The whole world, not just the automotive world, seems to be enamored with the idea of self-driving cars (hereafter SDCs). People have visions of a utopian personal transportation system, where tailgating, collisions, traffic jams, erratic drivers and all manner of evil things that happen on the roads will cease to exist. Peace will breakout and wars will end on a global scale.
However, there is potentially an economic dark side to a world filled with SDCs. What, you say, how could that be?! Surely we’ll all be better off with a total absence of problems on the roads. Well, not everybody. Let’s take a closer look at some of the peripheral impacts of self-driving cars.
The latest statistics I could find on line show that states collected $6,232,000,000 in speeding tickets in 2016. (https://www.statisticbrain.com/driving-citation-statistics/) That’s an average of $124,640,000 per state. The top ten ticket issuing states (Ohio, Pennsylvania, New York, California, Texas, Georgia, Virginia, North Carolina, Massachusetts and Connecticut) probably collect a disproportionate amount of that revenue. You can bet the cost of a speeding ticket that the revenue is built into each state’s budget and spending plans. The website Motorists.org even suggests that states purposefully work to increase the number of potential violations to keep the money rolling in. They claim that states “pass enough laws so that anybody can be stopped at any time and be given a ticket for a traffic violation. Trivial or concocted traffic law violations are also frequently used as an excuse to stop, detain, and search persons for whom the police have no other legitimate reason to do so.”(https://www.motorists.org/blog/traffic-tickets-are-big-business/)
So, in a utopian world where nobody can speed (or otherwise behave badly on the road) because the cars won’t allow it, where will all that money come from? One thought is that states will enact a separate tax or radically higher registration fee on SDCs. After all, somebody has to pick up the economic slack caused by an absence of ticket revenue. Imagine being penalized for safe driving!
States will take another economic hit because self-driving cars will most likely be electric cars. It may come as a shock, but electric vehicles (hereafter EVs) don’t use any gasoline. In most states, the gasoline tax pays for road maintenance and upkeep. Just as in the above example, yet another tax could be levied on EVs, call it an alternative vehicular energy use surcharge. Under that model, SDC owners will be doubly penalized for safe driving and helping to keep the air clean. If you are skeptical, remember that if I could think of it, politicians could do it.
And what about driver’s license fees? The general consensus is that the manufacturer of an SDC will be the operator. If that is the case, nobody will need a license to operate an SDC, because they are not operating it. According to staticbrain.com, there were 196,000,000 licensed drivers in the United States. (https://www.statisticbrain.com/driving-citation-statistics/) For arguments sake, let’s say they are $50 each per year. That amounts to $9,800,000,000 annually across the country, eclipsing the over $6,000,000,000 collected in fines. Between the no-longer-needed driver’s licenses and the disappearing ticket revenues, states stand to lose over $15,000,000,000 collectively. Perhaps they will replace the driver’s license with a state mandated ID card, which would probably have the same fee structure. States could even require every resident to have one, thus collecting even more for ID cards than they do for driver’s licenses. Imagine standing in line every year for a new picture, all thanks to SDSCs.
However, states will not be the only organizations likely to be economically impacted by SDCs. There is an entire industry that counts on bad drivers. That’s right; body shops are on a potential collision course with a downturn. The Hammer Group reports that the collision repair business is a $37 billion industry, comprised of 38,000 auto body shops nationwide. (http://hammergroupholdings.com/trends.php) What happens to that business when cars simply can’t collide? Is a nearly $40 billion market segment wiped out? The ripple effect could be widespread. Lost wages and vacant buildings impact local, state, and even the federal tax revenues. Body shop repair technicians will need to be retrained, as their skills will no longer be required. The replacement body parts business will shrivel, as will the overall demand for car paint. The economic impact will make its way to the top of the supply chain. Automobile manufacturer’s spare parts business as well as after-market manufacturers’ sales will plummet.
That’s not to say there won’t be societal benefits of SDCs. The costs of injuries resulting from car collisions, the economic cost of delays due to traffic accidents and the number of highway deaths will radically decrease. The point of this piece is to point of that rose-colored-glasses are not necessarily the best tools to look at the overall impact of SDCs
(Note: The contents of this blog represent the views of the author and are presented to start people thinking. They should not be confused with facts, actionable forecasts or anything else that could be taken really seriously.)
