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Reduce Car Accidents and Profit Handsomely

In his 1999 book The Age of Spiritual Machines, Ray Kurzweil made 156 predictions about the world in 10 years. Come 2009, about 86% of them nailed it.

You can find a full write-up in his 150-page paper “How My Predictions Are Faring.” And in that paper, he marks one prediction as incorrect…

Self-driving cars.

Why have self-driving cars not been adopted?

The safety and financial benefits are clear. According to some of the best data available by Google, autonomous cars should achieve 90% reduction in accidents, wasted commute time and energy, and sheer number of cars on the road.

Self-driving cars threaten a wide range of businesses. And established interests are likely to react with pushback…

As you know from Wednesday, Thursday and an August issue, the tech that enables self-driving cars is feasible. Computation and LIDAR scanning can even be had at a reasonable cost.

The technology is there, so where’s the adoption?

It is easy to forecast trends based on something like transistor speeds because they use fundamental measures of price performance and capacity. But a self-driving car includes factors that even a genius like Ray Kurzweil cannot easily predict: manmade laws, emotions and attitudes, among other things.

There’s really not much controversy when it comes to transistors. So they improve in a linear way. But as you know, human brains are not so simple and linear. Self-driving cars threaten a wide range of businesses. And established interests are more likely to react with pushback, rather than brave and adapt to disruptive change. Even if that change is a turning tide that lifts all boats.

Others may believe that this new tech is not safe, even though real-life tests prove otherwise. Or maybe they insist they like the feel of a manual stick shift, even though a self-driving car could still have that as an option.

Remember, people used to be afraid to fly on planes even though driving cars in its current form is certainly less safe. A lot of that fear of flying has faded, so you can see how most people get used to new tech.

By instinct, we fear what we cannot understand or see with our own eyes. I for one don’t like the idea of swimming far out into the ocean when nobody else is nearby, for fear of sharks. But more people die of coconuts falling on their heads than shark attacks. Shark attacks cause fewer deaths per year than obesity, shopping on Black Friday and falling out of bed. But something about those things does not strike the same fear in your heart as a shark while you eat, shop or sleep.

But as time passes, people — especially the youth — get used to new things. The personal car, once a staple and symbol of freedom for the baby boomer generation, will transform with the changing market. And the market says that young people do not care to drive as much.

According to USA Today:

“Young Americans, whose embrace of new technologies and social networking tools enable[s] them to adopt new ways of getting around, are beginning to change the nation’s transportation landscape.

“They don’t drive nearly as much as young people once did: While all Americans are driving less since the recession, the average person ages 16-34 drove 23% less in 2009 than in 2001, the sharpest reduction for any age group.”

I don’t blame them. After all, a car is one of the worst investments in the world.

The two most important money lessons for young people have little to do with investing:

1) Live beneath your means.

2) Don’t borrow money.

Sharing an autonomous car takes care of both of these. First off, next to a house, a car tends to be a person’s largest capital expenditure. And it is parked nearly 95% of the time, unused.

If you buy one while you’re young, it usually means going into debt. Driverless cars would spell doom for auto finance companies, which write loans for about 70% of new-car purchases and half of used-car purchases.

And even if you’re lucky enough that your parents foot the bill for a new car, the moment you drive off the lot, the car’s value drops around 10%. Can you imagine if every stock you bought immediately lost 10% of its value — for good?

With the struggling job market and stagnant income — especially for young people — it’s no wonder they’d rather use social media networks to meet with their friends. After all, in most cases, it’s far easier to have a conversation by video chat, rather than drive to meet somebody.

The idea vision of a self-driving car belongs to the man who designed General Motors’ Futurama exhibit for the 1939 World’s Fair in New York. The American utopianist Norman Bel Geddes displayed mini models of cars in tight formations that were governed under the control of a central traffic authority.

Can you imagine if every stock you bought immediately lost 10% of its value — for good?

Bel Geddes was not far off about how the cars would operate. But a central traffic authority? Probably not.

Automating cars would indeed allow them to go faster and choose the most efficient routes. It wouldn’t be long before they drive together in tighter, yet near-perfect formations on the highway, much like a school of fish. This would cut out what one study estimates is 4.8 billion hours and 1.9 billion gallons of fuel wasted per year by urban Americans on traffic. That’s $101 billion in lost in productivity and added fuel costs.

In addition, since cars will improve in performance, safety and ability to drive together in sync on the highway, many car parts will cease to be useful. Why install airbags if crashes no longer happen? The amount of steel that goes into today’s cars would drop, since they don’t need to be reinforced. This spells disaster for body shops, which would certainly lose demand.

As for the second part of Bel Geddes’ vision, cars are not likely to be under the control of a central authority. According to David Strickland, an administrator of the National Highway Traffic Safety Administration, the first generation of self-driving cars will be more like “human beings on steroids”.

That makes the most sense to me. All tech is an extension of human beings. Perhaps as the baby boomer generation ages, they will embrace the change as they get tired of driving themselves around.

Keep your eyes on this space!


Josh Grasmick
for The Daily Reckoning

P.S. The same tech that will bring driverless cars to market will soon be sitting on your desk. I know that’s bold claim, but it’s completely true and I’ve got the proof to back it up. I shared it with readers of the Tomorrow in Review email edition, and many of them could already be profiting handsomely from it. Discover this incredible story, and how to profit from it for yourself. Sign up for Tomorrow in Review, for FREE, right here.

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