Developing autonomous vehicles (AVs) is universally considered to be a herculean task by industry experts and computer scientists, but within the past 20 years Silicon Valley has made significant headway. A scientific fantasy is currently unfolding on our roads as carmakers begin to bring their creation into reality. Once companies have navigated and overcome regulatory hurdles, the entrance of AVs into the mainstream market is anticipated to have a significant economic impact.
Economic Implications of Driverless Vehicles
The introduction of autonomous vehicles would have a remarkable effect on the automotive industry. Research suggests that by 2035, advanced driver-assistance systems (ADAS) and autonomous driving (AD) could create $300-$400 billion in revenue. As the need to pay drivers is eliminated, automotive and ride-share companies will have a strong incentive to adjust their business models, leading to diminishing private car ownership. We may see for example, the establishment of a robo-taxi fleet with a subscription based pay per use model. Owners could add their vehicle to the fleet at their discretion, a model akin to Airbnb, which is what Elon Musk envisions for Tesla. Consumers would embrace this shift as it would reduce the economic burden associated with both car ownership and rental, with the added promise of increased safety.
AVs are forecasted to reduce traffic accidents by 90% according to a 2016 study. Another study estimated a reduction in annual fatalities by 25,000 in the United States. This would result in costs associated with medical care, lost work, and property damage being avoided and could save the U.S economy approximately USD $200 billion. If a similar adoption of AVs were to be observed in Australia, it is projected to save the economy $31.9 billion annually. The economic impact of greater market penetration of driverless vehicles is profound as it offers a more superior safety profile compared to conventional vehicles.
However, rapid adoption of autonomous vehicles will lead to a significant transformation in the jobs market; studies have forecast 4 million job losses in the United States alone, as the driving occupation becomes redundant. Nevertheless, new jobs are likely to emerge, such as remote vehicle operators who are tasked with monitoring and providing additional guidance and information to the machine, coupled with a greater demand for computer scientists, engineers, and vehicle management. This structural change presents a significant challenge and opportunity for the education sector, as it will require workforce retraining and upskilling to adapt to the evolving labour market landscape.
Case Study: Waymo
The adoption of driverless technology is accelerating swiftly and nowhere is this best illustrated than Alphabet Inc’s Waymo. The primary objective of Waymo is to advance and cultivate a safer driving environment, something which is slowly becoming apparent as the company lifts the veil on its operational data. This data reveals that after its driverless fleet clocked in over 1 million miles, there had only been 20 incidents, comprising of ‘18 minor contact events’ and only two other crashes that did not cause injury. The vehicle utilises a range of sensors such as LiDAR and cameras placed around the car, feeding the information it collects into the car’s software where it is processed and a decision is made in real time, this computer system incorporates machine learning where the vehicle’s decision-making ability is trained and refined over time.
Image source: Waymo
Recently however, a Waymo vehicle was pulled over for driving into oncoming traffic, illustrating issues pertaining to AVs making potentially fatal decisions in response to unpredictable situations such as encounters with pedestrians, cyclists and navigating road construction. While Waymo and its competitors alike are delivering profound social benefits by pushing the boundaries of AV technology, they face significant challenges in overcoming regulatory hurdles, and gaining the trust and acceptance of their technology from the public. Until then, these companies must prove to the public and regulators that they are ready for adoption, which is no small feat considering the overarching reality that laws in place today are designed for human drivers. Hence, in the absence of an updated system of laws and regulations, AV’s may introduce safety risks that cannot be mitigated by the existing systems.
Global Regulatory Landscape
Globally, countries such as the United States, China, and Germany are leading the discourse on AV regulation. Regulatory bodies like the United Nations Economic Commission for Europe (UNECE) and the National Highway Traffic Safety Administration (NHTSA) in the US are working towards developing a global regulatory framework for AVs. The current deployment regulations that exist globally, largely permit level 3 autonomy for passenger vehicles, while testing is allowed for up to level 5 autonomy (see below).
Image source: i-ecu
The global regulatory landscape’s impact on AV adoption is multifaceted. On the one hand, it fosters an environment conducive to innovation and testing, thereby accelerating technological advancements and ensuring that AVs reach the retail consumer after a period of prudent testing. On the other hand, it also poses challenges to automobile manufacturers due to the lack of a unified global standard, leading to potential inconsistencies and hindrances in cross-border operations.
Australia’s Regulatory Environment
In this context, Australia is developing its own regulations. In June 2020, the National Transport Commission (NTC) drafted the Regulation Impact Statement (RIS) on the in-service safety framework for automated vehicles. This led to the establishment of a dialogue regarding the creation of a new national law, the Automated Vehicle Safety Law (AVSL), and a national regulator. The AVSL and its regulator will broadly be responsible for monitoring Automated Driving System Entities (ADSE) in the country, who are tasked with ensuring the safe operation of automated driving systems for their entire lifecycle.
Conclusion
Autonomous vehicles have the potential to revolutionise not only the Australian, but also the global automotive industry. The importance of broader impacts on adjacent industries such as ride-sharing, and their impact on the future labour force and education sectors cannot be understated.The Australian regulatory framework’s impact on AV adoption is significant and a move towards a nationally consistent approach under the AVSL provides a clear regulatory path for AV deployment, thereby fostering manufacturer confidence and industry growth. In the future, a continuous dialogue among policymakers, industry stakeholders and the general public will be crucial to balance innovation with safety, privacy and security concerns which would cumulatively pave the way for a future powered by autonomous mobility.
The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.
