The Unintended Consequences of Self-Driving Cars

The question of when self-driving cars will gain mass acceptance is not a matter of if, but when. Google (GOOG), DARPA, auto-makers, and universities around the world are all hard at work making this a reality. The prospect of widespread use of driverless cars brings with it many benefits: fewer traffic accidents and the economic toll caused by property damage, injury or death that results. Energy costs will also be saved as these autonomous vehicles maximize driving efficiency and reduce traffic congestion. The net economic benefit has the potential to be enormous.

But that doesn't mean there won't be some unintended consequences that will result from a driverless car revolution.

Unintended Consequence #1: Unemployment

If cars, trucks, and buses start driving themselves, people who earn their living from driving these vehicles will suddenly find themselves out of a job. According to the U.S. Bureau of Labor Statistics, in 2019 more than 2.0 million people were employed as tractor-trailer truck drivers. Taxi and delivery drivers account for 370,400 jobs, and more than 680,000 Americans are employed as bus drivers. Taken together, that represents a potential loss of more than 2.9 million jobs—which is more than the number of jobs lost during 2008 due to the Great Recession. Add in delivery and light truck drivers (1.5 million) and the total number of potential jobs lost grows to a staggering 4.5 million. Now account for all the supervisory staff, management, and support staff for these driving jobs and that number could double.

It will be difficult for such unemployed workers to quickly find new work, and the cost of re-training them could be high. One interesting possible consequence is that after a few generations, very few people will even know how to drive a car anymore.

Unintended Consequence #2: Hackers Taking Over Vehicles

In the past, security experts looking to exploit flaws in modern automobiles have successfully hacked and been able to take control of a Tesla Model S and a Jeep Cherokee. A driverless car would be entirely controlled by computer hardware and software. A malicious attacker could find and exploit security holes in any number of complex systems to take over a car or even cause it to crash purposefully.

Furthermore, driverless cars of the future will likely be networked in order to communicate with each other and send and receive data about other vehicles on the road. Attacks on such a network could grind all these robotic cars on the road to a halt. 

Of course, the makers of driverless cars are hiring people to try to identify and patch any security gaps that they can find now, but enterprising hackers are sure to find new and novel ways to circumvent existing security measures.

Unintended Consequence #3: The Auto Industry

Another potential consequence of a world with driverless cars is that people will rely more and more on calling a driverless car from a shared fleet similar to calling an Uber, causing a decline in the private ownership of cars. Why own an expensive machine prone to breaking down when you can simply summon a driverless car to take you wherever you please upon your request? If private car ownership became a thing of the past it would destroy the automobile industry, representing the loss of many jobs both directly and indirectly, as well as billions of dollars in economic output.

Traditional automakers such as General Motors (GM) and Ford (F) have typically been slow to adapt to change and may find themselves in financial trouble once again if this plays out as some predict.

Unintended Consequence #4: The Auto Insurance Industry

Auto insurers already exist in a highly competitive market with razor-thin margins. Insurance is priced depending on the chances that some risk, such as an accident or a drunk driving incident. Driverless cars promise to greatly reduce the occurrence of both risks, as well as accidents involving pedestrians. The result is that the cost of insurance will collapse as the risks associated with human driving are eliminated by technology. There could be potential bankruptcies amongst auto insurers as their traditional business model will become out of date.

Keep an eye on some of the largest auto insurers which are publicly traded on U.S. stock exchanges: Allstate (ALL), Progressive (PGR), Travelers (TRV), and GEICO to see how this industry's bottom line may be affected in the future.

Unintended Consequence #5: Car Sickness

A study put out by researchers at the University of Michigan suggests that 6 – 12% of all American passengers of a driverless car will experience motion sickness, resulting in nausea and perhaps even vomiting. Motion sickness tends to become more severe if people undertake activities such as reading, which is exactly what bored passengers in self-driving cars are apt to do.

The Bottom Line

The advent of driverless cars is going to disrupt and revolutionize the way people get around. While there is likely to be a net positive benefit to society such as increased mobility for older Americans and the disabled or less reliance on fossil fuels, there will also be unintended consequences to consider. These negative effects range from the potential loss of millions of driving jobs to a collapse of the traditional auto industry. It seems apparent that the momentum in the development of self-driving vehicles is only going to pick up steam. As a result, it is important to be prepared for these, and any other, unintended negative consequences that may materialize as a result of this disruptive technology.