The Revolutionary Impact of Driverless Cars and Taxis

Billionaire Dermot Desmond recently called for the scrapping of investment in the new Dublin Metro. His reason is actually thoughtful and interesting. He is not against investment in public transport but argues that because driverless cars will be prevalent in a few years’ time that the investment may be not necessary, that is, it may be wasted.

I've been a big supporter of a Dublin Metro line since I wrote a pamphlet for a political party calling for such investment (and a tram system) in the 1980s, long before the Dublin Metro was thought of by any government.

Further, almost a decade ago here in Progressive Economy I argued that driverless cars would have a revolutionary impact on the economy, on society, on mobility and on the way we live. However I did argue in the blogs on driverless cars that they might be prevalent between now and 2030. This was optimistic but the revolution will be major and will happen soon. Photos of New York in 1900 had many horses and few cars but by 1920 this had been rapidly reversed. The adoption of technology can be fast as the adoption of the smart phone also showed.

The Revolutionary impact of driverless cars or taxis

I argued in my blog in 2016 that "when we have safe, accessible and cheaper driverless cars, it will have major impacts on many areas of the economy and society. Driverless cars will have massive impacts on:

1. Manufacturing 
2. Employment in manufacturing and other areas of the automotive sector such as car sales, taxi drivers, bus and train drivers, truck drivers, car servicing, car hire 
3. Road safety - the huge number of road deaths and injuries every year
4. Insurance costs
5. Change  in  the urban landscape and street use 
6. Climate and the environment 
7. Personal mobility and social interaction

Manufacturing

It is likely that the demand for cars will reduce by half and as far fewer will be required there will be a consequent reduction in employment of more than half in car and commercial vehicle manufacturing.  The production of autos , vans and trucks is vitally important in the modern economy. Peak car production was reached in Europe in 2006, but China is making up for the drop in production. In Europe the average number of cars per 1000 people is 500, that is one car for every two people. Ownership peaks at 678 in little Luxembourg and is 409 in Ireland. If driverless cars are everywhere and cheap, few will need to own a car. The Economist (1 July 2015) estimated that cars are unused for 96 per cent of the time. Because people drive their own cars for less than 5% of the time and if driverless cars are readily available then there will be a huge drop in ownership because the car is one of the most expensive and depreciating assets that people own.

Employment

Over 12 million work in the broad automotive industry in Europe in sales, services, taxi, and other driver services. If you scale that up by all the cars sitting in driveways and other car parks around the world, it is a staggering number. And it demonstrates the gross inefficient use of expensive assets.

Road deaths should fall.

In 2024, there were  over 1,200,000 road deaths worldwide. Road deaths are still one of the greatest causes of death, being the ninth biggest cause of death in the world (WHO). Road injuries are both costly and painful. 94 per cent of car accidents are due to human error according to the US Highway Road Safety body. Thus the number of road accidents will fall dramatically, improving longevity, well being but hitting jobs in insurance, in hospitals and clinics etc.
New Zealand Transport ministry put the average social cost at an estimated $4,582,600 (€2.9m) per fatal crash, $857,000 per reported serious crash and $90,000 per reported minor crash.

Insurance

A study by BCG and Morgan Stanley forecast that driverless cars and more car sharing will drive down insurance costs by 80 percent, which will be good for consumers, passengers but not for the industry. Motor insurance is big, being around 42 per cent of all property and injury insurance

Change in the urban landscape and street use

In US cities parking takes up almost one-third of city space. It is less here but it still takes up a lot of space and most of it is on public roads in urban areas. In some cities there are over three parking places per car. With far less cars, public space is freed up for citizens. Paths could be widened and there can be more parks and green areas.

On the other hand, will funding for public transport dry up as more and more shift to the easy and cheap use of hired driverless cars? This potential shift will be a major challenge for public policy.

Impact on climate and the environment.

A halving of the number of cars in a decade or more would have a massive impact on pollution in the production of less cars trucks etc. Furthermore a large fleet of driverless electric cars will cut pollution and impact positively on a localised, renewable electrical grid system.

Far less investment on roads and motorways will be required as the more efficient use of transport will mean few empty vehicles and more scientific driving.

Personal mobility will be impacted.

One of the advantages of public transport is that people walk to and from trams or buses and this helps healthy living. On the other hand if people use driverless cars from door to door everywhere, then obesity could increase. The impact on social mobility is difficult to predict but it could be positive if the correct policies to ensure that there is a widespread public intervention on the ownership and control of driverless vehicles from cars to heavy trucks.

Conclusion

My conclusion in 2016 and still is that the impact of driverless cars will be revolutionary. It will affect all the areas listed above and more. The disruption will begin within a decade. The impact on jobs will be destructive in manufacturing sales service and in taxis, transport.  It is difficult to see where the replacement jobs will come from in the coming decades. This is a major negative impact.

On the hand, there will be  positives – not least less deaths and injuries, lower insurance and more productive and efficient economies, with far better streetscapes and environment

If we have ubiquitous driverless cars are driving around urban areas and available with a tap on a mobile phone, then public transport could be under threat, including the Metro. A key question is whether the operational companies of the fleets of driverless cars should be public or for profit multinationals. The big technology companies which control and will produce the driverless cars are vast quasi monopolies Waymo (Google), Tesla, Zoox (Amazon) ,Cruise (GM) and Nvidia. Scale was required to develop the driverless cars, but when they are ubiquitous, it is doubtful if we want these companies to be the operators.

My view is that the metro should go ahead as it is a type of mass public transport, moving tens of thousands efficiently.  More innovative thinking must begin now because of the impact of fewer cars will impact on the design of our cities, buildings, and retailing.  

Posted in: Environment • Technology

Paul Sweeney     @paulsweeneyman

Paul Sweeney is former Chief Economist of the Irish Congress of Trade Unions. He was a President of the Statistical and Social Enquiry Society of Ireland, former member of the Economic Committee of the ETUC, a member of the National Competitiveness Council of Ireland, the National Statistics Board, the ESB, TUAC, (advisor to OECD) and several other bodies. He has written three books on the Irish economy and two on public enterprise, including The Celtic Tiger; Ireland’s Economic Miracle Explained and Selling Out: Privatisation in Ireland, chapters in other books and many articles on economics.