Over the better part of the last seventy-plus years, passing the driver’s license exam was a rite of passage. Teens longed for the day when they could get behind the wheel of Dad’s old Mustang and leave behind a cloud of dust as they raced towards the horizon. Sitting in the driver’s seat with a parent alongside yelling “Hands 10 and 2… eyes on the road… use your turn signal!” became quite the typical family outing. Eventually, that driver’s license brought you freedom and responsibility – road signs for an ‘Adult Life Ahead’.
But what if tomorrow’s teens never get to experience this?
As we approach the end of the 2015 fiscal year, motor vehicle (and tech) companies aim to bring driverless cars to the European market within the next 3-5 years. But the American vehicle market finds itself at a slight disadvantage and less likely to see these autonomous cars in that same time frame. American lawmakers control the national requirements of vehicle safety, what vehicles are legal and the maintenance of interstates/highways. On the state level, however, there are different requirements for inspections and emissions, plus more complicated regulations regarding what vehicles can/cannot be driven on the roads. Due to autonomous car regulations at the state level, the difficulty for motor vehicle companies to adhere to American car guidelines increases fifty-fold. Volvo head Håkan Samuelsson is very concerned with the inability of the U.S. to nationalize these car laws to ensure that all regulatory guidelines can be met. Samuelsson’s full warning can be found here.
The great appeal for the autonomous vehicle (known as AV from here forward) stems from a desire to increase road safety. Theoretically, AVs should decrease the number of motor vehicle deaths by 90%. An average of 30,000 people are killed in the U.S. each year due to traffic accidents. The claim is made that AVs would save 27,000 of these people. If those numbers are realistic, who in their right mind would be against vehicular autonomy? Autonomy is achieved through algorithms programmed by tech companies. These algorithms allow the vehicle to drive with extreme caution and to follow traffic laws with the utmost precision. Techcrunch.com put out a report analyzing the 11 incidents in which the Google AV was involved. Google places the blame for every crash squarely on the heads of the other human drivers. Although Google is passing the buck and claiming its car is faultless, the public seems less than convinced.
In a perfect world, drivers would put down their cell phones, coffee, razor, lipstick and cigarettes to ensure the safest possible driving experience. But given the nature of mankind to push the limits, take uncalculated risks and disregard prevailing traffic laws, there seems to be a need for an all-or-nothing approach to driverless cars. The combination of AVs and multi-tasking drivers could prove to be an even more lethal cocktail than the current mix of humans-only. A person driving a car can make split-second decisions through the parallel processing occurring in the brain; decisions made based upon spatial awareness and the speed of the vehicle, compensating for other drivers and heightened by the effects of an adrenaline surge. AVs are no more or less than the sum of their parts. While the algorithms running the car are programed to react to and handle any situation, they were programed by humans and will inevitably lack the decision-making skills of a capable driver.
I’ve probably run the following scenario in my head a hundred times. An AV is driving down the highway and it attempts to merge at exactly the same time that another AV plans to speed up in the adjacent lane, resulting in a collision between two cars completely devoid of human control. Whose insurance pays for the damage incurred? Was there a manufacturing issue or did the AV sensors fail to recognize a car accelerating in the adjacent lane? Who is held responsible? Volvo (following suit with Google) addresses these questions by accepting full liability for accidents involving its cars. As always, there’s a caveat: liability is accepted only if the accident was caused by a design flaw. If the owner misuses the technology, the manufacturer is not liable. The same is true if an accident – not being the result of an AV design flaw – occurs with a human third party,
Car insurance policies would still be required, but must be reinvented in order to fit the new mode of driving. Insurance ultimately comes down to a matter of who’s responsible for the traffic accident. As it stands right now, insurance premiums would have to increase substantially to cover the ‘user error’ that will inevitably occur through the use of these cars. With luck, the AV itself will be able to compensate for user error, hopefully within time to prevent an accident. The cost of AVs will be $7,000 to $10,000 on average more expensive than current market cars. This too will raise the cost of insurance due to ownership of a more expensive vehicle which requires a substantial amount of user training and also costly technical repair work in the event of a crash. The luxury of riding as a passenger will undoubtedly increase insurance premiums.
Although the cost of vehicles and insurance are set to increase, this provides a key investment cornerstone for anyone interested in tech/motor vehicle stock trading. Companies devoting billions of dollars towards AV research and development predict that in the not too distant future, the modern day ‘driving human’ will become obsolete: chauffeurs for everyone! With giants like Tesla Motors and Google involved, it’s easy to see that the driverless era is peeking out on the horizon. Tesla’s Model S recently underwent revamping to make it one of the first pseudo-autonomous vehicles on the market. While a steering wheel and pedals are provided, the car utilizes autopilot features which allow the owner to ride hands-free for the majority of the journey. These monumental breakthroughs in technology are bound to increase the potency of the company’s corresponding stock. The current average car price is right around $30,000. The prediction of a $7,000 increase in the average price for an AV (not taking into account inflation), puts us right around $37,000. The larger profit margin accrued will increase the company’s earnings, and market value should follow suit. Investing in these global tech companies early on maximizes the opportunity for substantial profits.
As a realist, it seems to me that we’re bound for driverless cars whether we’re willing to let go of our steering wheels or not. Looking into our automotive future, it feels wrong not to start investing in companies like Tesla, Volvo and of course, Google. To push Tesla stock even a bit higher, Tesla has recently invested a million dollars into battery research at UNLV. This presumably has to do with the urge to make AVs energy-efficient and eco-friendly. If all goes well for Tesla in the upcoming years, they may be the new tech giant on the market.
So, what if we never had those precious moments behind the wheel of Dad’s old Mustang? Or raced Mom’s Jeep through the mud then parked it in the clean garage? What if Mom never got worried when we kept the car out late? Or Dad never had the chance to get mad at our first speeding ticket? While the driverless car phenomenon taking over motor companies provides us with unparalleled safety in theory, it removes something from the fabric of our DNA as Americans, and as humans. There’d be no more need for a driver’s license. Mom and Dad wouldn’t have to tell us time and time again to use the turn signal. We wouldn’t get to pick-up our prom date in the new car. Instead, driving would become exactly what the tech companies claim: automated. It would be out of our control, out of our minds and no longer an activity. The freedom of the open road would only be seen from the passenger seat. If we are willing to put aside those familiar traditions for a chauffeured ride to the grocery store, then by all means let’s throw away our licenses. I can’t say which is the better way to go. But I can say that from here on out, wise investors will pay attention to the Teslas, Googles, Audis and Volvos on the market.