Invest in driverless cars for a faster, safer future
It may seem like a long shot, but self-driving cars may be closer than you think
FROM an investment point of view, George Osborne’s autumn statement was remarkably bloodless: a married tax allowance here, a capital gains charge on foreign property buyers there. As Matthew Engels put it in the FT: “The Chancellor gave away nothing worth mentioning and he took nothing away, except an hour of precious time.”
One of his more intriguing announcements was news of a review into driverless cars. The government is going to examine whether the necessary legislative and regulatory framework is in place to support the technology. It has also established a prize fund of £10m – allocated to the town or city deemed most suitable to host a test site. Doubtless they’re revving up in Milton Keynes, which already plans to trial a system of “self-driving pods” in 18 months time.
In the general scheme of things £10m isn’t going to run very far. And from the sound of things, the Milton Keynes pilot rather lacks the glamour of the self-driving trials that Google has been pioneering in California. Forget cruising on auto-pilot around Mountain View. In Milton Keynes the pods will use dedicated lanes to transport passengers at just 12 mph.
Still, the Chancellor’s little throwaway does ram home the point that this technology is coming – and probably much faster than we thought. Until recently, most people who thought about it all were giving it a 20-year timeframe. Now some experts reckon computer-driven cars could be on our roads within the next decade. That’s certainly the aim of mainstream carmakers like Nissan, Volkswagen, Volvo and BMW, who have jumped on the bandwagon since Google first trumpeted its prototype driverless car in 2010. They all aim to have at least semi-autonomous vehicles ready by 2020.
More recently, momentum has been driven by America’s rocket-man, Elon Musk (the entrepreneur behind the spaceX private rocket company), who recently announced that his motor company, Tesla, would have roadworthy robot cars ready within three years. Since Musk has a history of turning bold predictions into reality, we can safely conclude that sci-fi this ain’t.
Just because we can develop driverless cars, does it mean we actually want or need them? Proponents certainly have some good arguments on their side – safety being a leading consideration. On some estimates, taking human error out of the equation could reduce car accidents by 90 per cent. It would also speed up journey times. A driverless car with built-in 360-degree lasers, navigational GPS and adaptive cruise control could safely attain speeds of 125mph on motorways. They’d also liberate those currently unable to drive (check out Google’s video of a 95 per cent blind man running errands). And what better way to enjoy a stress-free commute?
There’s also a big efficiency argument. The average vehicle currently spends most of its time idle – parked more than 90% of the time. That could change if driverless vehicles reduce the need for car-ownership and usher in greater pooling – and cars that we could summon when we need them. What’s more, if cars are safer, they can also be built lighter, which means they’d guzzle less gas.
In short, the possible ramifications of this hugely disruptive technology are endless. Consider, for instance, its potential impact on railways, city design and financial products like insurance.
If driving becomes significantly safer, car insurance will become vastly cheaper too, which could well act as a major incentive for consumers to shell out on driverless cars. But there’s also the question of liability: if you are involved in a prang in your self-driving car, shouldn’t it be up to the manufacturer to settle any ensuing claim?
The likelihood, of course, is that the inroads that self-driving cars make into our lives are more likely to be evolutionary rather than revolutionary. The idea of relinquishing complete control over a vehicle is anathema to most drivers: Elon Musk prefers the term “computer-piloted” rather than “computer-driven” because it sends the message that the human is still in control.
Even so, it’s interesting to consider how you might invest in and around the technology. The purest play is probably Tesla, listed on Nasdaq – though even Musk concedes shares have been looking toppy of late. But it would also be worthwhile keeping an eye on more mainstream carmakers to see if any has a product that looks to be a runaway winner. If you hold shares in any big motor insurer, it would also pay to keep a wether eye.
In Britain, however, the biggest casualty could well be big rail projects like the £46bn HS2 project, scheduled for completion in 2032, which some have already dismissed as a ludicrously expensive white elephant given the explosive potential of the driverless car. The paltry £10m prize announced by the Chancellor this week could well be seen as the first acknowledgement from the Government that there may be another way. ·