer required. As more all-electric, self-driving vehicles are added to taxi fleets, the full cost of a self-driving vehicle, including the latest tech, drops below $100k.

SDCs are now driving with the skill of a professional driver, and most people become comfortable with the idea of riding in one; the price per mile also crosses a threshold where many are willing to use the service full time. Because of this, many people elect to use SDC services instead of owning their own vehicles. However, electric vehicles with a 350-mile range are being sold below $25k, making it attractive for some to still own their own vehicles. The use of all-autonomous trucking fleets accelerates, alleviating the industry pressure from a shortage of qualified drivers. I am now personally using a service to get to work on the days I go into the office, instead of driving my own personal vehicle.

2022 – Skill level: Better than any human driver

Cost per mile of SDC ride-share: $0.35

Fleets of fully electric, autonomous vehicles are offered most everywhere, at half the cost per mile of owning. There are very few new model cars with combustion engines available for sale, as electric vehicles are cheaper, perform better, and have a much lower cost of maintenance and fuel. A personal self-driving vehicle is still too expensive for the average person (at a total cost of $85k), and more people decide not to own any vehicles at all. Trucking is 65% self-driving.  Automobile accidents and deaths are beginning to drop. The US automobile fleet begins turning over to fully self-driving (at a ratio of 5 personal vehicles being replaced by each self-driving vehicle) at an adoption rate of 8% a year or more.  Prepare the world for major disruption.


Want more?

In Part 4 I share why, beyond 2022, the adoption rate of SDC technology will be faster than that of prior automotive technologies (such as automatic transmissions or seat belt use), and significantly faster than the typical fleet turnover of 5% a year. In Part 5, I list ten signs that will let you know mainstream self-driving cars are actually arriving.

About Matt Perkins

I've been actuating for quite a while now... My experience includes #pricing, #reserving, personal and commercial lines, rate implementation, #SAS, #excel, rating systems, leading projects, managing teams, championing others, ad-hoc analyses, presenting to large-ish groups, and lots of other things useful to insurance companies. I also follow autonomous vehicle technology as a hobby and sometimes work effort. I am currently a Fellow of the Casualty Actuarial Society (FCAS). Anything I write here expresses my own views and does not represent the vies of Travelers Insurance Company.

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