Self-driving cars coming sooner than you expect

by Steve Blum • , ,

The Consumer Technology Association – the sponsor of CES (don’t dare call it the Consumer Electronics Show) – says even though we’ll see the first fully autonomous cars by 2020, by 2030 there only be 1 million sold per year. By 2045 – all but 30 years from now – maybe half the cars sold will be self driving.

I don’t think so. My prediction is that by 2020 more than half the cars sold in California will include self-driving features, and you’ll be able to buy a fully autonomous vehicle for less than $25,000. By 2025, the cost will have dropped below $10,000 (reckoned in 2016 dollars). Not for a full sized SUV of course, but for something sufficient to commute or run errands. And the vast majority of new cars purchased will be self driving or nearly so because of the cost of insuring a manually operated car.

Insurance companies will drive the market for autonomous vehicles. A two mile-per-hour bump into a bus notwithstanding, Google’s autonomous driving record is pristine after 1.4 million miles on the road. And the software it’s developed will only get better. Risk-averse and numbers-driven insurance companies will focus on that statistic and calculate a corresponding discount when autonomous cars are commercially available. A discount on the one hand means a premium on the other: the cost of insuring cars piloted solely by fallible human brains will increase over time, to the point that total cost of ownership for autonomous vehicles will steadily fall. That will push up sales volume and drive down prices. Manual driving will eventually become just another expensive hobby.