Many science fiction stories or movies involve self-driving cars. This technology is now a reality, with “autonomous vehicles” proven safe and legalized in many states. But beyond simply freeing drivers to do other things while the car is moving, self-driving cars have enormous implications for business. Of course, the automotive industry will be affected. Self-driving cars only increase the attractiveness of ZipCar and other car-sharing services (the University of Texas at Arlington has Connect by Hertz, a similar car-sharing service on campus). Previously, these services suffered because when a customer needed a car he or she had to get to where the car was. But with self-driving cars, the car can come to you. This might even reduce the demand for cars overall. Beyond the automotive industry, self-driving cars will have enormous implications for other areas of business. For example, when cars can park themselves and come when you call them (think Batman calling the Batmobile), the need for convenient and close-by parking will reduce. Real estate and economic development will be significantly changed.
Other things to consider with this new technology are changes to the way auto insurance policies are written and enforced, how traffic and fuel is regulated for these driverless vehicles, and consumer culture of ownership versus renting. When considering consumer behavior, will the product be slow to catch on, with early adopters and experts trying it first and most consumers gradually adopting it, or will there be some economic, convenience or status incentive to make the product desirable by all consumers? These are the issues being discussed and studied in the College of Business at UT Arlington. Marketing Associate Professor Zhiyong Yang recently published a paper in the Journal of Marketing that explores consumer adoption of new products, and the independent and interdependent influences that affect the adoption of innovation. His findings demonstrate that adoption of new products is driven by the perceived fit between the product’s newness level and the optimal level of distinctiveness sought by consumers. “Transportation and real estate go hand in hand,” said Steve Isbell, lecturer in the university’s Finance and Real Estate Department. “As for how real estate has been impacted by the automobile in general, one need only track suburban development alongside the popularity of the automobile. Beyond that, the interstate highway system also played a major role in real estate development.” Economics Professor Roger Meiners noted that driverless cars will mean greater productivity because people can read, send text messages and complete multiple tasks while riding. The vehicles also will be a boon for elderly people, giving them increased mobility to go shopping, go to the doctor, and visit family and friends. “Driverless cars hold multiple promises,” he said. “There will be fewer injuries and deaths from accidents as almost all are caused by human error. That will mean lower insurance premiums for auto insurance, less repair work and, more importantly, fewer trips to the emergency room.”
Meiners also said that shared cars should become much more common with the advent of driverless cars because they can be called to come when needed. “Cars are costly and sit unused the vast majority of the time (while declining in value). Driverless cars can go around and pick up many people during the day, making the use of taxis and mass transit less attractive with such door-to-door service available.” He predicted that the landscape will change significantly because fewer total vehicles will be needed, lessening the need as well for road expansions and parking lots. It’s possible that people who live in urban areas will not own cars and instead will use a shared driverless vehicle when they need to go somewhere. UT Arlington recently announced a new unmanned vehicle systems undergraduate certificate, available beginning Fall 2014. The program is a collaboration between the College of Engineering and the UT Arlington Research Institute, and will help meet demand for highly educated employees in the rapidly developing field of unmanned ground, air and water systems.
The Future of Business is a blog series created by College of Business Dean Rachel Croson to promote discussions about what business will be in the future.