Self-Driving Cars Will Transform the Human Environment

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Self-Driving Cars Will Transform the Human Environment

Compared to most of our capital investments, automobiles are underutilized assets. They are mainly active during peak hours and rarely for more than 10 percent of the day—in fact, most are used for less than one hour a day.1

Much of their capacity is also underused since cars typically display low levels of occupancy in each trip—often with only one occupant. Households put up with such levels of inefficiency in order to gain the benefits of comfortable, door-to-door, on-demand travel.

But soon the convergence of shared transport services—such as car sharing and ride-sharing—with self-driving vehicle technology is likely to eliminate this one-hundred-year-old inefficiency.

Until recently, shared transport services have been largely informal and ad-hoc, including household car-sharing and carpooling; but starting in the 1980s, new models of cooperative and commercial car sharing emerged.

These forms of car sharing allowed individuals to subscribe to shared fleets whose vehicles they could reserve, access, and use only when they need them. Pricing for these services is typically calculated on a per-hour or per-kilometer basis.

The business model, situated somewhere between traditional car-rental services and taxis, has proven popular in many urban areas since they allow individuals to have access to cars without necessarily owning one.

With the arrival of ubiquitous Internet access and dedicated app-based services, car-sharing has quickly grown in popularity and sophistication, and numerous successful services have been deployed around the world.

At the same time, there has been a development in terms of technological sophistication with ride-sharing services—especially for app-based on-demand services. These can take the form of taxi-like services or peer-to-peer real-time ride sharing.

As with app-based car sharing, these forms of ride-sharing have proven to be tremendously popular, and pioneering companies in this field have generated billions of dollars in market capitalization.

All of these services currently require a driver. So it seems interesting to examine what might be the next step in these services' evolution, namely, their integration with self-driving technology. In order to quantify the economic implications of shared self-driving vehicles on a regional basis, the International Transport Forum at the OECD sponsored extensive investigations by several researchers...

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