(c) Chartered Accountants Australia and New Zealand. Contact Chartered Accountants Australia and New Zealand for permission to reproduce this article., Information Technology

Driverless cars

By Lachlan Colquhoun

The future of automobiles is bearing down on us and nobody is at the wheel.

Martin Matthews FCA is a self-confessed “petrol head” and is the owner of seven classic cars, including a 1920s Chrysler once owned by his grandparents.

Despite his love of cars, Matthews forecasts that his own children and grandchildren will never be car owners and is busy preparing for a future where autonomous vehicles rule the road, and car ownership is a fraction of what it is today.

“We are on the cusp of a paradigm shift that will play out over the next 30 years,” says Matthews, a former secretary of Transport in NZ, who will this month become his country’s new Controller and Auditor-General.

“If you go and talk to the big guys in this transformation – people like Google – they will tell you they have cracked the technology and will have it ready for deployment by 2025.

“They are coming ready or not, and the big question is whether governments and regulators are going to be ready for them.”

Autonomous vehicles could disrupt transport in the same way changes to the world of telecommunications and mobile phones has rapidly changed people’s daily lives, he says.In terms of infrastructure, it is similar to the development of the broadcasting industry. At one time, governments built and operated broadcasting as a publicly-owned monopoly but today governments are minor players and there is a new world of broadcasting products and services from the private sector.

Hit the road

In some countries, governments and regulators are rushing to embrace the 

new world of autonomous vehicles. Numbers forecast to reach 21 million worldwide by 2035, according to consultancy IHS Automotive.

The impetus comes from higher population density, new visions for urban planning and “smart cities,” and a global push for lower carbon emissions. 

Japan is gearing up for the 2020 Olympic Games to showcase the country’s leadership in driverless car technology, with athletes, coaches and spectators traveling between venues and hotels without drivers. 

In Australia, the states of South Australia and Victoria are competing for bragging rights to be first movers. SA has introduced the necessary laws 

to accelerate driverless car trials, while Victoria has partnered with technology company Bosch to create what it says is Australia’s first driverless vehicle, set for testing in 2017.

The new autonomous world also includes driverless trucks hauling freight. German manufacturer Daimler unveiled its first self-driving truck, the Freightliner Inspiration, in the US in 2015, and a trucking trial is set for the UK next year. 

Matthews is not only forecasting the advent of driverless vehicles, he has been working actively for their implementation in Australasia.

In between his two public sector jobs, Wellington-based Martin Matthews has been busy working as a consultant to the transport industry, and one of his key projects has been to facilitate NZ’s first autonomous vehicle trial, due to begin in Christchurch early next year.

A collaboration between HMI Technologies and Christchurch International Airport, the trial will be conducted largely on the airport campus, beginning on private roads with no other traffic.

The trial will test the capabilities of a 15-person electric powered shuttle vehicle with no steering wheel, the French built Navya, which is expected to arrive in NZ by Christmas 2016.

The Christchurch project, says Matthews, will answer three questions. What are the technical and infrastructure requirements for autonomous vehicles? What are the human factors we need to understand so these vehicles can interact with people? What is the safety case and how do regulators create an effective framework?

If successful, the Christchurch trial could lead to the implementation of autonomous vehicles operating in and around the airport, but for Matthews the significance of the exercise is much wider.

Car free

Instead of representing being considered as assets, in the cities of the future cars will be inconvenient liabilities, and will be superseded by a range of alternative “mobility solutions.” For the young people of tomorrow, freedom will not be owning a car. Freedom will be not needing to own a vehicle.

“I don’t think my grandchildren will own cars because they will buy their mobility as a service just as today we buy food from the supermarket,” Matthews says.

“Where once most of us were involved in producing our food, today we buy what we want when we want it because its cheaper, more convenient and we have far more choice.

“When people live in big cities they are going to say ‘why would I buy a car when I can just buy my mobility when I need it’.”

Ride sharing juggernaut Uber, says Matthews, was only the first part of the transformation of mobility to a service, and also to a service which can be shared.

“What Uber and the other companies have done,” he says, “is to unlock the ability to find other people who want tobroadly go where you want to go at the same time, and the convenience comes from sharing costs.

“This paradigm shift is also going to have a big impact on public transport planning, because people won’t want to wait at a bus stop or a train station waiting for a vehicle to show up according to someone else’s timetable and take them somewhere approximately close to where they want to go, when the alternative is to be picked up where you want and go exactly where you want.”

Matthews envisages cities full of vehicles similar to the 15-seat Navya to be used in the Christchurch trial. 

Several of these vehicles will “platoon” with each other to create a mass transit solution when required, and then peel off to deliver smaller groups of people to their destinations. 

Infrastructure

All of this will require a significant re-think of infrastructure priorities and investment, and the good news is that if planners get this right, it can actually save a significant amount of money.

“The OECD did some modeling on a mid-sized European city such as Lisbon, and factored in some mobility sharing and mass transit, and found that you would only need 10% of the current vehicle fleet to meet the transport needs of the city.”

“In Auckland we did some work when I was Secretary of Transport, and considered what would happen if we could move average vehicle occupancy from 1.4 people to 1.7 people.

“We found that this would have the same impact as adding 20% additional capacity to the road, meaning that to get the same outcome you would have to build 20% more road infrastructure.”

This, he says, is the “big prize” from the shift to driverless vehicles, but it is one the world could find difficult to attain given the ongoing focus on growth for growth’s sake.

The traditional way for transport planners to approach the future is to increase the supply, either of public roads or infrastructure. But the world of autonomous vehicles will require smart technology and appropriate regulation.

Manufacturing a new model

It will also have a major impact on the car companies, which have been a cornerstone of manufacturing industry in many countries around the world.

Already, Ford is on the path to transforming into a “technology company” delivering solutions around urbanisation and city planning.

The other Detroit monolith, General Motors, invested US$500m in ride-sharing service Lyft in January 2016, and plans to use the company as a way of rolling out an “on demand network of self-driving cars”.

Volkswagen is also in transition, making a commitment to all-electric cars and announcing a new business division called MOIA to focus on people who prefer to pay for mobility services rather than own a car. The company has also invested US$300m in another ride-sharing company, Gett.

“The big car industry players can see it coming, and they can see the future is all about mobility services,” says Matthews.

“The upside for them is that while there may not be as many vehicles on the road, autonomous vehicles will need turning over more rapidly than cars do today

“They will have to rethink their business models, but there is plenty of evidence that they are already doing that.”

Lachlan Colquhoun is a freelance journalist based in Singapore.