Self-Driving Cars

An interactive presentation on the future of cars, and problems we may face with their integration.

1. What are self-driving cars?

A self-driving car is a vehicle that is capable of sensing its environment and navigating on roads and highways without the need for human interaction.

Right now, companies are racing to develop the first complete models. Some of the many companies testing driverless cars include Audi, BMW, Ford, Google, General Motors, Tesla, Volkswagen, Volvo, and Uber.


2. When can we expect to start seeing them on the road?

Believe it or not, self-driving cars are already on the road. Waymo, an autonomous car development company controlled by Google’s parent company, Alphabet Inc. On November 7, 2017, Waymo announced that it had begun testing driverless cars without a safety driver at the driver position. Since launch Waymo has racked up over 5 million test miles on the road in 21 days.

Other companies such as Tesla have already introduced autopilot features into their vehicles and plan for future updates.


3. What is the cost of Self-Driving Cars?

The idea of autonomous vehicles and the technology behind it is increasing in popularity and practicality.  Giant tech companies like Tesla and Google have pioneered the industry over the last decade and have emerged as market leaders.  The proliferation of autonomous vehicles is all but inevitable in the near future and is mostly hinging on the regulation of public sentiment.   Self-driving cars are polarizing in how people visualize them integrating into our daily lives.  Many see a bright future with a wide variety of positive economic benefits, while others have a dystopian vision of the future, fearing it will take away millions of jobs.  This phenomenon is part of the theory of creative destruction.  New innovations will always catabolize those of the past but will open up more doors of opportunity in the future.


The auto industry will undergo a dramatic shift in how they will market and sell cars. Currently, the auto industry makes up 3-3.5% of the US GDP (Clements 2014).  As a result of ride-sharing programs and families sharing 1-2 vehicles, instead of the standard one per family member, the number of cars each year will likely fall.  The average number of cars per household is 2.1, however, estimates of the future are closer to 1.2 cars.

Around 90% of accidents result from driver error, which will virtually be eliminated with software making the decisions.  Premiums will inevitably fall along with the risk of accidents.  At the current level of autonomous car, level 4, analysts from KPMG are estimating a reduction of near 80% (Clements 2014).

Public transportation services like Taxis, planes, and trains are likely to be heavily affected when the cost of sitting in the back of a self-driving car is cheaper and more practical than traditional transportation. Taxi services would be all but obsolete with far cheaper autonomous cars able to pick up and transport passengers. The highest input cost is labor in this equation, which would be replaced with a one-time purchase of IT software.  The main key to the success of this strategy in utilizing the idle automated cars which will excise in the future.  Currently at peak driving times, around 5 pm, less than 12% of cars are on the road.  These vehicles, given the technology, could be out giving rides, and creating income for their owners. This will be the inevitable course of action people will take given the technology that will enable them to do so.

Million Jobs Lost

Cost Added per Car


The efficiencies created by autonomous long hail trucking will substantially increase margins for a variety of retailers and distributors.  Trucking and freighting’s highest input cost is by far human labor.  Autonomous tucks would avoid all the regulations set on driving length restrictions.  They will be able to travel in a convoy system, all following a lead truck, with no human involvement. An interesting aspect of self-driving cars and one that is little thought about is entertainment.  If the user is no longer driving, the screen in the car can then be used for media and ad consumption.

In addition to the immediate effects on consumers and industries, there are many positive externalities resulting from the rise in self driving cars.  Roadway congestion is one example of how the byproduct of this technology will make everyone’s lives better.  With less car needed and those on the road moving more efficiently, it is not hard to imagine the relief on the roads and highways.  The time saved in traffic along with the available work time while not driving, productivity should increase substantially.

According to a Morgan Stanly report, the total economic savings from self-driving cars, including $488 billion in collision costs, would result in a total savings of $1.1 trillion in the US and approximately $5.6 trillion globally (Jonas 2014).  There is no question autonomous vehicles will alter the world as we know it in ore way than we can imagine.  The inevitable fundamental change in transportation will affect many industries directly and will trickle through to most others in one way or another.  We are not living in this world just yet, but the technology which will make it all possible is progressing every single day.  Whether people like it or not, the world is going to change, it is only a matter of how well the market and society utilizes the platform.

Trillion Dollars Saved Globally

Annual Traffic Hours Saved Per Person

4. The unsolvable problem

The Trolley Problem:

Some of the largest barriers to mainstream acceptance of autonomous vehicles are the questions posed by the ethical implications – how do we impose a sense of morality on an entirely objective artificial intelligence? This question is commonly addressed by exploring the “Trolley Problem” thought experiment. While there are countless variants, the general problem can be summarized as follows:

There is an out of control, runaway trolley barreling down the tracks. Ahead of the trolley, there are five people chained to the trolley tracks who will be inevitably hit by the trolley if it continues on its current path. You, however, are standing by a railroad lever which can divert the trolley to a separate length of track where there is a single person chained down. Assume these are your only two options:

1.Pull the lever – the trolley will be diverted and kill the one person chained to the tracks.

2.Do nothing – the trolley will continue on its path and kill the five people.

Clearly, this situation creates an obvious moral dilemma. If the onlooker does nothing, four human lives which could potentially have been saved will be lost. On the other hand, if the onlooker had not been there these people would have died regardless; does the onlooker have the right to decide who should live and who should die?

Pull the Lever

Pull the Lever

Do Nothing

Do Nothing