The Economics of Driverless Cars


When looking at the future of driverless cars, we need to take into account the different economic changes that will occur with this shift in technology. What job industries will suffer and will new ones arise? Will the actual price of the vehicle be affordable for the average family? Do the benefits outweigh the negatives? These are all important questions that should be addressed before autonomous vehicles are mass produced to make the transition easier.

Currently, vehicles form a big part of the economy whether you’re thinking of manufacturers, insurers, mechanics, dealers or even taxi drivers. For those businesses that don’t adjust in time, it is possible that they could lose “hundreds of billions of dollars” (Dallegro, 2014) and some would likely bankrupt. However at this point in time, many car manufacturers are wary of investing in autonomous vehicles because “anything that reduces the number of vehicles on the road, or reduces the overall cost of these vehicles, without providing a new revenue stream to compensate” (Stayton, 2015) is risky for companies and until the change becomes imminent, most manufacturers will stick to the status quo.

Even the government would lose revenue with a flip to autonomous cars since there would be no need for licensing fees and, since these vehicles follow the road rules at all time, there would no longer be fines for illegal driving habits like speeding and drinking under the influence. This all doesn’t cast the friendliest light for a shift towards driverless technology for companies who rely on the industry, but with the possibilities of safer roads and lower carbon emissions, autonomous vehicles are the way of the future. One industry that will certainly boom in the wake of driverless cars will be software development since the programs controlling the vehicles will have to be constantly updated to ensure safety in all situations and to stay on top of newly built roads. Although there may be some initial losses for the big boys, the future for the little people seems far brighter.

Anyone who has owned a car would be well aware of the ongoing cost to upkeep the vehicle. There’s ever-changing fuel prices, insurance, servicing, mechanics and that’s not even counting the initial purchase of the car which is a lot of money to drop whether it’s brand new or second hand. With self-driving cars, it would be possible to “rent them by the hour” (Ozimek, 2014) – a much cheaper system compared to a taxi. So for those who didn’t require a car on a daily basis or only for a short commute, rather than paying for insurance and other fees, they could rent cars based on their needs. This could help save the average family thousands of dollars a year which would make it much easier to save money in general whether that’s for a house deposit, a holiday or a little treat for yourself.

Robin Chase (2014), CEO of Buzzcar (a peer-to-peer car sharing service), provides a few statistics to help explain the benefits of self-driving cars for the average consumer. He mentions that 80% of people drive alone in their car and can spend roughly $9000 of their income every year for an asset that is used only 5% of the time. Although an important asset in this day and age, and quite a time saving one at that, autonomous vehicles would take a step further and increase the potential for car pooling (think of a company car that picks you up every morning and takes you home), save even more of your time by allowing you to work on tasks on-the-go and help you save some cash along the way. Also, for people who owned these self-driving cars, it could be an extra form of income. Rather than having our modern day taxi services, one person would be able to manage their own fleet of cars and simply work from home.

According to the Australian Bureau of Statistics (2015), Australia has 764 motor vehicles per 1000 people which places it in the top 10 list of countries by vehicles per capita. Google is aiming to increase car utilization from between 5-10% to 75% through sharing (Dallegro, 2014). So if Australia were to move towards self-driving cars, a decrease in the number of cars on the road would be likely to occur. However, this brings in the question of affordability. Right now, the autonomous technology that needs to be added to a base model can add several thousand dollars to the price tag; the systems needed for a driverless Infiniti Q50 “costs an additional $6600 above the base sticker price” (Tannert, 2014). If the prices remain high, it will be difficult to convince the consumers to invest in the technology. The costs will definitely decrease with enough demand, however there needs to be a market from the everyday person in the first place rather than having sparse celebrities buying the product.

With technology improving at a rapid rate and a constant emphasis on keeping roads safe, it’s a no-brainer to move towards autonomous technology. Even with the initial shock to the car industry, it is very possible that new jobs will arise from the very creation of this technology and with enough adjustment, the transition will easily fit in to our culture. On an individual scale, the benefits seem almost magical and will be a relief to commuters everywhere although it may be a bit more difficult to get those rev-heads to stop grinding those gears.

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7 thoughts on “The Economics of Driverless Cars”

  1. You raise an interesting point about the government losing money with the introduction of driverless cars. This seems like a huge drawback as governments love money, however, if there are enough positives, I imagine the government will definitely find a way to make money from such an advancement. Be it a driverless car tax or more road toll fees.

    A great benefit I can see from driverless cars is the resulting impact on the environment. With more efficient driving from computers there will surely be a lot less pollution, and with the car-pooling idea you suggested, even less! I wonder if there have been any studies on the environmental impacts of driverless cars?


  2. Hey cool post it’s interesting to read up on automated cars, I feel like they’re a pretty inevitable part of society in the future.

    I didn’t think about a lot of the economic implications you raised which were really interesting but I think at the end of the day we shouldn’t struggle to keep a couple ageing industries alive and save the government money when driving is so dangerous and costly.
    Another point you made which i definitely agree with is as the industry changes and some forms of revenue are shut down there will be new forms of income opening up to a range of people.

    One other area you could look at is how automated cars could save on energy consumption and/ or emissions. Not only at the immediate level when automated cars drive smoother and car pooling becomes popular but if an entire grid of cars are communicating that allows us to possibly get rid of traffic lights (where we spend a lot of fuel starting and stopping), start using drafting (if cars can communicate they can drive close to each other and minimise wind resistance) and potentially a tonne more.

    This article just looks at some stats and how automated cars and trucks could reduce emissions.



  3. In relation to ownership of self-driving cars, it’s likely that Governments will move away from private ownership of motor vehicles, with the likelihood of a ‘taxi-system’ as you noted. In 2015 U.S and China alone consumed 40 million light vehicles (Neil, D. 2015). There is no doubt that such change will impact the international economy, with Morgan Stanley stating that their could be a saving of 5.6 trillion globally. Additionally we also have the possibility of what likely will be a reduction of resources, and as to which countries economies will likely benefit from such – which could be an interesting topic to touch upon. I look forward to the rest of this project.


    Neil, D. (2015) Could Self-Driving Cars Cars Spell the End of Ownership, The Wall Street Journal, viewed 03.05.16


  4. I was talking to my boyfriend on the weekend about driverless cars and the idea of sharing cars, e.g. uni students could share a driverless car and there would be no parking, just one person gets out and the car is ready for use by someone else. He straight up said “That will never happen and it will never work”. Being a tradesmen he mentioned the fact that people like himself need personal vehicles to carry tools and equipment. Also needs larger vehicles like utes to carry bigger materials like timber and scaffolding. What if you had your tools in your driverless car, got out and it drove off? I guess there is the idea of renting the car by the hour but it doesn’t seem efficient for situations such as this one.

    While there is the idea of saving money which is great, a lot of people few that there car is their private space (I do anyway). I need to keep a lot of things in my car, especially travellings and living between Wollongong and Campbelltown. It would be annoying having to move my stuff into a driverless car everytime I needed to travel back and forth.

    He also said “It would only work if all cars were wiped out all at once”. With cars we have now sharing the road with driverless cars would be dangerous. Not that the driverless would be dangerous; they are programmed to work exactly to road rules and would be safer, but it is humans that are unpredictable. How do you program a robot to human unpredictability?

    I think the idea of driverless cars is great, but it still has a long way to go. What about different shapes and sizes to cater for different things? Imagine if with normal cars it was one size fits all? With bigger sizes and different functions of bearing weight and such comes with more technological development and more money.


  5. Tesla have released electric vehicles in the name of leaving a positive environmental impact and innovations such as this, I think only naturally lead into a niche of automated self-driving vehicles and most probably will be combined to create the ultimate vehicle. BUT I think that driverless cars are a thing of the future but the very far far distant future. They still have a longggggg way to come in not only technological innovation but also legalities, regulations, cost and general public acceptance. Driverless cars have a strong technological aspect but more so people would show a lot of caution towards it acceptance due to its unpredictability. They can’t guarantee what is going to happen when they hop into the vehicle and this I think would be the main hindrance.

    I agree with Shenae in the comment above that it would be highly dangerous to merge driverless cars and human drivers. Driverless cars would need to be highly programmed to watch out for changes in situations and react swiftly to unpredictability in other drivers as well as weather/environment/setting changes such as potholes or a rock from the ground flying up and shattering the window. There are so many minor details that need to be addressed for a safe, trustworthy, reliable, economically viable, comforting driverless vehicle to exist!


  6. I honestly had never even considered the government losing it’s revenue from licensing fees and road offences like speeding. It’s an interesting point but I’m sure they will inevitably find a different source of revenue from the rising industry of autonomous vehicles. After all, the fines for road offences are supposed to only be there as a deterrent to disobeying road rules. I read this article a while back that focuses on the economy restructure around the self-driving industry, you should check it out


  7. Whilst the Government would most defiantly if driverless cars were to become a thing of the future, there is no denying that they would find a way to supplement this loss of income. Things such as rego costs and toll costs are two examples which we may see increase.

    Here is an article about all the projected costs of a driverless car,


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