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Autonomous Vehicles Poised to Transform the Future of Transportation

Bridges vol. 40, July 2014 / OpEds & Commentaries

By Stephen Ezell                                                                                                                       

EzellInformation and communications technology (ICT) has already revolutionized many industries, from publishing and entertainment to education and health care, and is now in the early stages of transforming countries’ transportation systems. As the Information Technology and Innovation Foundation (ITIF) describes in Explaining International Leadership in Intelligent Transportation Systems, the increasing use of information technologies in transportation networks is apparent in numerous ways, from commuters' ability to access real-time traffic information via their mobile phones to vehicle-infrastructure integration (VII) — a process by which computerized-adaptive traffic signal lights can “know” a vehicle is waiting at a red light with no other traffic present and switch the light to green based on real-time traffic flow. Perhaps the ultimate manifestation of bringing intelligence to modern transportation is autonomous (or driverless) vehicles — vehicles that can literally drive themselves. Virtually all leading automotive manufacturers — including Audi, BMW, Ford, General Motors, Mercedes-Benz, Nissan, Toyota, and Volvo — as well as non-traditional players such as Google, are vying to field autonomous vehicles.

This article discusses the potential social and economic benefits provided by autonomous vehicles, addresses several challenges to their becoming a reality, and briefly assesses the evolving policy and regulatory environment regarding autonomous vehicles in the United States and Europe. It makes the case that autonomous vehicles are poised to deliver five key benefits: greater driver and pedestrian safety; enhanced personal mobility and convenience; heightened productivity and efficiency by maximizing the use of existing highway infrastructure; reduced environmental impact; and a possible increase in economic growth by introducing new business models and service delivery opportunities.

Regarding safety, human error is overwhelmingly the cause of the vast majority of traffic accidents: One report, the Tri-Level Study of the Causes of Traffic Accidents, finds that “human errors and deficiencies” were a “definite or probable cause” in 90 to 93 percent of the incidents examined. The use of autonomous vehicles could dramatically reduce accident incidence because their design can incorporate several safety advantages. For example autonomous vehicles won’t drive while distracted, tired, texting, on the phone, inebriated, or contending with quarreling kids in the backseat.  They will obey all traffic laws, won’t speed, and will be capable of automatically braking when other vehicles get too close. These safeguards could significantly reduce the more than 5.5 million traffic accidents that occur annually on US roadways, causing approximately 35,000 traffic fatalities (almost 100 per day) and an estimated $1 trillion economic cost through lost productivity and loss of life. Similarly, in the United Kingdom, a motorist’s lifetime risk of being killed in an auto accident is 1 in 240; and, around the world, autonomous vehicles might play a significant role in decreasing the 1.24 million fatalities and 50 million injuries occurring on roadways each year. While it is unreasonable to imagine a future in which autonomous vehicles are never involved in an accident, Google notes that its driverless cars have already logged over half a million miles on US roadways without causing an accident: This is more than twice as far as an average American driver goes without an accident. Even before truly autonomous vehicles roam the roadways, a range of information technology-enabled automated driver-assistance technologies, conceived in part during the process of developing autonomous vehicles, are already having a significant impact in reducing accidents and increasing driver and pedestrian safety. These assistance technologies include blind spot detection, lane departure warnings, dangerous proximity (pre-collision) indicators, rearview cameras, parking assistance, etc. For example, since 2010, Volvos equipped with a safety system have experienced 27 percent fewer property-damage claims than Volvos without one.

Secondly, autonomous vehicles could profoundly enhance personal mobility and convenience, particularly for citizens such as the elderly, young, disabled, or injured, who cannot drive themselves. For instance, a recent YouTube video that went viral showed a blind citizen, Steve Mahan, completing daily chores and visiting friends, thanks to a Google driverless vehicle. Chris Urmson, the leader of Google’s Self-driving Car program, has observed: “We all at some point will lose the privilege of driving [as we get older] and autonomous vehicles could help people maintain the mobility they’ve grown accustomed to throughout their lives.” But autonomous vehicles won’t be a boon only for those unable to drive; they'll also present a compelling mobility option for people who prefer not to own a vehicle or who choose not to drive under certain circumstances. Instead of turning to taxis or ZipCars for temporary transportation, one can imagine a future in which just hitting a button on a mobile phone application will "call" an autonomous vehicle to take you to your destination. Some fear that autonomous vehicles may threaten a person's “autonomy” — the freedom to get behind the wheel and enjoy the driving experience — but it doesn’t have to be an either/or option.  In the future, autonomous vehicles will be available when you need or want them, but that certainly won’t prevent people from owning their own vehicles and driving whenever they want to.

Autonomous vehicles are also well positioned to maximize utilization of the existing transportation infrastructure and assets. For example, the average American vehicle sits idle 92 percent of the time (e.g., after driving the car to work, the owner parks it in a parking garage during the day, then parks at home again in the evening).  But autonomous vehicles could be shared or otherwise redeployed in their spare time (e.g., the car goes to the dry cleaner to pick up your clothes or is rented out to others). A New Yorker article, Auto Correct, summarizing the state of autonomous vehicle technology, cites one study's calculations that a fleet of autonomous vehicles acting as a personalized public-transportation system for a community could be cheaper and more efficient than taxis — possibly using half the fuel and a fifth the road space of ordinary cars, while being more flexible than buses or subways.

Autonomous vehicles could also significantly maximize highway usage by enabling vehicles to drive closer together. Today, at peak capacity, only 6 to 8 percent of highway space is actually occupied with vehicles, but highways full of autonomous vehicles could potentially accommodate 2 to 3 times as many automobiles, significantly ameliorating the $200 billion in annual economic losses and environmental damage caused by traffic congestion in the US. The 4.2 trillion hours lost annually to congestion in the US translates into 34 hours per year for the average American. The Texas Transportation Institute’s Urban Mobility Report notes that this “congestion penalty” costs Americans over $1,400 per year. Because autonomous vehicles will be able to operate more efficiently on highways — and may eventually be positioned to communicate with other vehicles and with surrounding infrastructure — they could play a significant role in reducing traffic congestion. At the same time, as the existing transportation infrastructure is utilized more efficiently, there will be less need to invest in new roadway construction.

Fourth, autonomous vehicles could play a significant role in reducing the environmental impact of cars. Because traffic congestion causes an outsized amount of carbon dioxide (CO2), autonomous vehicles’ ability to make more efficient use of roadways, thus reducing congestion, could play a significant role in reducing vehicles’ environmental footprint. For example, vehicles traveling at 60 kmph (37 mph) produce 40 percent less carbon emissions than vehicles traveling at 20 kmph (12 mph); and vehicles traveling 40 kmph (25 mph) produce 20 percent less emissions than at the 20 kmph baseline. Even leaving aside the question of whether autonomous vehicles are using fossil fuels or hybrid or electric batteries (though one would generally assume the latter), their innate ability to operate more efficiently will decrease the environmental impact of a nation’s vehicle fleet.

Finally, the economic impact of autonomous vehicles will be tremendous and will extend far beyond their contribution to mitigating the $1 trillion annual economic loss from traffic accidents and at least $200 billion impact of traffic congestion. Indeed, autonomous vehicles will have a profound effect on a wide range of industries while enabling the introduction of entirely new business models. As noted, companies will offer “personal mobility solutions”:  Instead of going to pick up a ZipCar or hail a taxi, a person can use a smartphone application to summon an autonomous vehicle on demand. Likewise, if the vehicle is doing the driving, this opens the opportunity to provide value-added, in-vehicle concierge services to the vehicles’ occupant, such as information/entertainment services, Internet connectivity for productivity, tourism information, etc. In fact, in the report The road to 2020 and beyond: What’s driving the global automotive industry?, McKinsey finds that providing concierge-type services to vehicle occupants will become increasingly important as a source of revenue for the global automotive industry.

Moreover, as Forbes writer Chunka Mui explains in a series of papers detailing how autonomous vehicles will revolutionize the future global economy, many downstream industries will feel the impact of the advent of driverless vehicles. The auto insurance industry will be significantly affected, as will hospitals and doctors, personal injury attorneys, and auto body repair shops, for whom a significant share of business results from automobile accidents. What about communities that rely in part on speeding, traffic, or parking tickets to finance operations? And will as many police officers be needed when many more vehicles obey the rules? Trucking, distribution, and logistics industries are also likely to be revolutionized, with some people envisioning lanes for driverless trucks platooning down the highways.

Autonomous vehicles will also have an impact on the economic vitality of regional and even national economies. For example, a study by the Reason Foundation, The Effect of Traffic Congestion on Regional Economic Performance, found that if “free-flow traffic conditions” could be achieved in just eight US cities, it could boost their economies by $135.7 billion and generate $9 billion in additional taxes. Autonomous vehicles will help make this possible by more efficiently using the existing transportation infrastructure. Finally, because autonomous vehicles represent a key component of the future transportation ecosystem, they will account for a growing share of revenues (and jobs) produced by countries’ automotive and information technology industries. For that reason, a number of countries are intensely competing to ensure that they can provide a favorable policy environment in which autonomous vehicle manufacturers can develop, refine, and experiment with their technologies.

But for all their potential benefits, autonomous vehicles aren’t around the next corner. Even the most optimistic predictions of their availability to the mass market place the date five to ten years in the future. And, as represented in the MIT Technology Review article Driverless Cars Are Further Away Than You Think, many skeptics such as MIT professor of robot navigation Tom Leonard believe driverless cars are much further away than that. Leonard believes that “there won’t be taxis in Manhattan with no drivers in my lifetime,” and argues that many of the core technologies underlying autonomous vehicles (e.g., computer processors, radar, cameras, side-laser scanners, ultrasonic sensors, and global positioning systems) just won’t be available at prices palatable to the mass market any time soon. Moreover, he and others point out that various companies’ prototypes of autonomous vehicles still encounter difficulties even in rainy or snowy weather conditions. Despite those caveats, the technology optimists counter that Moore’s Law predicts exponential rates of increase in the power of these technologies accompanied by simultaneous decreases in price, suggesting that autonomous vehicles can, in fact, be produced at reasonable prices within a decade.

Aside from the technological and public acceptance issues, a number of policy, regulatory, and product liability hurdles still need attention, as ITIF describes in greater detail in The Road Ahead: The Emerging Policy Debates for IT in Vehicles. To date, four US states — California, Florida, Michigan, and Nevada — as well as the District of Columbia have passed laws permitting road testing of autonomous vehicles. Europe is also beginning to look at adjusting its laws regarding the legalization of autonomous vehicles. But as a BMW representative recently noted: “The legislation is just not in place for us to be able to put these [autonomous] vehicles on the [European] market.” Still, an important step towards this end was taken in April 2014 with the passing of an amendment to the Vienna Convention on Road Traffic (an international treaty designed to facilitate international road traffic, which covers 72 nations including European countries, Mexico, Chile, Brazil, and Russia, although not the United States, Japan, or China).  The amendment will permit vehicles to drive themselves, so long as the vehicle can “be overridden or switched off by the driver.” The amendment still has to clear several bureaucratic hurdles and must be worked into various countries’ laws, but it does pave the way for automakers to move from test drives to commercial marketing of autonomous vehicles in European countries at a much accelerated pace, potentially benefiting European automakers by providing a domestic marketplace in which autonomous vehicles can be legally sold. Europe may also have an advantage over the United States if autonomous vehicles become legal for sale and operation across the entire European Union; by contrast, the legal status of autonomous vehicles in the United States will be determined on a state-by-state basis. In May 2013, the US National Highway Transportation Safety Administration (NHTSA) issued a preliminary policy statement intended to guide states in permitting the testing of emerging vehicle technology. This was the first step in a four-year-long process to examine every facet of autonomous vehicle technology, from testing and licensing to full-scale implementation. Still, while NHTSA can set safety standards and provide a framework, individual US states must determine the legality of operating autonomous vehicles on their roadways.

A particularly thorny issue pertains to product liability, particularly who is at fault if an autonomous vehicle is involved in an accident, as the National Journal explores in the article Who Gets Sued When Your Robot Car Crashes? Is it the passenger (who is no longer the driver), the automobile manufacturer, or the company who wrote the computer code operating the driverless vehicle? At the same time, the product liability risk must be balanced against the societal benefits of a potentially significant overall reduction in auto accidents. One option, as noted by Alex Brown in the National Journal, could be to create a payout fund that would compensate victims of driverless car accidents, possibly modeled after the US Health and Human Services Department’s vaccine injury compensation fund, which includes a 75-cent tax in every purchased vaccine as part of a no-fault program to assist those injured by vaccine-related incidents, thus protecting the pharmaceutical industry and medical community from legal battles and expensive damage suits.

In his Wired article Let the Robot Drive: The Autonomous Car of the Future Is Here, Tom Vanderbilt notes that Mercedes-Benz founder Karl Benz had once lamented that the global market for his invention — the automobile — would be limited only by the lack of qualified chauffeurs. Today, Bill Krenik, chief technologist for the semiconductor manufacturer Texas Instruments, argues that the advent of autonomous vehicles will be as transformative as the shift, in a prior era, from the horse to the internal combustion engine. Just as it once seemed unimaginable that we could drive ourselves, and today it seems unimaginable that anything besides humans are capable of driving, tomorrow we’ll find that driverless cars are capable of doing the job just fine — quite possibly, even better than we can. In conclusion, autonomous vehicles will be key to the future competitiveness not only of automobile industries but of national economies. It is vitally important that the United States and countries of the European Union provide a welcoming regulatory and sociopolitical environment to encourage the deployment and adoption of this transformative technology.

Stephen Ezell is a Senior Analyst with the Information Technology and Innovation Foundation (ITIF), a Washington-DC based technology and economic policy think tank, where he focuses on science, technology, and innovation policy and trade issues. He is the co-author with Dr. Robert Atkinson of Innovation Economics: The Race for Global Advantage (Yale, September 2012). Ezell came to ITIF from Peer Insight, an innovation research and consulting firm he co-founded in 2003 to study the practice of innovation in services industries. He holds a B.S. from the School of Foreign Service at Georgetown University, with an Honors Certificate from Georgetown’s Landegger International Business Diplomacy program.