(This story accompanies a Special Report, "Inside Google's
quest to shape the rules of the driverless road")
By Joseph White and Paul Ingrassia
DETROIT - April 26 (Reuters) - The automotive and tech
companies pursuing the driverless car share a utopian belief:
Autonomous vehicles will benefit society, eventually saving most
of the nearly 33,000 people each year killed in road accidents
in America alone.
"If the situation was reversed, and we had automated
vehicles today and someone proposed to let people drive cars,
what would the reaction be?" asks Glen De Vos, vice president of
global engineering for Delphi Automotive PLC DLPH.N , a supplier
of driverless-car technology.
"You would be basically asking that 33,000 deaths per year
be allowed on highways as part of a policy plan. There's no way
on earth anybody would accept it."
The big win for society wouldn't be big, or even a win, for
everybody, however. There will be losers and winners.
Take automakers. Eventually, if fully driverless cars ("L4"
vehicles under the American government's classification system)
can be summoned with a smartphone just like Uber cars today,
many people might forgo car ownership. Or families in developed
nations might own one car instead of two.
That could be a financial boon for families. In the United
States, cars are usually the second-largest item in the
household budget, even though studies show they sit idle 90% of
the time. But automakers would suffer.
If driverless cars catch on, U.S. car sales could plunge 40%
in the next 25 years, Barclays (LON:BARC) analyst Brian Johnson wrote in a
report last year. General Motors (NYSE:GM) GM.N and Ford Motor (NYSE:F) Co F.N ,
he added, would have to cut their combined number of assembly
plants in the U.S. and Canada to 17 from the current 30. Some
25,000 auto workers would lose their jobs.
Auto makers now are moving to offset any loss of sales with
revenue from providing transportation as a service.
"We've run a number of scenarios trying to understand some
of the sensitivities," Mike Abelson, vice president of strategy
and global portfolio planning, said in an interview. "Some
scenarios show a decline in volume, but we have some scenarios
that show it going it up."
As the cost goes down for autonomous vehicles, it will allow
people who cannot drive - the elderly and disabled - to own or
use vehicles, Abelson said, echoing comments by Google
executives.
Ubiquitous driverless Ubers are a couple decades or more
away, but some automakers already are experimenting with selling
rides as well as cars. Ford F.N and Jaguar Land Rover
TAMOJL.UL are launching car-sharing experiments without
self-driving cars; autonomous vehicles could accelerate the
concept. General Motors GM.N has purchased 10% of ride-hailing
service Lyft, a competitor to Uber.
But a prolonged transition to full L4 autonomy could bring
automakers a financial windfall. The stage before L4 is L3
technology, requiring some human intervention - including
automatic handling in traffic jams, braking to avoid accidents,
keeping a proper distance from cars ahead and pulling into
parking places. These features would cost extra and boost
profits, especially on luxury models.
This is already happening. Last year, Tesla Motors Inc
TSLA.O introduced Autopilot, which does all those things, on
its Model S that starts at $76,500. Drivers are warned to keep
their hands on the wheel - not that they always comply.
The Mercedes-Benz Intelligent Drive system, offered on the
new E-Class and some other models, includes features the
Daimler DAIGn.DE AG brand calls Park Pilot, Speed Limit Pilot
and Blind Spot Assist. The L3 autonomous features can add $4,500
to the price of a $53,000 car.
Volkswagen AG VOWG_p.DE 's Audi and BMW BMWG.DE offer
similar systems, and General Motors plans to offer "SuperCruise"
next year on its Cadillac CT6 sedans. Other automakers are
joining in.
The components companies that sell these systems to
automakers are winners, too. They include Israel's
Mobileye (NYSE:MBLY) MBLY.N , Germany's Continental AG CONG.DE and Robert
Bosch GmbH, ROBG.UL and Delphi DLPH.N and Nvidia Corp
NVDA.O in the United States. Silicon Valley's Nvidia, which
began by making graphics for video games, now counts automotive
as its fastest-growing business segment, with revenue nearly
doubling every year.
Two Silicon Valley giants, Google parent Alphabet
Inc GOOGL.O and Apple AAPL.O Inc, could be big winners.
Google, which says it wants automotive partners, could
license its self-driving software to car companies worldwide.
Apple, typically tight-lipped, won't discuss its automotive
ambitions. Its hiring suggests it might want to market
Apple-brand cars, though their manufacture might be out-sourced,
like iPads and iPhones.
People who drive taxis, Uber cars, transit buses or delivery
trucks would be losers. The number of jobs lost in the U.S.
alone could total 2.6 million, or nearly 2% of the work force,
calculates economist Martin Zimmerman at the University of
Michigan.
To put that in perspective, Zimmerman says, American
manufacturing has shed jobs equivalent to 11% of the work force
since 1979. The U.S. economy has adjusted well, although many
individuals have suffered. Those who moved into other jobs often
settled for lower pay.
Eventually, widespread adoption of autonomous driving and
automated accident-avoidance technology could undermine
automobile insurers. The collapse of auto-insurance premiums in
America and Europe as autonomous cars take hold would create a
"giant, sucking sound," Kate Brown, senior vice president of
Swiss Re SRENH.S , told a recent conference on autonomous
driving at the University of Michigan law school. Insurers would
"make it up in China and India" and other emerging markets, she
said.
Auto insurers could profit by delaying big discounts for
customers who buy automated driving technology, arguing it will
take years of claims experience to know how many accidents and
deaths are avoided.
Trial lawyers can probably breathe easy: Autonomous driving
won't end litigation over accidents. But it will change who gets
sued.
"A greater share of crashes could be attributed to a product
defect," Bryant Walker Smith, assistant law professor at the
University of South Carolina, said at the Michigan conference.
In other words, when cars drive themselves, manufacturers - as
opposed to human drivers - would be liable.
(Edited by Michael Williams)