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Who Wins And Loses In The 'Robot Car' Revolution

With the arrival of tech-heavy, self-driving vehicles, makers of traditional cars will have to adapt. But so too will everyone from real estate agents to insurers and tax collectors.

MIT's CityCar concept
MIT's CityCar concept
Julien Dupont-Calbo

-Analysis-

PARIS — The wheels of the first car started spinning more than a century ago. At the time, horses and their droppings were polluting roads and causing many deadly accidents. It's true too that carriage drivers weren't always sober, especially at the end of the day, and the animals weren't, therefore, always under control. And so, when motor vehicles started to appear on the roads, opponents of horse-drawn vehicles stepped into the breach and pleaded for modern vehicles to be launched hastily, in the name of public health and safety.

But could they ever have imagined how, in just a few decades, these vehicles would entirely reshape our cities and our countrysides? History sometimes repeats itself, and today's advocates of the electric, shared and autonomous car are using similar arguments. Ten years ago, researchers from the Smart Cities Group at the Massachusetts Institute of Technology were already working on the CityCar concept: small, electric (to protect the environment) vehicles that can be parked like shopping carts (to free up space) and rented near public transport hubs — in short, vehicles that offer a "more sustainable personal urban mobility than individual cars," according to the late William Mitchell, who led the team.

Of course, we're not there yet, even though some projects are starting to herald the end of personal vehicles. And it looks as if we'll have to wait another ten years, if not two or three decades, before these machines really start impacting our lives. But in the meantime, we can start imagining the thousand-and-one potential consequences of robot cars, what Apple CEO Tim Cook calls "the mother of all artificial intelligence projects, and the most difficult one."

"It's likely to begin in the U.S., where the states are competing against one another to attract new jobs; in Japan, the country for robots and the elderly; or in China, where the authorities can make radical decisions overnight," says Gabriel Plassat, a future analyst at France's Environment and Energy Management Agency (ADEME).

It looks as if we'll have to wait another ten years, if not two or three decades.

And once the ball gets rolling, it'll have a gigantic "domino effect," he predicts. Joël Barbier, director in the Cisco Digitization Office and currently a research associate at the IMD Business school in Lausanne, Switzerland, agrees. "They'll have direct and indirect effects on almost all sectors of the economy, private as well as public," he says of the new generation of vehicles.

This changes everything

For obvious reasons, the ecosystem closest to the epicenter of the coming earthquake is the car industry. Manufacturers are, in fact, already beginning to feel the first tremors. Faced with the foray of digital giants into their territory, they are currently reviewing their investment policies and shifting more towards software and services. According to PwC, software will represent half of a vehicle's price by 2030, compared to one-quarter today.

But manufacturers won't be the only ones affected. What about mechanics? A good part of their revenue, after all, comes crumpled metal. So what happens if autonomous cars fulfill their promise and drastically reduce the number of accidents? And if the robot car ceases to be something you own and becomes a self-service object (which will happen, given the vehicles' expected price)? What will that mean for car dealers and rental companies?

Ultimately, all activities that rely on motor vehicles will be shaken as well. Logistics and transport will likely change with the arrival of self-driving trucks on highways and smaller autonomous vans in cities. The potential savings could reach into the hundreds of billions of dollars annually in the U.S. alone (the money earned in wages by drivers and delivery men), according to the consultants at McKinsey. There are also fears about the future of driving schools, if nobody drives with their hands and feet anymore, and parking valets, if nobody needs to find a parking spot anymore.

All these changes will, in turn, impact public works companies, which will be required to build appropriate roads and sidewalks, and to install street lights for pedestrians instead of car drivers. Then there are the highway management companies, which won't have any toll booths to manage anymore because self-driving cars will inevitably be connected cars. Even garbage collectors have reasons to worry, with robotized waste trucks that will be able to come and collect our garbage only when necessary and no longer at regular intervals.

Bigger still will be the impact on insurance companies. They will find themselves with a huge task on their hands to get as much income as they do now with a "cybersecurity" offer. "This will completely reshape car insurance, to the point of significantly shrinking the market, leading to the disappearance of a number of companies," a recent study released by Fitch warned. According to the rating agency, damages will grow over the coming years, given the prices of the sensors and software that come with self-driving cars, before it drops due to the fall in the number of accidents. Human error, it's believed, accounts for 90% of accidents.

Freeing up time and space

The media, publishing companies, and the entertainment sector, on the other hand, can't wait for the transition to take place. The increase in "available human brain time" should be good for their business. McKinsey's estimates that 25 more minutes spent online daily could generate about $140 billion a year in the U.S. alone.

There's also everything that relates to real estate and urbanism. In Paris, there are a large number of driving streets and some 145,000 parking spaces. In the U.S., automobiles are said to monopolize one-third of the surface area in big cities. Removing parking lots (which will have become useless) from city centers will disrupt the real estate sector. Imagine the joy of property developers faced with this ocean of square meters to be built — or, alternatively, the anguish of estate agents after housing prices fall.

The tax system will need to adapt.

When there are no more traffic lights, there will be no more fights among shopkeepers or advertisers for a good spot to catch the attention of drivers waiting for the green light. How will shops deal with the fact that a self-driving car can go and get the groceries before it picks up its passenger? Will roadside motels survive once it becomes more comfortable to spend the night in your car while it drives you to your holiday destination? Sven Schuwirth, head of digitalization at Audi, believes that within 20 years, most people will prefer the second option.

Last but not least, since the invention of tax discs in the 1950s — not to mention parking and speeding tickets — the authorities in many countries have come to see cars as a guaranteed source of income. But without drivers breaking the driving laws, they will have to find new tasks for the traffic police, if not cut down their number. "The tax system will need to adapt. We can imagine a tax per kilometer driven, higher at peak time," Gabriel Plassat says.

For the time being, all of this is still fiction. But with such exponential phenomena, there's always a very slow gestation, before things start moving a lot faster. "If you react then, it's too late," Joël Barbier says. You've been warned.

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Geopolitics

One By One, The Former Soviet Republics Are Abandoning Putin

From Kazakhstan to Kyrgyzstan, Armenia and Tajikistan, countries in Russia's orbit have refused to help him turn the tide in the Ukraine war. All (maybe even Belarus?) is coming to understand that his next step would be a complete restoration of the Soviet empire.

Leaders of Armenia, Russia, Tajikistan, Belarus, Kazakhstan and Kyrgyzstan attend a summit marking the 30th anniversary of signing the Collective Security Treaty in Moscow on May 16.

Oleksandr Demchenko

-Analysis-

KYIV — Virtually all of Vladimir Putin's last remaining partner countries in the region are gone from his grip. Kazakhstan, Armenia, Tajikistan, and Kyrgyzstan have refused to help him turn the tide in the Ukraine war, because they've all come to understand that his next step would be a complete restoration of the empire, where their own sovereignty is lost.

Stay up-to-date with the latest on the Russia-Ukraine war, with our exclusive international coverage.

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Before zooming in on the current state of relations in the region, and what it means for Ukraine's destiny, it's worth briefly reviewing the last 30 years of post-Soviet history.

The Collective Security Treaty Organization (CSTO) was first created in 1992 by the Kremlin to keep former republics from fully seceding from the former Soviet sphere of influence. The plan was simple: to destroy the local Communist elite, to replace them with "their" people in the former colonies, and then return these territories — never truly considered as independent states by any Russian leadership — into its orbit.

In a word - to restore the USSR.

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