Driverless Cars – The Route to Richer, Happier Lives


Driverless cars are already a reality. There’s still work to be done on the technology, and big challenges confront their widespread adoption. But there can be little doubt that they promise to be a transformative technology. Apart from boosting output and productivity, driverless cars are set to make transport cheaper, faster, safer, cleaner, healthier, more social, and more convenient. So cities won’t just be smarter, but happier places too.

Tech leaders such as Google and Tesla suggest this could happen in the coming decade, which may be overoptimistic. But once the transition begins, the clamour to make cities not just smarter, but happier, will become irresistible.


Today, cars are used less than 5% of the time. Shared vehicles would vastly increase this: Google suggests to as much as 75% of the time. This means that less vehicles will be needed, with some experts estimating as much as a 90 percent reduction.

This would greatly reduce the cost of mobility, and eliminate much of the need for parking spaces, freeing up valuable space for other, more attractive uses. In the US, for example, it is reckoned that there are nearly four parking spaces per vehicle.

The savings would not end there. With human drivers being initially segregated on highways, and eventually banned from public roads, traffic management would become massively more efficient. Driverless cars would travel much closer together in ‘platoons’ in synchronised fashion, interacting seamlessly via vehicle-to-vehicle communications and road sensors.

The result is that road space would be used far more intensively and congestion reduced and potentially eliminated. One study suggested that road capacity would be at least doubled. Faster journeys would therefore free up huge amounts of time. Drivers in England spend an average of 4 ½ hours a week driving. Imagine if this were cut in half, for extra work, leisure or sleep. This would come on top of the time that former drivers would gain as passengers in transit, using their vehicles as a mobile lounge or office.

Transforming cities

Driverless cars will radically alter the geography of cities. With streets largely cleared of parked cars, journeys might be less confined to the traditional hub-and–spoke highway networks, allowing more flexible decisions on both home and work locations.

In principle, the reduced pain and cost of commuting is likely to prompt some people to commute longer distances. However, since this might threaten the economic benefits of driverless cars, some form of road charging may help to discourage this. This would be easy to implement, since shared vehicle journey charges would likely be at least partly distance-based. Taxing usage would also provide governments with an income stream to replace the revenues lost on parking fees and speeding fines.

Another convenience of driverless cars is that they may also offer passenger-less services such as deliveries. This could complement the drone delivery services already envisaged by Amazon. Just imagine if the driverless car that you ordered to take you to a party could pick up your shopping and gifts – or even your kids – on its way?

Sharing rather than owning vehicles will also allow users more choice. Commuting to work on your own (as most people do)? Then order a single person vehicle, a ‘personal pod’[1]. Taking the kids to the beach? Then order a large people carrier with cinema equipment to keep them entertained en route.

More sociable places

Driverless cars promise to make cities more sociable places. Reduced travel times would free up more time for leisure. Enhanced mobility for non-drivers such young, elderly or disabled people would boost their social lives. Freed from driving, vehicle occupants would be free to interact with each other and, via mobile technology, with their friends elsewhere.

Moreover, particularly since driverless cars are likely to be electric, or hydrogen, powered, they will offer enormous environmental benefits to cities. According to some estimates, autonomous vehicles could reduce air pollution by an average 90 percent. This in turn will add to the benefits to city dwellers’ health and longevity. Aside from reduced pollution, the sharp reduction in of the number of road accidents, over 90 percent of which are down to human error, will address one of the prime sources of injury and death. According to the World Health Organisation, 1.2 million people are killed on the roads every year.

The reduction in accidents would cut the need for heavy safety protection, adding further to the tendency for driverless cars to be smaller and lighter. Combined with the dramatic efficiency gains in usage, energy and resource utilisation would plunge, reinforcing the environmental benefits.

So the economic, environmental and social impact of driverless cars promises to be transformational. In economic terms, they represent a massive productivity boost. Output will benefit from quicker journeys and the increased scope for working while travelling. The reduced cost of travelling, insurance, repair and the freeing up road and parking space will increase the spending power of both consumers and businesses. And the magnitude of this could be huge. In the US, the direct costs of owning and running cars accounts for over 12% of the cost of living. ING’s initial estimate is that over two-thirds of this, 8%, could be eventually be eliminated by driverless cars.[2]

Impact of driverless cars on CPI

The reshaping of the urban infrastructure will also entail substantial new investment. The near-gridlocked cities in emerging economies such as India and China stand to make huge gains in both mobility and activity

Beyond the monetary

Yet the benefits of the driverless car revolution will go well beyond the monetary. Research shows that commuting is one of the biggest sources of stress. According to Professor Daniel Kahneman “commuting is the worst part of the day, and policies that can make commuting shorter and more convenient would be a straightforward way to reduce minor but widespread suffering”. Studies show that people with the longest commutes have the lowest satisfaction with life, particularly if they are driving. So by making journeys quicker and more enjoyable driverless cars will make cities more liveable.

Just hype?

But wait. Isn’t all this talk of driverless cars becoming the norm in a few years just tech hype? Driverless cars still have a lot to learn about life on city streets, populated by unpredictable humans who are not just driving, but walking and cycling. They still have to figure out to deal with bad weather and icy roads. And even if we assume that these technological challenges are met, there are other barriers before driverless cars take over from human-driven vehicles.

On the legal front, while accidents will become progressively rarer as pesky human drivers gradually depart from the roads, issues of liability and data privacy will need to be resolved. Socially, there will be challenges from the loss of jobs, starting with taxi and truck drivers. Then there is the question of the interaction with public transport and infrastructure. While driverless vehicles may supplant bus services, will they complement or replace train services?

Moreover, traditional auto manufacturers will struggle with this new disruptive technology. Some will find it hard to transition from merely making cars to becoming mobility and experience providers. They may try to cling on to the idea that people will still want to own their own cars, even if they are not driving them.

Indeed, the ingrained car-owning culture may take many years to fade. But the compelling logic of sharing will ultimately prevail. As the economic, social and environmental benefits of driverless cars come to be recognised, the speed with which they overtake human-driven vehicles is bound to accelerate.




[1] If this became popular, this would reduce congestion further. Another alternative would have a similar effect would be ride sharing, or pooling. The success of Uberpool, whereby people share rides, and also the costs, indicates the potential.

[2] This is even before factoring in potential savings in health care and real estate (parking) costs.


About markcliffe

Board Advisor and Thought Leader on the impact of disruptive change. Former Chief Economist of ING Group
This entry was posted in Autonomous Vehicles, Driverless Cars, Economic Growth, Inflation, Innovation, Macro, Productivity, Real Estate, Sharing Economy, Technology. Bookmark the permalink.

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