Self-driving cars: it will take a little bit more time

Lets dream about it: It should feel like a magic carpet ride, sitting in the back of a self-driving car, with vehicle negotiates freeway onramp merges, stops before a pedestrian crossing in a school zone, and smoothly avoids a careless human driver turning into its lane at an intersection.

When innovators get this technology right–and they will–the impact on society will be huge, and the mammoth businesses will be transformed. The automotive industry represents 3.5% of U.S. GDP, and the freight transportation sector is a whopping 9% of the entire U.S. GDP. The combined revenues of U.S. auto makers and suppliers alone are nearly $500 billion, and that excludes manufacturers based outside the U.S.

But this transformation will take some time.

Geography poses a more practical and immediate challenge: In places such as Southern California or Arizona, where roadways are built in grids, pedestrians are scarce, and the weather is generally good, consumers could see self-driving cars materialize first.

In London and other older cities, driverless cars literally face more roadblocks. And since cars are designed to move across multiple geographies, it is hard to sell a consumer vehicle that only works in, say, Phoenix, but can’t take a road trip to San Francisco.

Most consumers’ first experience in a driverless car will probably be part of a network run by a ride-sharing company such as Uber or Lyft, which could program the cars to operate strictly within localities that are suited for autonomous vehicles, forming a dense network of units that could operate around the clock.

The economic benefits to these ride-sharing networks, and ultimately to users, is huge: Companies pay $1 to $2 per mile to their drivers–about 75% of revenue. In contrast, self-driving vehicles cost about 10¢ to 20¢ per mile to operate. If operating costs could be reduced by some 90%, transportation could become cheaper for consumers and more profitable for companies. And the ride-sharing companies’ challenge of finding qualified drivers could be alleviated.

The auto makers themselves have the resources to invest in a full stack of hardware and software, and indeed, General Motors and Tesla are among some of the car makers developing autonomous vehicles in-house.

After decades of selling cars based on their performance and appeal to drivers, they’ll need to figure out how to build and market cars that appeal to passengers.

The timeframe for all this to become a reality remains impossible to predict. While marketing professionals at these companies will surely paint a pretty picture, the more likely scenario is that we will really start to see deployments in “easy” cities in the 24-month horizon. The more complex cities for autonomous vehicles, like New York or Boston, may have to wait as long as three to five years before the technology is ready for them.

It is important to remember the magnitude of the impact of self-driving on society. In the U.S. alone, 37,000 people died in automotive fatalities in 2017–a number that has been rising because of texting and driving.

Self-driving cars have some challenges, but they are not distracted by texting.

The cost of moving around both people and goods will be significantly reduced. We’ll likely experience less traffic, and just generally be happier.

So while the road ahead for autonomous vehicles is longer and more complex than we’d like, this is a once-in-a-century kind of transformation that is happening right in front of our eyes.

Any person who believes that technology makes our lives better should be keenly interested in its progress. I know I am.