These Self-Driving Cars Are Going To Disrupt Everything

Driverless cars are a reality--whether we know it, believe it, accept it, love it, hate it, or not. This will be one massive disruption to numerous industries, including insurance. While some skeptics in the insurance industry claim it will take decades for insurance as we know it to become obsolete, we have very recent examples of industries that have collapsed due to disruptive technologies, even though the signs had been there for anyone able to see them. 

I like KurzweilAI.net: it's a website that lays out news stories for futurist nuts like me, based on the research and thought of futurist, inventor, and thought leader, Ray Kurzweil. One study it paid considerable attention to was the IHS Automotive Study, released on January 2, 2014, that forecasts nearly 12 million yearly self-driving cars sales and almost 54 million in use on global highways by 2035. According to this forecast, self-driving cars (SDC) that are a hybrid of computer and driver-control will become nearly ubiquitous by 2025, followed by a complete transition to self-driving-only vehicles by 2030. 

The rise of SDCs is forecasted to emerge along the above trajectory, comprised of five distinct levels, as shown above.

Accordingly, complete ubiquity of self-driving personal and commercial vehicles will emerge by 2050. Such vehicles will provide greater safety to drivers and pedestrians: near-zero crashes of SDCs (although non-SDCs will crash into SDCs), near-zero pedestrian deaths, and less traffic congestion and air pollution. It is indeed presumed here that SDCs will be electric, not gasoline-fuelled, vehicles, given for instance the European Commission's comprehensive strategy, titled Transport 2050, whose primary goal is "To halve the use of 'conventionally fuelled cars in urban transport by 2030; phase them out of cities by 2050; achieve C02-free city logistics in major urban centres by 2030." 

What these reports are forecasting, and admonishing, is the disruption of the entire global transportation industry--all within only about 15 years' time! In this very short time-period, most--if not all--gas-powered vehicles will be obsolete, and removed from the roads, as well as all human-driven vehicles. This is a possible shift of millions of vehicles world-wide and trillions of dollars in lost and recovered profits. According to the IHS Report, North America will account for 29 percent of worldwide sales of SDCs in 2035, or nearly 3.5 million vehicles. China will be not far behind, capturing the second largest market share with 24 percent or 2.8 million units, and Europe will have the third largest market share with 20 percent of the total, or 2.4 million vehicles. Who will be on the right side of this change? Technology companies, such as Google.  Who will find it very difficult to compete? Traditional companies, whether auto or insurance--unless they have been able to reinvent themselves and intentionally drive the change rather than merely react to it. 

GM VP, Larry Burns, Gives This TED Talk On The Future Of Cars 

If cars are self-driving by 2030, then auto insurance will by that fact undergo a massive change. Insurance companies will have to innovate to stay both relevant and profitable; and they'll have to compete with the likes of Google which will most likely enter the insurance business to cover any litigations as a result of their vehicles succumbing to accident. 

But as you'll read in a future post, it appears that by 2020 highly-automated vehicles (those that are autonomous, but with human over-ride) will be hitting the roads--that's only six years away and may present a good reason to hold off on buying that new vehicle.