“Civilization requires energy, but energy use
must not destroy civilization.” -Pope Francis
Now, let’s explore the impact of the
autonomous
revolution
on
public
infrastructure, the energy sector, the
finance industry, and the justice system.
You will be surprised to learn how far the
ripples of this revolution extend. car dealerships. In the same way that we
are seeing the manufacturers need to
change, so are dealerships. Tesla sells
direct to consumers (no dealer markup!)
and AutoNation services Waymo’s self-
driving fleet.
PUBLIC INFRASTRUCTURE Where will the electricity come from?
UBS calculates that 14 to 27 “giga-
factories” would be enough to produce
batteries for all of the world’s electric
vehicles. Where will all the raw materials
come from to make those batteries? We
will need 30x more lithium and 20x more
cobalt (the choke point in the supply
chain). Researchers are also working
hard at developing new types of battery
chemistry.
Oxford Economics forecasts $5T (yes,
Trillion) will be invested on roads in
Asi a-Pacific, more than the rest of the
world combined. Lyft has calculated
self-driving fleets will require just one
lane versus the four lanes that it takes
today. Additionally, our system of paying
for roads will transition away from being
based on these usual methods:
• Gas taxes—because these cars
won’t be powered by gasoline
• Vehicle registration and driver’s
license fees—because we won’t
have them
ENERGY
One third of all energy is used for
transportation. Has the era of peak oil
come to an end? Opinions vary. The
International Energy Agency is less
optimistic than industry forecasts, and
Bloomberg is more pessimistic. Even oil
industry leaders believe in a low-carbon
future; they just want it to happen later
than sooner. Recently, Pope Francis
hosted a gathering of the energy sector’s
leading thinkers and policy makers to
discuss ways of reducing emissions of
carbon dioxide and methane. He began
the meeting by declaring that “Civilization
requires energy, but energy use must not
destroy civilization.”
So how and where will electric fleets
get charged? It won’t be at our home or
workplace if we aren’t owning the car. It
may be one big central location—all
the parking garages will be empty. Or
how about where car dealerships are
located (prime real estate all across the
country)—since there won’t be any more
FINANCE
Insurance, car rentals, and car loans
are just some of the industries that will
change. Self-driving cars are going to be
a lot safer than cars with human drivers,
and as a consequence, premiums will
fall significantly. Forty million people sell
a car each year, generating enormous
revenue for government agencies,
dealerships, and finance companies.
This will disappear. The car rental market
will also disappear, as fleet transport
replaces the “one car, one driver” model.
Even advertising is going to have to
change. Insurance companies spend
$6 billion on advertising, and just the
top three auto advertisers spend another
$8.4 billion. At least 10 percent of all ad
spending will go away.
JUSTICE SYSTEM
The autonomous revolution isn’t just
limited to hardware and software
companies. Cities, regions, even entire
countries are also racing to establish
the legal and regulatory framework
necessary to lead the change. Big
questions need to get answered about
how the “mobility value chain” will
evolve. Will the software be proprietary
or open source (once again, think Apple
and Google)? Will governments require
technology companies to be more
transparent about their privacy policies
(especially when your car is generating
gigabytes of data a day!)? Who owns
that data and who will have access to
it? There is an all-out race from Silicon
Valley to China underway, and change
will happen faster than you think.
There are already several countries that
have laws on the books that outright ban
the sale of gas-powered cars. And when
Germany, China, and California take
action, that will set the direction for the
entire industry. Governments are already
using a combination of carrots (e.g., tax
incentives) and sticks (e.g., laws and
regulations) to incentivize us to get into
electric cars.
Lastly, there will be no DUI or distracted
driving when humans aren’t driving. One
third of civil trials are auto related. Level 5
cars (no steering wheel) will eliminate 95
percent of accidents. The big question
is about liability. Who’s liable? The car
maker? The fleet operator? The person
sitting inside the car? The software
provider? Now is a great time to go to law
school, as an entire new generation of
case law will be created.
CONCLUSION
The Autonomous Revolution is a great
example of exponential disruption. At this
stage, the hype is greater than the reality.
As we have seen with other technologies,
these big changes appear deceptive right
before they become disruptive. Change
is coming. Faster than you think. There
will be winners and losers. You’ll hear
more from, and about, the losers than the
winners. Entrenched industries and ways
of thinking will resist the change. Having
accurate information about the state of
the world will increase your confidence,
success, and happiness. u
Source: Jim Jubelirer is indebted to Frank Chen, of
Andreessen Horowitz, for much of this original research.
Watch his excellent video series: http://bit.ly/jubelirer_
futurecars.
FALL 2018
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