​Remaking the world, one driverless city at a time

A top Silicon Valley investor predicts what the world will look like in 10 years, when roads are full of self-driving cars

This is a good article, and goes a bit deeper than the usual 1". It leaves many questions, and it should because there are, today, no answers. 
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​More after the break.

"The real hold up on driverless cars isn't technology — it's all of us 

In May, the first death caused by Tesla's AutoPilot feature occurred. A man who was using the feature on a highway and reportedly watching a DVD while the car manned the road hit a truck and then crashed into a power pole.

The accident made global headlines. One article in Fortune got a passionate response from Tesla founder Elon Musk:

"Indeed, if anyone bothered to do the math (obviously, you did not) they would realize that of the over 1M auto deaths per year worldwide, approximately half a million people would have been saved if the Tesla autopilot was universally available," Musk wrote to Fortune.

While Musk's stat on car-related deaths may be accurate, the question looms: Will humans be forgiving of fatal crashes if they're caused by machines, rather than people?

Dixon thinks that question may be the biggest holdup when it comes to a driverless future."

While I agree, I suspect that problems like this will be solved in a very old fashioned way, insurance premiums. For example, when I speak with people about OSHA and how it has changed the workplace, many will claim it has made the workplace safer, and that it is the reason for much of the decline in workplace deaths in America during the first half of the 20th century. If only that were true. But is is not. OSHA was implemented in 1958, it could have had no effect on the workplace before that, yet the most significant safety results occurs during this period. How could that be?

When I tell them that insurance premiums caused this change, they are nonplussed, disbelieving. But it is true. These changes occurred due to the implementation of Workers' Compensation laws, and I suspect that the background noise in the self drive car will follow a similar pattern. What happened in WC was both workers and employers were dissatisfied with the preWC system. Injured workers had to sue, which was a costly crapshoot, and employers could be bankrupted by a single injury if a jury made a disastrously high award. 

It was a lose/lose system. Wikipedia has a reasonably good blurb on the laws,and their predecessors.

https://en.wikipedia.org/wiki/Workers%27_compensation

The WC insurers premium gave employers a financial incentive to reduce things which were likely to cause injury like unguarded machinery, or belts. This quickly caused the employers to prioritize the most cost effective safety features, and then over time continue to improve on this. Early changes resulted in large injury reductions causing insurance premiums to decline.

So, how will this apply to the self drive car? Auto liability, and auto collision insurance are both costly. Today those with fewer assets can get away with operating a vehicle with minimal liability policy limits. States allow this because to do otherwise would likely cut an entire demographic out of auto ownership. However, low liability minimum coverages do not make economic sense since they do not cover the actual problem that individual vehicle ownership creates in all situations. There remains a lottery like effect depending on whether you are hit by a low, or high coverage driver. Add to that the fact that non-owners would not need to pay for a collision premium.

As self drive vehicles become prevalent there will be little need for the state to continue to maintain low liability coverage amounts, and in fact there will be a strong propensity to exchange the current auto liability system to something similar to WC. However, private drivers will likely be exempted and required to insure under the old system since they will be causing accidents, injuries, and death at far higher rates. As the pool shrinks, premiums will skyrocket. Anyone operating a non-self drive car will find liability coverage requirements to be much higher (no more minimal $25,000 coverage, and instead likely replaced with mandatory $1,000,000 or similar high level coverage), and premiums will be out of sight (think $5,000 per year, not $1,000). Incentives matter, and since the cost of riding in a self drive car will be low, people will simply opt for that. 

I suspect that Dixon is correct that this will have a tip-over effect where a number of things will happen in quick succession, insurance coverage amounts will rise, premium costs will skyrocket, self drive riding costs will decline, and this will trigger a rapid adoption of the new model.

There are so many things which are likely to pressure change that it would take a book to even scratch the surface. Two other interrelated examples. 

First, our commercial land outside of the city core is only lightly developed. Big box stores have far more land for parking than they use for the building structure. All of this land will be fallow, and available for development with the use of self drive cars. These landowners will put pressure on local government to allow this development, and to speed the adoption of the self drive car.

Also, for a short period during the adoption of the technology, these extensive lots could be increasingly used for parking/refueling of self drive cars when they are not being used. Grocery stores, and big box stores with their huge parking lots could make substantial money by renting spots for night, and perhaps daytime storage/refueling of these vehicles. Again this will create pressure to adopt this technology.

Don't forget the Boomers are getting older, and soon will find driving difficult. They will not want to give up mobility, and this will allow them to maintain their mobility, safely for far longer. 

We want this technology just as we wanted the Smart Phone, we just didn't realize it until we had the Smart Phone in hand, nor will we realize this for the self drive car until we are in the seat, enthralled. The, of course, we will find waiting two minute interminable! Heh.