With the first driverless being trialed on British, a change in the automotive industry will happen sooner than anticipated. As a vehicle rental service, it is extremely important for us to define the potential impact of driverless vehicles on our industry.
Driverless cars are estimated to cost approximately £170,000 per car. The high purchase price will inevitably put pressure on demand, so those who wish to use one may well consider the rental option, almost like a taxi service.
It is anticipated that economies of scale combined with advanced and cheaper technology will decrease the price over time.
Rental overheads will reduce considerably. Administration for fines etc. will disappear and maintenance costs will be very different. Services are likely to be carried out via the Internet. On the other hand, IT costs are likely to increase, as specialist knowledge will be needed to maintain the fleet.
The department of transport has estimated that 90% of vehicle crashes with casualties are caused by human error. Driverless cars will erase human error behind the wheel, which decreases the probability of casualties and damage to vehicles. This will save the sector on vehicle repairs, administration and time. However, software bugs, external threats (hackers) and faulty sensors could cause serious accidents. Operators will not have the power to correct the fault if something goes wrong, causing the potential for greater damage and a higher chance of fatalities. It can be compared to a train, the chance of error is very small, but when something goes wrong, the consequences are huge.
Due to the high cost of obtaining a licence, the trend of registered driving licenses in the last 15 years has seen a decline of 8% amongst young adults. The cost of driving lessons and car insurance were the two main reasons young adults turn away from owning a vehicle. We can assume that fully driverless vehicles will attract the younger generation and eventually lead to a licence being superfluous which in itself will drive the demand for more driverless cars.
Insurance companies fear for the implementation of driverless cars, due to the low degree of risk. The more stable the vehicles gets, the lower the insurance premium will be. Private insurance may be necessary required for the repair of the technology, as repairs could cost a fortune!
The threat of cyber attacks on vehicles can influence all the points mentioned above. Car manufacturers and software developers will need to budget a lot to ensure the protection of their software. If hackers manage to get through the firewalls, major accidents could occur. Ironically, this threat could help the rental industry, as consumers would not want to risk such damage to their own vehicle, making them turn to temporary rental, which will have the newest, most updatedand secured driverless vehicles.
Most industries (including ours) will struggle in the first years due to the high costs and unstable software. Regular cars will still be available for quite some time, as change may take more than a decade. We can see a positive aspect in most variables affecting the rental industry and we're sure the market will evolve as it always had, to the benefit of the consumer.