The Impact of Self-Driving Cars on the Consumer Landscape

time lapse photography of man riding car

Self-driving cars have the potential to drastically change automobile transportation as we know it, with far-reaching implications in terms of safety, economic impact, convenience, and mobility.

While full automation remains in the testing stages, experts anticipate that self-driving cars will eventually integrate fully onto U.S. roadways. So, what do autonomous, self-driving systems mean for the average driver? Here’s what consumers can expect.

Understanding the Current Landscape

The day when you can simply sit back and let a vehicle pilot you to your destination, with no input from a driver, is at least a decade away, according to most experts. However, many “self-driving” features are already available on vehicles that consumers can test drive from dealer showrooms today; over the next decade, those features will become both more common and more sophisticated. In fact, it’s unlikely that fully self-driving cars will hit the road all at once. Instead, we will likely see a graduated progression of increasing levels of self-driving.

Specifically, the Society of Automotive Engineers (SAE) and the National Highway Traffic Safety Administration (NHTSA) identify six levels of driver assistance technology, ranging from zero (no automation at all) to five (full automation). Today, Level 2 technologies, as employed by various manufacturers, include parking assist, collision avoidance, auto-brake, and other systems. Level 2 systems have begun to proliferate among major auto manufacturers. Most notable are Tesla Autopilot, Nissan ProPILOT Assist, and Mercedes-Benz's DRIVE PILOT.

Meanwhile, Levels 3 through 5 automations remain entirely in the testing stages for now. Despite some setbacks – for example, Uber halted on-road, real-world testing of its autonomous vehicles, after a high-profile fatal crash in Tempe, Arizona in March 2018 – traditional automakers such as Volkswagen, Toyota, BMW, General Motors, Ford and others have all announced their intention to proceed with fully autonomous vehicles by the year 2020.[1] Increasingly sophisticated self-driving options are coming – and sooner than most people realize.

So, the question becomes, what do autonomous vehicles mean for the average consumer?

time lapse photography of man riding car
Source: Samuele Errico Piccarini by Unsplash

How will self-driving cars affect consumers?

1: Self-driving cars will make travelling by road safer

People are understandably wary of fully autonomous vehicles. The idea of entrusting human life and well-being to a system of sensors and algorithms is enough to give anyone pause.

Indeed, when the Massachusetts Institute of Technology (MIT) asked 3,000 people about their interest in self-driving cars, nearly half said they would never purchase a completely autonomous vehicle. They cited discomfort with the loss of control and distrust of the technology, and they doubted whether self-driving cars would be truly safe.[2] "I don't trust technology to the point of putting my life in its hands," one participant told researchers.[3]

Yet, people routinely underestimate the risks associated with human drivers – often with fatal consequences. A study by NHTSA concluded that driver error contributed to 94 percent of crashes where at least one vehicle was towed from the scene.[5] Altogether, almost 6,000 American pedestrians and more than 37,000 drivers and passengers die in car crashes every year.[5] [6]

“Human drivers aren't that safe,” Lionel Robert, a professor at the Robots Institute at the University of Michigan, told QZ. Per Robert, the goal is not to make self-driving cars as safe as human drivers. “We want self-driving cars to be safer.”[7]

Once self-driving technology is sufficiently developed – particularly around Levels 4 and 5 – it will likely reduce the number of roadway accidents and fatalities. Even a modest reduction would mean thousands of lives saved.

In fact, lives are already being saved, even with Level 2 self-driving functions, which have begun reducing the incidence of crashes even today, according to the Insurance Institute for Highway Safety (IIHS).[8] Electronic stability control, for example, reduces the risk of a fatal single-vehicle crash by about half and the risk of fatal rollovers by as much as 80 percent.[9] These safety outcomes will only accelerate as more and more self-driving features hit the road.

2: Self-driving cars could lead to lower insurance premiums for consumers

Changing risk profiles have potentially consequential implications for auto insurance. A report by McKinsey & Company suggests that autonomous technology will shift the insurance industry's business model, as it relates to the private passenger auto insurance sector:

“With driverless vehicles, auto insurers might shift the core of their business model, focusing mainly on ensuring car manufacturers from liabilities from a technical failure of their Autonomous Vehicles (AV’s), as opposed to protecting private customers from risks associated with human error in accidents.”[10]

Indeed, if the human in the car is not the “driver,” does he or she still hold liability for any accidents? Precedent has already emerged for manufacturers and fleet owners to assume liability—several auto makers and technology companies currently testing self-driving cars accept liability where the self-driving system is at fault for the crash.

As a result, auto policy ownership could begin to shift away from consumers to commercial entities. That trend could speed up if transportation service companies like Uber begin to eat into car ownership rates. In other words, if self-driving cars make transportation-as-a-service more attractive than car ownership, it could result in fewer cars on the road. That would mean fewer auto insurance policies.

But even for consumers who retain auto insurance, premiums will likely begin to fall, thanks to safety gains. Many insurers are already offering premium discounts for vehicles that use advanced driver assistance systems like lane change alerts and technologies to prevent forward collisions. As such technologies proliferate, auto insurance premiums could plummet.

3: Self-driving cars will save consumers time and money

An NHTSA study noted that in 2010, motor vehicle crashes cost $242 billion in economic activity and $594 billion due to loss of life and injuries. It also estimates that Americans spent about 6.9 billion hours in traffic in 2014.

"Self-driving cars have remarkable potential to make a significant dent in the $160 billion worth of time and gas that Americans lose stuck in traffic every year, and the hundreds of hours each American spends each year driving," says Jeff Zients, the director of the National Economic Council.[11]

McKinsey's study found that automated vehicles could free 50 minutes per day for consumers. Rather than focusing on driving, being stuck in traffic, circling busy streets, or looking for parking, commuters could reclaim their time in the car for relaxing, working, or other activities.[12]

4: Self-driving cars will facilitate transportation for disabled and elderly consumers

All of this does not take into consideration the opportunity autonomous vehicles will provide for the millions of disabled Americans who currently do not drive due to disability or other factors.

According to a Ruderman Family Foundation study, automated vehicles could create new employment opportunities for nearly two million people with disabilities by eliminating transportation obstacles that hinder an individual's ability to obtain and sustain employment.[13] This is an area that has been under-addressed when discussing autonomous vehicle legislation, despite the far-reaching implication the technology could have for those with disabilities, and the resulting savings from productivity gains and healthcare expenditures.

5: Self-driving cars will change the regulatory environment as well

Regulations governing self-driving vehicles are still in flux. In September 2016, NHTSA and the U.S. Department of Transportation issued the first Federal Automated Vehicle Policy. A year later, they released the report A Vision for Safety 2.0, providing guidelines to encourage best practices and an emphasis on safety.[14] A third version of the report is anticipated for 2018, to reflect the evolving landscape of automotive technology, and to address concerns or issues that have arisen since the previous findings. In general, they’re taking a cautious approach, setting out primarily voluntary guidelines. That will likely change as more self-driving cars hit the road, however. The current guidelines emphasize safety concerns, cybersecurity, data recording, and consumer education, so it’s likely future regulations will be designed to help consumers to adopt the new technology with stringent safety requirements and related oversight.

6: High profile incidents may slow development and adoption

Though it’s virtually inevitable that self-driving vehicles will become commercially available, unpredictable PR crises could slow their progress. When an executive at Mercedes-Benz told Car and Driver that the self-driving car would favor the safety of the rider over pedestrians, the public reacted with outrage. Then, the 2016 death of a Tesla driver using the autopilot feature received far more media coverage than the 40,200 other fatal US traffic accidents that year.

“These reactions could derail the adoption of autonomous vehicles through numerous paths,” write the MIT researchers. “They could directly deter consumers, provoke politicians to enact suffocating restrictions, or create outsized liability issues that compromise the financial feasibility of autonomous vehicles.”


While full autonomy may be a decade or so away, current technologies give us a glimpse into the future of mobility.

Highways populated exclusively by self-driving vehicles remain a distant prospect. It will likely take decades for automated vehicles to become the majority. While technology moves fast, it often takes time for consumers to embrace it, and for the industry to standardize features.

The Insurance Institute for Highway Safety notes that while electronic stability control was introduced for the 1995 model year, it was not until 2012 that it became standard in 95 percent of new vehicles. This same report predicts that technologies available today—front crash prevention and lane departure warning, for example—are not expected to be found in most registered vehicles until 2040.[15]

This is despite the fact that 20 major automakers have entered into a voluntary agreement with the NHTSA and IIHS to make front crash prevention systems standard on virtually all models by late 2022.[16]

As with any new technology, it will take the public time to adapt to the concept of yielding control to an autonomous vehicle. However, a study by Kelley Blue Book showed that younger respondents (ages 12 to 15) were more amenable to riding in an automated vehicle compared to all respondents (48 vs. 36 percent).[17]

In the end, AV's have the potential to improve quality of life by reducing traffic fatalities, saving time and money, and providing opportunities to a large segment of the population for whom mobility is a challenge – and as more people are impacted by those benefits, the advantages will only fuel greater adoption.


Common Wealth Casualty News