Phnom Penh, Cambodia
There are two big trends in cars: self driving cars and electric cars. Most people think we’re moving to a world where everyone owns an electric car. My thinking is that we will skip owning our own electric cars and most of our transportation will move to driverless electric taxis.
Why? Because cars are a huge and dangerous waste of money. The average American spends about 13% of their budget on car payments, depreciation, gasoline, maintinence, and car insurance. That is money wasted on a car that is not professionally maintained, sits idle most of the time, and is one of the most common ways to die.
How Driverless Taxis Take Over
We are a long way from everyone riding in a driverless taxi right now. So how do driverless taxis take over? I think that once a foothold of self driving cars get on the road, data will show that human drivers are far more dangerous than computers. As a result, the insurance cost for driving your own car will creep higher until it is an unbearable expense for most people.
How driverless cars are safer:
- See 360 degrees around the car at all times.
- Communicate with each other as they come across obstacles.
- Make fewer errors.
- Intelligently handle bad weather on the road.
At the same time driverless taxis will become much cheaper than either driving yourself or taking a human driven taxi. Right now the technology and computers to replace a human driver cost about $300,000. That’s ten times the price of the average new car (see same article).
This outfit cost will come down as the self driving technolgy is put into production. I would guess that in 5 years it costs less than $100,000 to outfit a Prius as a self driving car. To pay for a $100,000 capital investment an investor will look to earn $20,000 per year. This is less than most taxi drivers make today.
There are some other cost benefits to driverless taxis:
- They can draft each other on the highway for energy efficiency.
- They never miss a turn.
- They can immediately drop off one person and drive to pick up another.
- They can cluster around parts of a city with high volumes of pickups.
- They can take themselves to a fixing station for regular maintinence or charging.
How this changes cities
Think about the changes to your neighborhood.
How much space is dedicated to parking? In the future, cars that aren’t used will drive themselves away. We might convert existing parking areas into outdoor seating or rip them up and replace them with parks and gardens.
How much time do you spend commuting every day without being productive? This goes away. Since cars can draft each other without accidents, traffic becomes negligible. Since you’re not driving the car now you can read, work, or play games.
Do people still live in cities? Proximity to downtown will become less important. Public transit, which has never really worked in the United States, will largely go away in favor of on demand driverless taxis. Suburban property values may go up as people decide to leave cities in favor of having more space with their newer, much faster low traffic commute to work.
Driving and owning cars today sucks. I’m excited for the driverless future.