Photo: All Rights – REUTERS/Kai Pfaffenbach/Files

Robots have arrived and they are sweeping citizens off of the streets of Pittsburgh! No, they didn’t arrive by flying saucer, these are UBER driverless cars, and a ride in a robot UBER is FREE! By the end of the month, UBER will launch its pilot program in Pittsburg. When you order a car, you decide if you want to try one of their 100 robot cars. Depending on demand, you may get a robot car or a regular car. If you do get a robot car, your ride is on UBER. Free taxi rides? Resistance really is USELESS!

Traffic laws vary from location to location and most are unclear on how to deal with driverless cars. That’s why UBER’s driverless cars will each have… a driver. For decades it has been legal to turn on cruise control and other “assistance” features. At least as long as there is a driver in the car. The latest car driving software is considered an extension of cruise control. Turn on all the options you like… as long as a driver remains in the car. But, remove the driver and who has legal responsibility? If there is an accident or a law is broken, does the ticket go to UBER or the car manufacturer? Who do you sue?

Today, it is illegal in all 50 states to drive without car insurance. But today’s insurance contracts don’t have clauses for driverless cars or are written so that it is not clear if they allow driverless cars. For a pilot, UBER can self-insure or negotiate a special agreement with just one insurance company. A national agreement with every insurance company will take more time.

The “driverless car with a driver” model will undoubtedly be used throughout the pilot, but it will still address two important issues. First, the public will become familiar with robot cars, and see they really do work. Second, UBER will collect enough real world data… up to 500,000 hours of driving data every month… to perfect the software their latest acquisition (Otto) provides.

UBER also announced a $300 million partnership with Volvo, to develop new driverless cars. Not surprisingly, the Pittsburgh pilot will use Volvo SUV’s that are fitted with special sensors and upgraded software. Soon, though, a driverless car will look very different from today’s vehicles.

As driverless cars evolve, the steering wheel, the driver’s seat and other features that are needed for a car to work, will no longer be needed. Removing this equipment allows manufacturers to dramatically redesign the car interior. Should all seats face each other? Do buyers want their car to be a conference room on wheels, with a work table? If buyers want a quiet work space, driverless cars might work best as electric vehicles. Autonomous cars may spawn a new category of car.      

Which explains this week’s Ford announcement. Ford said that it will release its own fleet of autonomous cars by 2021. If Volvo is releasing an autonomous car NOW, how can Ford wait until 2021? The answer is that Ford is talking about a different type of vehicle. The 2021 target is for a consumer level vehicle, the complete redesign we just discussed, without a steering wheel or driver’s seat. The Volvo will, obviously, still have the old equipment. Other firms may show up in the near future that offer autonomy retrofits to existing vehicles. However, because some journalists confused these two types of vehicles they misunderstand how quickly self-driving cars will impact employment. Let’s set the record straight!

Here’s the misunderstanding. If Ford releases self-driving cars in 2021, then by 2025 there should be many self-driving cars. So, a lot of cars and trucks and other vehicles will convert by 2030. That gives us 15 years to absorb the changes this technology brings. This is a reasonable schedule,based on 20th-century assumptions. Especially the assumptions of how quickly “Detroit” (remember when that meant the car industry) can adapt and put out a new type of car.

However, all of those numbers are about consumer cars.  Consumers are interested in self-driving cars but are not demanding it. Still, fewer consumers have a clear vision of what makes a great self-driving car. Firms that employ professional car and truck drivers will make use of these cars when they arrive, but they are not waiting for these vehicles. By the time Ford sells its first “true” self-driving car, most professional driving jobs will have been replaced by robots.

Companies like UBER and Lyft will be first movers, doing whatever they can to adopt autonomous cars. There is a massive financial advantage to eliminate the cost of drivers. There is also the matter of UBER’s losing battle to classify drivers as “non-employees”. UBER attempted to settle the matter for $100 million, but that has been rejected by an appeals court. The pilots started in 2016 will expand in 2017, and may involve more than taxis and private cars.

After UBER? Big trucking firms cannot hire enough truckers, and the gap is growing, driving up wages. In order to keep up with the work, overworked drivers are making bad decisions that burn more fuel, cause excessive wear and tear on the vehicles, and cause sometimes fatal accidents. These companies are VERY motivated to get driverless vehicles on the road.

Without the cash reserves of UBER, trucking firms will rely on a combination of retrofitting some trucks, while replacing the oldest vehicles with the latest autonomous trucks. Expect transportation firms to fill the “driver gap” with thousands of autonomous trucks in 2018 and 2019.

Then there’s Fedex and UPS. Eventually, Amazon and other Internet merchants may steal work from trucking firms when air-drones are available, but let’s assume that we still have a few years before that happens. By 2019, if not sooner, some changes will have been implemented to traffic laws and insurance. Not every vehicle will be autonomous, but package delivery services will have pilots underway and some of these vehicles running on live routes.  

Small and medium sized companies will still own millions of old style trucks and company cars.  These firms may continue to use these cars, buy their own driverless cars, or… order vehicles from UBER on demand. Making a large number of consumers and small businesses give up their dedicated vehicles for shared vehicles on demand is a HUGE part of UBER’s $60 billion valuation. It’s hard to predict how this will impact employment in America, but it will certainly speed up the movement to replace drivers. By 2019, every small business in America will be at least thinking about whether they should replace the company truck.  

In 2016, robots will drive real passengers around Pittsburgh before the end of the summer. After that, it’s just a question of how quickly autonomous vehicles spread through the US, and the world. Ford’s target of 2021 for a self-driving car is reasonable, but not groundbreaking. When Ford is ready to enter the autonomous car market, it is likely to be crowded with Ford’s traditional competitors, as well as new players (such as Apple and Google). And that’s my Niccolls worth for today!