Driverless Vehicles – It’s Not a Matter Of If, But When?

Adrain Harrington
Head of Funds Management
Folkestone

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The rapid pace of technological advancement is transforming industries from retailing to financial services. Two industries that are on the cusp of major disruption if you think you will always drive your own car, or enhanced if you don’t like driving, is the car and real estate industries.

Driverless or automated vehicles are no longer some sci-fi fantasy. The foundations are being established to facilitate the car industry undergoing an unprecedented transformation, from one based on a personally owned driver driven mobility system, to one that incorporates driverless vehicles and shared mobility.

Major technology companies such as Uber, Apple and Google, the established car manufactures such as General Motors, Ford, Mercedes and Volvo and the new generation of car makers such as Tesla are fast tracking the development of automated vehicles to the point that it is now a matter of not if, but how quickly will driverless vehicles become reality.

Already Google has begun testing driverless cars in San Francisco, Austin and Phoenix. Carnegie Mellon University which is a pioneer in research into self-driving cars has recently partnered with Uber to develop a driverless vehicle for its ride sharing service. NuTonomy, a spinoff out of the Massachusetts Institute of Technology, recently launched the world’s first taxi service in Singapore that uses driverless cars in a limited circuit.

Earlier this month, German multinational Bosch developed Australia’s first self-driving vehicle at its Australian plant in a joint venture with the Victorian Government. The vehicle uses the shell of a Tesla with Bosch components and will hit the roads in a series of trials in the coming weeks.

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A group of self-driving Uber vehicles ready to take journalists on rides during a media preview at Uber’s Advanced Technologies Center in Pittsburgh, Monday, Sept. 12, 2016. (AP Photo/Gene J. Puskar)

A major step forward came recently when the US government threw its weight behind the automated vehicle industry, with the release of the ground breaking policy framework – the Federal Automated Vehicles Policy“. The new guidelines which stopped short of being official regulations, were introduced to accelerate the development and adoption of automated vehicles in the US.

According to the US Department of Transportation, the car industry is on the cusp of a technological transformation that will herald the greatest evolution in personal transportation since the invention of the automobile nearly a century ago. Not only will it improve road safety, automated vehicles “have the potential to transform personal mobility and open doors to people and communities – people with disabilities, ageing populations, and communities where car ownership is prohibitively expensive, or those who prefer not to drive or own a car …. Cities will reconsider how space is utilised and how public transit is provided.”

A key part of the policy is a 15-point safety assessment for the design, development and deployment of automated vehicles so that developers and manufacturers understand the key things that the US Federal regulators will expect. It covers everything from data collection and sharing of information amongst the various automated vehicle developers and manufacturers, to cybersecurity, to managing the interface between humans and machines and most importantly crash responses.

The demise of the traditional car manufacturing industry in Australia certainly hit home this month when the last Ford Falcon rolled off the production line. Yet, most people don’t realise that Australia is positioning itself to be a major player in bringing automated vehicles to reality.

A group of more than 50 Australian and international organisations including Toll, Suncorp, IAG and RACV, have come together to back the Australian Driverless Vehicles Initiative (ADVI). ADVI is funded by a range of government, industry and academic research partners and is seeking to position Australia as an international role model in the development of new technologies and attract developers, innovation and investors in automated vehicles to establish a presence in Australia. In addition, ADVI is also investigating and helping inform the development of robust national policy, performance criteria, legislation, regulation, business models and operational procedures to ensure the safe and successful introduction of driverless vehicles onto Australia roads.

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ADVI recently commissioned Brian Haratsis from MacroPlan Dimasi, one of Australis’s leading urban economists, to look at the economic benefits of introducing automated vehicles into Australia. According to Haratsis, growing Australia’s stake in the global intelligent mobility sector to 1%, would inject $15 billion into the Australian economy not to mention the estimated $80 billion economic saving from improved road safety and congestion thanks to autonomous vehicle technology.

A prime example of Australia’s capabilities already is South Australian based ADVI Partner, CohdaWireless, which is a world leading supplier of vehicle-to-everything (V2X) communication devices for General Motors. According to Haratsis “We have the high-tech research, design, testing and manufacturing capabilities to make us a leading exporter of mobility services and technology across the APAC region. By taking first mover advantage in this emerging global industry, we can not only mitigate the forecast 40,000 jobs to be lost in car manufacturing, but create a new specialised high-tech export market. If the average $2 billion in assistance to car manufacturers between 1997 and 2012 was invested in intelligent mobility, direct employment could be doubled from 7,500 to 15,000. Add that to the estimated baseline $80 billion economic saving from improved road safety and congestion thanks to autonomous vehicle technology and the incentives for swift and decisive action are clear.”

It’s not just the economic benefits to the car industry that make the move to automated vehicles a no-brainer. Just think how much space in our cities is devoted to cars – millions of kilometres of roads, not to mention the millions of car parks scattered across the urban landscape. There is an inextricable link between transport and the development of our cities. In the 100 years since the first automobiles hit the road, cars and trucks have had an enormous impact on the shaping of our cities and have played a key role in the movement of people and goods, creating a truly connected economy. An amazing result for something that is used on average for around 5% of the day – for the remaining 95% of the time, most cars sit idle.

As President Obama wrote in the Pittsburgh Daily following the release of the Federal Automated Vehicle Policy “technology isn’t just about the latest gadget or app – it’s about making lives better”. Automated driving shouldn’t be seen as just another gadget or app – it should be seen as a tool to make our cities better, and in doing so, make our citizens’ lives better.

It might be difficult for some to believe but by 2020, Haratsis believes remote parking, freeway high speeds (hands free) and truck platooning will be in action, with 5% of cars automated by 2025 and 35% by 2035. But think back 10 years and how quickly technology has evolved. We didn’t have iPhones, Uber, Netflix or smart watches that told us not just what time it was, but how far we walked, how many calories we’d lost and what type of sleep we had. Facebook had only just opened up its social network to the world. To do a DNA sequence of a human cost $10 million dollars, now it’s under $10,000 and falling.

When it comes to technology, most of us find it hard to see more than a few years in advance. So to fast forward ten years, is near impossible. However, when you have some of the most innovative and technologically advanced companies such as Google and Apple pumping billions into creating automated vehicles, we need to sit up and take notice.

Forward thinking government policy makers, urban planners and real estate investors and developers should be working out now how to take advantage of the transformation that autonomous vehicles will have on the urban eco system. Technology is moving ahead at a rapid pace. As Bill Gates remarked “We always overestimate the change that will occur over the next two years and underestimate the change that will occur in the next ten”. Leaving it for another few years to work out what to do, will be too late. It will take bold thinking.

Adrian Harrington
Head of Funds Management

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