AMERICANS WANT SELF-DRIVING cars. Not because they’ll save loads of time or ease the commute nightmare, but because it will save them money.
Of the 1,500 US drivers the Boston Group surveyed in September, 55 percent said they “likely” or “very likely” would buy a semi-autonomous car (one capable of handling some, but not all, highway and urban traffic). What’s more, 44 percent said they would, in 10 years, buy a fully autonomous vehicle.
What’s most surprising about the survey isn’t that so many people are interested in this technology, but why they’re interested.
The leading reason people are considering semi-autonomous vehicles isn’t greater safety, improved fuel efficiency, or increased productivity—the upsides most frequently associated with the technology. Such things were a factor, but the biggest appeal is lower insurance costs. Safety was the leading reason people were interested in a fully autonomous ride, with cheaper insurance costs in second place. (Reasons not to want a robo-ride include fear of hacking, distrust of the technology, and good old love of driving.)
This is unexpected, because how insurance will shake out usually is on the “tricky things to be figured out” side of the ledger, alongside how the government will test and regulate the vehicles. The current insurance business model—car owner has insurance to protect himself from the risk of causing a crash—doesn’t make sense if the computer’s in charge. And if we can make cars that rarely crash, do we even need insurance? We certainly won’t need to spend as much on it (currently about $800 a year, according to the National Association of Insurance Commissioners).
But just as automakers are sneakily getting us to accept self-driving cars, insurers are quietly adapting to the change.
In the near term, semi-autonomous features—blind spot monitoring, adaptive cruise control, collision avoidance—will lead to fewer crashes. That reduces costs for insurers, says Xavier Mosquet, head of Boston Consulting Group’s North America automotive division. That’s why you see lower premiums for safe driving records, and discounts for having things like anti-lock brakes.
The XC90 is the first car in the world with technology that features automatic braking if the driver turns left (or right in left-hand traffic) in front of an oncoming car. This is a common scenario both in in busy city crossings and on highways. The all-new Volvo XC90 detects a potential crash and brakes automatically in order to avoid a collision or mitigate the consequences in a crash.
That’s why “a vast number of insurance companies” are exploring discounts for those semiautonomous features, Mosquet says. For example, drivers who purchase a new Volvo with the pedestrian protection tech qualify for a lower premium. “The cost to [the insurer] of pedestrian accidents is actually significant, and they’re going to do everything they can to reduce this type of incident.” That’s already started in Europe and is spreading to the US.
The tricky part for insurers is figuring out how much each advanced driver assistance system feature is worth to them. Boston Consulting Group is helping with those calculations, and it’s not a major hurdle.
The harder question comes when we hand over nearly all the driving to our robots. Liability—who’s responsible in a crash—will be an issue. What will likely happen, Mosquet says, is a shift from driver liability to product liability, so blame and cost will be assigned to the automaker, or whatever supplier is at fault in the event of a crash. Figuring out whom to blame, exactly, won’t be easy, and regulators will likely step in. Again, a tricky situation, but nothing that will stop progress.
So yes, we’ll be rewarded financially for giving up the wheel. But in the long run, as fully autonomous cars take over our roads, the insurance companies will have to adapt. They can’t argue against saving lives, but “they’re very, very concerned,” says David Carlisle, chairman of the board of auto industry consultancy Carlisle & Company. “If the car can’t wreck anymore, those premiums have got to go down drastically.”
We’re not sure just yet how they’ll stay in business (higher flood insurance premiums to go along with sea level rise?), but we’re glad that letting the robot drive won’t just keep us alive and productive on the road—it’ll save us money, too.
42 Hours a Year In Traffic Jams
Hate your commute? It’s going to get even worse
American drivers put a record number of miles on their vehicles in 2015 -- roughly 3.15 trillion miles, or enough to make roughly 337 round trips to Pluto.
These figures were just released by the Federal Highway Administration, which says they mark an important milestone: The number of vehicle miles traveled in 2015 finally surpassed the highs last seen in 2007, before the Great Recession. The numbers encompass all types of road travel -- passenger vehicles, trucks and buses.
But the population has grown since the recession. On a per-capita basis, vehicle miles still haven't caught up to the levels seen in the mid-2000s. Vehicle miles per capita topped out in 2004, at 10,105 miles per person. Last year, the per-capita tally stood at 9,794 miles.
Still, last year was a big year for driving. Total vehicle miles increased by more than 4 percent, the biggest year-over-year jump since the late 1980s. And the reason why can be summed up in two simple words: cheap gas.
With gas currently at $1.71 per gallon, it hasn't been this affordable to drive since 2004. In places like Missouri and Oklahoma, gas costs less than $1.50 per gallon, according to the American Automobile Association.
If it's cheap to drive, people are going to drive. They're also going to be less worried about fuel efficiency. Back in October 2007, the average fuel efficiency of purchased new vehicles was about 20 miles per gallon, according to the University of Michigan. As gas prices rose, so did average fuel efficiency -- peaking at 25.8 miles per gallon in August 2014. Since then efficiency has plateaued and even declined slightly, down to 25.1 miles per gallon in January.
More driving means more congested roads, and more wear and tear on those roads too. But as usual, infrastructure spending remains the forgotten stepchild of congressional budget battles. Total public spending on transportation and water infrastructure declined from 3 percent in 1959 to 2.4 percent of GDP in 2014, according to the Congressional Budget Office.
At the federal level, the decline in infrastructure spending has been sharper, falling from close to 6 percent of all federal spending in the 1960s to less than 3 percent in 2014.
And if you drive to work -- or drive anywhere, for that matter -- this failure to fund infrastructure directly affects you on a daily basis. Consider that the typical urban commuter spends 42 hours a year stuck in traffic jams, according to a report from the Texas Transportation Institute. That number has more than doubled since 1982, when the average time stuck in traffic was 16 hours a year.
Forty-two hours is more than a full work week. Think about how much you'd pay to get a full week of your life back each year. That's a pretty good barometer of how badly we're under-funding transportation these days.
And as the population grows and drivers continue to put more miles in, it's only going to get worse.