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: less 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 2012 more than 1.7 million people were employed as tractor-trailer truck drivers. Taxi and livery drivers account for another quarter million jobs, and more than 650,000 Americans are employed as bus drivers. Taken together, that represents a potential loss of more than 2.6 million jobs—which is the same number of jobs lost during 2008 due to the Great Recession. Add in delivery and light truck drivers and the total number of potential jobs lost grows to a staggering 4 million. Now account for all the supervisory staff, management and support staff for these driving jobs and that number could double.

Many of these workers are classified as low-skilled workers, with their main skill being the ability to drive. 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 consequence is that after a few generations, very few people will even know how to drive a car anymore. (For more, see also: 20 Industries Threatened by Tech Disruption.)

Unintended Consequence #2: Hackers Taking Over Vehicles

Recently, security experts looking to exploit flaws in modern automobiles successfully hacked and were 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. The FBI has gone so far as to caution that driverless cars could be turned into weapons, striking objects or pedestrians. 

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. (For more, see: How Internet Connected Cars Work.)

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? In many parts of the developed world, there are more cars than people. 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. (For more, see: Self Driving Cars Could Change the Auto Industry.)

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. (For related reading, see: A Beginner's Guide to Auto Insurance.)

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, there will also be unintended consequences to consider. These negative effects range from the serious—the potential loss of millions of driving jobs along with a collapse of the traditional auto industry—to the silly (more people will be puking). 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. (For related reading, see: How Google's Self Driving Cars Will Change Everything.)