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posted on 20 May 2017

When Will Self-Driving Cars Become Omnipresent?

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In April 1968, I sat in a theater in a small town in central California and watched 2001: A Space Odyssey. The plot revolved around interplanetary travel within our solar system aboard a spacecraft administratively controlled by HAL 9000 - which meets the current criteria of an artificial intelligence (AI).

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Just over one year later, Apollo 11 landed on the moon. Interplanetary travel seemed very plausable in the early 21st century. After all, within my young life - I had witnessed the first satellite go into orbit, and then landing on the moon in less than 10 years. There was over thirty years remaining to get to 2001, and all one had to do was extrapolate the rate of progress. I was thinking even I could make it into space.

Flash forward to 2017 - little is to be seen of interplanetary travel by humans. Progress has slowed to a crawl. The primary reason is that funding for the USA space agency evaporated.

The space program was a cutting edge venture - and spending could be likened to R&D costs. There were many technical contributions which evolved out of this space program.

There is no immediate profit potential so space needs to be funded by the public sector. Who knows how the USA and the rest of the world would look if 4% of the USA budget had been spent on space since 1970. Imagine the advancements in health and technology. Instead, the USA wasted the good spending on military ventures.

From Business 101 we learned that companies who do not invest in discovering new technologies eventually whither and die (and the same is true for governments). Today it is not uncommon for some companies to spend 10% of revenue for R&D. But for business, it is not necessarily the amounts being spent - but on what and how these are being spent. New technology in the business sector must be focused on gaining more revenue both in the short and long term.

Take the R&D surge on self driving vehicles. Sales of self driving vehicles should be significant as this technology takes hold.

But what about long term?

One report says the logical evolution of self-driving vehicles is to fleets of taxi type self driving vehicles which will pick us up and deliver us as needed:

By 2030, within 10 years of regulatory approval of autonomous vehicles, 95 percent of US passenger miles travelled will be served by on-demand autonomous electric vehicles owned by fleets....."

There would be a drastic reduction in new car sales. Instead of 2-3 cars for each of many households as we have today, could we have 2-3 (or more) households for every car? Could it be that self-driving vehicles are actually the beginning of the end of the automotive industry as we know it today with annual sales as high as 17 million (2016 was a record 17.55 million)? How would the economy respond if annual motor vehicle sales fell to 5 million? To 4 million? To 3 million? Or even lower?

When will self-driving cars become omnipresent?

Ah .... Think about the long term profit motive for R&D on self-driving cars. When the automotive industry wakes up to destructive potential of fleets of self-driving cars - the pace of development will slow. [Truck transport self-driving may experience a different timeline because autonomous trucks will not result in fewer vehicles sold]. Many believe the self-driving horizon is between 2020 and 2030. Without the profit motive, this timeline may be as optimistic as my anticipation of interplanetary space travel.

Or is it possible that the profit motive from the car-as-a-service businesses will fuel the R&D. Still, auto manufacturing will still suffer reduced sales as the car-as-a-service takes hold.

Other Economic News this Week:

The Econintersect Economic Index for May 2017 improvement trend continues - and the index is now forecasting normal growth for the first time since early 2015. Six-month employment growth forecast indicates modest improvement in the rate of growth.

Bankruptcies this Week from Katy Industries, rue21, GulfMark Offshore, Tidewater

Weekly Economic Release Scorecard:

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