Recently, about a dozen trucks from major manufacturers including Volvo, Daimler AG (OTC: DDAIF) and Volkswagen (OTCMKTS: VLKAY) completed a week of autonomous driving across Europe, to take part in the European Truck Platooning Challenge, organized by the Dutch government as one of biggest events for its 2016 presidency of the European Union.

Truck “platooning” involves a few trucks linked wirelessly that autonomously follow one leading truck determining route and speed. The platoon of wireless-linked trucks arrived in Rotterdam, Netherlands, signifying a win for the future of driverless transport with the first ever border-crossing trip of its kind. Trucks arrived from factories as far as Southern Germany and Sweden. The news shed light on the ability of driverless trucks to completely disrupt the economy.

The Economics of Autonomous Vehicles

According to Navigant Research, sales of autonomous vehicles will grow from fewer than 8,000 annually in 2020 to 95.4 million in 2035, representing 75% of all light-duty vehicle sales. With most innovation, comes the backlash from traditional suppliers and laborers, as the economy is not always quick to adjust.

Smart car manufacturers point to the increased efficiency, safety and price performance of the driverless convoys versus traditional human drivers. The advantage of an automatic truck in decreasing time and improving efficiency is the ability to stay at a more consistent speed, eliminating heavily congested roads and highways.

Regarding safety, proponents of the driverless cars trust the calculated technology of driverless trucks over the inconsistent and often faulty human judgment and concentration. Human error accounts for 94% of total reported traffic accidents in the United States, according to a recent NHTSA report. Alternatively, when ordinary driverless tricks sense an issue through radar and cameras, the system will alert the driver, and in the case of no response, the truck will pull over itself and wait for directions. According to driverless car manufacturer Daimler, their self-driving trucks, which lack fancy laser-radar and LIDAR technology contained in Google’s (NASDAQ: GOOGL) version, have tacked on a million plus miles over a decade-long of testing.(For related reading, see: How Google's Self-Driving Car Will Change Everything.)

The replacement of traditional truck drivers will undoubtedly result in a widespread displacement of jobs. In the U.S., truck drivers represent 1% of the total workforce, serving as the most common job in 29 states. According to the American Trucker Association, there were 6.8 million people employed throughout the economy in truck-related activities in 2010, excluding the self-employed. The ripple effect of these job losses will negatively impact the local economies built around supporting this cohort of the population, including the small businesses that provide food, drink, accommodation and rest to the truck drivers.

Part of a Larger Automotive Movement

The self-driving truck concept is only part of a much larger revolution of autonomous vehicles with potential to send a ripple effect through the entire global economy — transforming industries from insurance to manufacturing. (Also, see: Self-Driving Cars: Shifting Gears in Key Sectors.)

Remarking on the recent tests, Eric Jonnaert, president of the body representing DAF, Daimler, Iveco, MAN, and Volvo, stated: “This is all part of a journey, which we are on as the automotive industry, towards highly automated vehicles.” (To learn more, see: Self-Driving Cars Could Change the Auto Industry (GM, F).)

Automatic Vehicles Face Various Roadblocks

Despite the recent landmarks achieved by driverless technologies, the industry still faces hurdles to get the technology moving. We have yet to see standardized government regulations specifically for the vehicles, leaving autonomous automakers in murky waters.

From a technology standpoint, the manufacturers need to set in place a means for communication in between trucks from different manufacturers. Although the trucks involved in the European Platooning Challenge were only semi-automated, with human drivers on board accompanying the computers, the manufacturers hope to release a fully-autonomous truck that will accompany a new generation of autonomous cars worldwide.

The Bottom Line

The successful cross-border trip of a convoy of self-driving trucks across Europe into the Netherlands gives insight into a near future of autonomous vehicles replacing traditional truck drivers. As truck platooning will potentially replace millions of workers, policy makers must take into account the economic gains and losses due to newly unemployed, alongside an increased efficiency, safety and price performance brought by the innovation.

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