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In 2014, General Motors CEO Mary Barra said the auto industry would experience more dramatic changes over the next decade than it has in the last 50 years. She reiterated that sentiment at the Davos World Economic Forum in December 2016.
Big questions about the way people travel are swirling, and this means big changes are on the horizon. These questions are being asked at an ideal time, as the Trump administration appears poised to catalyze greater economic growth through various policy measures, including lowering corporate tax rates and initiating a sizable infrastructure development plan. These policy measures could usher in major changes in the transportation industry sooner than expected, and well beyond the driverless car.
Elon Musk, CEO of Tesla and a consummate big-thinker, had his own audacious epiphany regarding transportation last December while stuck in a Los Angeles traffic gridlock. Musk tweeted his exasperation and committed to building an underground transportation network. After amusingly crowning his new digging venture “The Boring Company,” Musk now has a team of engineers digging a giant hole in his company’s parking lot to learn more about the cost and time it would take to create an underground network of roads for vehicles.
My thoughts? I don’t find it boring. I dig it.
A fully autonomous driverless car is simply an application of technology that will impact many other modes of transportation. The idea of a pilotless aircraft has been a pipe dream for NASA for many years. In partnership with industrial aerospace companies such as Honeywell, NASA has been testing a number of prototype pilotless aircrafts. These flight tests will play an integral role in evolving the technologies that will ultimately be used to develop regulations for unmanned aircrafts to become viable. Put another way, they will be drones large enough to fit passengers.
Commercially implementing transformative innovations without resistance is difficult. Many stakeholders are involved. The efficiency of ride-sharing companies such as Uber and Lyft, for instance, have been fought tooth and nail by skeptical city councils. In Austin, thousands of attendees of this year’s SXSW Conference had to relearn getting around without Uber. Labor concerns are also a recurring source of resistance for major autonomous technology innovations. Worker backlash from the taxi industry against Uber has been substantial, as taxi drivers feared job displacement.
It may be helpful to think of any new automation or technical advance that replaces an old one in terms of three groups of people, each affected differently by the innovation: (1) the group making the new innovation to market, like Uber and its drivers (replacing taxi drivers), who gain because Uber’s ease of use and seamless experience is in high demand, (2) the group of individuals unrelated to the change and unaffected in their employment, but who gain by using the newer/lower cost/better performing product or innovation, and (3) the group of workers in the displaced sector (e.g. the taxi drivers). The focus should be how to help that last group – the displaced workers – which shouldn’t be rocket science.
While autonomous vehicles and aircrafts will likely face resistance that will slow their adoption, there are key stakeholders that should be more friend than foe for autonomous vehicles. Consumers will benefit from taking their hands off the wheel, free to use the time for leisure or as a second work space. According to the Brookings Institute, state and local governments should expect to see a net-increase in tax revenues, despite the likely decline in revenue sourced from speeding tickets, DUIs, and the like. This is due to all the productivity that will be unleashed from removing everyone’s wasted time in traffic congestion and the subsequent road damages.
Autonomous travel is speeding toward us – and faster than most assume. Of all the major industries, the transportation industry will likely be the most transformed during the upcoming decade. Big changes are on the way.