This Life-Changing Technology Is Closer Than You Think
Editor's note: When it comes to cutting-edge technologies, our colleague and friend Jeff Brown is one of the best in the business.
Over his 25-year career, Jeff has built early stage startups, run multimillion-dollar organizations, and made a fortune as an angel investor in pre-IPO companies. Now, he's editor of The Near Future Report for our Bonner & Partners affiliates.
Today's edition of our weekend Masters Series features an interview that originally appeared in the June 16 issue of Bonner & Partners Inner Circle. In it, Jeff sits down with Bonner & Partners editor at large Chris Lowe to discuss why self-driving cars will be a reality much sooner than anybody realizes...
This Life-Changing Technology Is Closer Than You Think
An interview with Jeff Brown, editor, The Near Future Report
Chris Lowe: One of the emerging trends you're particularly interested in for your new investment advisory is self-driving cars. How near is the self-driving future?
Jeff Brown: I typically go to about four technology conferences a month. I've gone to quite a few about machine intelligence and artificial intelligence – or AI – as they apply to autonomous-driving technology. Occasionally, you'll have someone from one of the large automotive manufacturers get up and present. What they'll typically say is, "Yes, self-driving cars are coming. But it won't be for another 15 years."
It always astounds me. Because I live in Silicon Valley, and when I walk outside my house, I see cars on the road without anyone in the front seat every single day. Although most folks still don't know it, we are on the cusp of commercial deployment. I expect that will happen within the next 18 months.
Chris: Can you tell me a bit more about the type of self-driving cars you're already seeing on the roads?
Jeff: Most of the cars you see driving themselves around Silicon Valley are from a company called Waymo, a division of Alphabet, the parent company of Google. These cars have been around for a few years now. In fact, I first sat in one of Google's self-driving cars in 2011.
I was visiting NASA's Ames Research Center. The car was an early prototype. Inside, it was loaded with computing equipment, screens, and wires. Around and on top of the car were all the sensors, the cameras, the radar, and the LIDAR (light detection and ranging).
Things have come a long way since then. Tesla's new Model 3 car was released in late July and costs $35,000 – about the price of an average car in America. And it will be fully capable of driving itself from start to finish, perhaps by the end of this year.
In fact, since October 2016, every car that has come off the Tesla production line has all the hardware required for fully autonomous driving – the ultrasonic sensors, the radar sensors, the cameras, etc. All they need is a software upgrade to make them fully autonomous.
What will likely be the determining factor for when self-driving cars become a reality is a supportive regulatory environment. With regulatory approvals, it will open up the industry for even more investment and innovation. And there's already promising news in that arena.
You see, earlier this year, the House passed a driverless car bill called the "SELF DRIVE Act." Essentially what it would do is provide overarching guidelines from the federal government. It would also permit the deployment of 100,000 self-driving vehicles annually.
You asked me how far off self-driving cars are. They're here today. But unless you've seen and experienced self-driving technology, it's still hard to wrap your head around it.
Chris: Why is this such a big deal? Obviously, it means you don't have to drive your car on your commute to work or whatever. But what are the other implications?
Jeff: One of the most obvious ones is that people will not die. Roughly 1.3 million people die every year in automobile accidents – one every 25 seconds. And about 90% of those deaths are caused by driver error. All of those deaths will disappear with the employment of autonomous-driving technology.
And here's what's really interesting: Driver-error deaths have been increasing lately. There was a study recently about the number of vehicle crashes per year in the U.S. According to the results, after falling for many years because of the use of safety technology – airbags, active braking, stability control systems, etc. – deaths bottomed out roughly around 2011. Then they started increasing again. And the reason behind the increase is smartphones.
Chris: Haven't smartphones been around for a decade or so now?
Jeff: The first iPhone was launched in 2007. But smartphone ownership among drivers in the U.S. didn't exceed 50% until 2011 – the bottom for automobile crashes. And since 2011, smartphone ownership among drivers has risen to above 90%.
What's causing the increase in road deaths? The correlation is almost perfect. It's driver distraction. It's people texting, surfing the Internet, and making calls on their smartphones rather than paying attention to the road.
This brings me to another big change self-driving cars will bring: lower insurance costs. If the number of crashes per year goes down, insurance rates are going to go down, too. If the number of crashes a year goes close to zero, that's going to have a dramatic effect on premiums. And it may not even be the individual consumer – you and me – who pays for the insurance anymore. The burden, I believe, will shift to the automobile manufacturer.
Chris: You're saying that in a world of self-driving cars, the Waymos and the Teslas will have to insure their autonomous vehicles?
Jeff: Keep in mind that we're also going to see the birth of an entirely new industry for shared autonomous vehicles – or SAVs. Companies will keep fleets of autonomous vehicles on demand to safely shuttle commuters from point to point. You won't even need to own a car.
In a self-driving world, individual car ownership is going to drop by at least 50%. And if people don't drive or own a car, why would they need car insurance? If there actually ever was an accident, it would most likely be caused by a human driver who isn't in a self-driving car. But it may happen that there is a software problem in an autonomous vehicle. So it makes sense for either the SAV company or the car manufacturer to take on the responsibility for car insurance.
Chris: You live in Silicon Valley. You're steeped in new technology. But what do you say to someone who's not a tech insider, like you, who still doesn't trust computers to move hundreds of millions of people from A to B without any crashes? Last year, wasn't a guy killed in Florida when his Tesla was driving in autopilot mode and crashed into a truck?
Jeff: The Tesla crash you're referring to was actually due to driver error. That Tesla owner was using the car as though it were a fully autonomous vehicle when it wasn't. At that time, Tesla's self-driving technology, while the most advanced in the world, was never advertised as fully autonomous.
And Tesla has always warned its customers that its autopilot system requires their supervision – drivers need to stay alert, with a hand on the wheel, and pay attention to the road. In the case of that Tesla crash, the driver was watching a movie.
Aside from that, let me ask you a simple question: On a flight from, let's say, Berlin to Moscow, for how many minutes or hours of that flight do you think a pilot is actually flying your plane?
Chris: I would guess about five or six minutes – takeoff and landing.
Jeff: On an Airbus aircraft, the answer is, on average, three and a half minutes. A pilot touches the controls for only three and a half minutes on a flight. As you say, that's usually for takeoff and landing. Otherwise, there is nothing to do.
People have been riding safely in autonomous vehicles now for the last couple of decades. Those autonomous vehicles are planes... They're commercial aircraft. They literally fly themselves.
And the deployment of these self-flying technologies has slashed the number of aircraft accidents by more than 90% – because more than 90% of previous air accidents were caused by pilot error.
Chris: The pilot is really there to be a second pair of eyes... a kind of backup system. Is that what you mean?
Jeff: That's right. He or she is there purely as a safety mechanism in the event that all else fails. In reality, pilots are not necessary. But the thought of not having a human up there in the cockpit to keep an eye on the computer flying the plane still freaks people out. Because that's the way people think of airplanes – that there's a human up there flying them when, in fact, it's a computer program. That is an impression that will change over time. But for now, it's still the paradigm we have in our heads.
Editor's note: This is just the tip of the iceberg... That's why Jeff recently put together a brief online presentation to share the incredible things going on in self-driving technology and explain how to find the most profitable investment opportunities in the industry. Click here to watch his free presentation.