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Driverless technology is coming. When? I don’t know but hopefully sooner rather than later. I think about all the future applications of driverless technology. Many different areas would be affected by this new technology.
The elderly would be able to stay in their homes longer. Many elderly people move into nursing homes because of their inability to care for themselves, namely driving. Deteriorating eyesight and slower reflexes are cause for concern. With driverless technology, the elderly would no longer be reliant on themselves or others to take them places. According to the CDC, at the age of 70, fatal crashes per mile increase noticeably and are highest for those 85 years old and older. On average, over 5,000 elderly drivers are killed each year and more than 200,000 are injured. Through driverless technology, this number should plummet.
On the other end of the spectrum, young drivers are also known for high accident rates due to their inexperience and overconfidence. The ability to remove these student drivers from behind the wheel would greatly reduce the number of collisions. It would also reduce their parent’s insurance payments. On top of that, with the driverless technology, the car’s location would always be known. You never know when a young driver might have a brain lapse and try something sneaky.
Additionally, can you imagine as a parent no longer having to chauffeur your child around? The ability to save time by having a driverless car take your children around would be a gift to parents.
Driverless technology would also have the ability to reduce drinking and driving. Over 9,000 lives are lost each year due to drunk drivers. That equates to three lives a day.
This technology would change the way that we live as a society. When driverless technology is fully implemented, the interior of the vehicle could be completely reconfigured. Can you imagine driving down to the beach and sleeping in a bed in your car? No longer would be you be stressed out having to drive in traffic. You could virtually do whatever you please.
You would no longer be required to find parking in the city. Your driverless car would be able to drop you off at your work or an event and park itself back at your house until you summon it again. Say goodbye to the high price of parking fees and even tickets that you could receive each year.
Speaking of tickets, with driverless technology, speeding tickets should be a thing of the past. No longer would police officers be required to ticket individuals for speeding, since the driverless cars should be operated with the optimal and safest speed.
Accordingly, if municipalities would no longer be able to ticket and fine for revenue, there could be a reduction in municipality workers, which is unlikely. More likely, municipalities would start to charge a toll fee to enter their areas of jurisdiction to make up the shortage. Local and state governments would figure out a way to be paid, one way or another.
With the reduction in accidents, the Wall Street Journal reported that car insurance rates by 2040 could be reduced by almost 80%. Let me point this in perspective. The industry currently collects premiums of $200 billion. It would be reduced to $40 billion. Individual car insurance covers 33% of their business. Another 6% comes from commercial vehicle insurance. If nearly 40% of their current revenue is reduced by 80%, millions of jobs could be lost with the reduction of car accidents. As you can see, a substantial amount of revenue and certain jobs could be lost due to driverless vehicles.
Insurance wouldn’t be the only industry to take a hit. Taxicab drivers and Uber and Lyft drivers would potentially be put out of business. Whether or not you agree with the way taxicab companies and Uber run their companies, both have to be worried about the perceived competition of driverless vehicles. In addition, there are a lot of rumblings in the industry that Tesla’s upcoming semi-autonomous technology could be a direct competitor to Uber and Lyft.
When driverless technology gains traction with the masses, the model of car ownership could greatly change. Right now, most two working-adult households own two cars. In the future, the number of vehicles owned could be greatly diminished. The one car could drive back and forth to serve both adults. On top of that, with cars being used only 11% of the time, individuals may be able to rent out their vehicle during the day when not in use. If this happens, the number of vehicles owned could drastically decrease.
Finally, dealerships make the bulk of their revenue from services such as maintenance or auto repair from accidents. Most dealerships sell brand-new cars with very little profit margin with the hope that they will up-sell you services over the life of the car. With car ownership potentially declining, the omission of human error and the addition of smart technology should drastically reduce the number of accidents meaning less time spent at the dealership. In addition, Tesla plans to sell vehicles directly to the consumer, which would upend the traditional franchise model that dealerships currently depend on.
So you may ask, what does this have to do with personal finance? Picking winners and losers in the stock market is difficult. Lots of individual investors are buying stocks in anticipation of the future events. Companies that provide elderly care are extremely hot right now, as is the eagerly anticipated Uber IPO. Another hot pick, Tesla, has never actually made a profit, but it remains a darling of Wall Street.
While these may turn out to be terrific investments, the problem with making these bets is that technology is moving very rapidly. And, no one knows what the future holds.
Do you think driverless technology is over-hyped? Does this make you want to avoid certain sectors when you invest? Share your thoughts below.