Here comes the driverless car: what does it mean for your business model? The Brightest Minds series

03 Aug 2016

  • New thinking
  • Technology

Driverless cars are here, if by ‘here’ we mean various states in America such as California, Michigan and Florida. In Australia, they’re only cleared for testing in South Australia but a major Holden-partnered research and development hub is on the cards with experts predicting the phenomenon is only a decade away from mass adoption on our shores. So what does it mean for your business?

Members of the automotive industry are likely to be most affected. Stuart Jaffray, General Manager – Marketing for BMW, says: “In the next 10 years, we're going to see more change in the automotive industry than we have in the last 100 years. There are a number of forces combining to drive all of this including innovations in technology and the digitisation of the world. Until recently, it's probably excluded cars.” As if they didn’t already have enough on their hands with electric and hydrogen powered cars, vehicle manufacturers are now being disrupted – and somewhat interrupted – by the driverless car. Already BMW offers automated features in its vehicles such as remote parking which allows drivers to park their vehicles with a remote control but there was a great deal of legislative red tape to be cleared in order to offer this. Jaffray says: “You're starting to see the technology coming through more quickly than the legislation can actually respond.”

Ridesharing companies such as Uber are also likely to collide with the driverless car sooner rather than later as will car sharing companies in the style of GoGet. BMW already has a car sharing program across nine European cities enabling drivers to access a fleet of BMWs when they need. Jaffray says: “We launched the program in Seattle earlier this year. We had 13,000 members within a month. It's a way for us to expand our services out across a consumer group that we're arguably not reaching at the moment, because the old model was always one of selling cars, rather than leasing or drive-sharing concepts.” It’s evidence business models are already being significantly disrupted within the automotive industry, but could they soon be offering a fleet of driverless cars in this manner? It’s not out of the question with car ownership set to decline.

Evan Stubbs, author of Big Data, Big Innovation and board member of the Institute of Analytics Professionals of Australia says: “Research suggests millennials have far less interest in capital acquisition. If you look at Baby Boomers through to Gen X'ers, they will buy a house and a car. That's where significant capital investment goes. If you look at the trends in the sharing economy, it's not about personal ownership of assets, it's about the use of common assets.”

Urban planners are also likely to feel the effects of driverless cars with the rise of mega-cities. Jaffray says: “In mega-cities, there are concerns around simple things such as where to park your car. We only see these sorts of concepts growing moving forward.” Self-parking fleets of driverless cars could well be in our future and another industry that will feel the impact of this is the insurance sector. Stubbs says: “If driverless cars reach a tipping point in society where they outnumber driver-led cars, what does that mean for personal motor insurance policies?” While Stubbs raises the point that driverless cars are proven to be statistically safer than human driven cars, he notes that the use of automated vehicles raises serious ethical questions that will need to be addressed by insurance firms such as who is to blame when a driverless car has an accident.

The trend of driverless cars may not have kicked in yet but it’s tied to the broader implications of the rise of artificial intelligence. Stubbs says: “This is only the pointy end of the wedge. Increasingly, we're going to see the same things around home automation, smart cities, even coordination of airplanes. The driverless car is the most obvious one because it's here now, and we can physically see them, but these same dilemmas, economic and social considerations are going to start cropping up more and more.”

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