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Self-Driving Cars and the Economy of Fuel by Beth Kelly

14 July 2015

Self-Driving Cars and the Economy of Fuel

By Beth Kelly

Internet search leader Google is testing its self-driving automobiles on public roads this summer. This latest phase of testing follows previous successful trials, further indicating the fact that the reality of driverless cars is coming ever-closer to fruition. It’s only a matter of time before these autonomously operating vehicles begin to displace “traditional” human-directed cars – a development that will have serious repercussions across the whole of society.

There have been plenty of features introduced over the years to make driving a car easier, like power steering and cruise control, but Google’s driverless cars are a whole new ballgame. The on-board computer will handle accelerating, braking, steering, lane positioning and all other functions without human intervention, turning the “driver” into little more than a glorified babysitter. These awesome capabilities are made possible by the fusion of sophisticated sensors and cameras with heavy-duty computing machinery to process the incoming data and determine the correct action for the vehicle to take at all times. Indeed, it’s fair to say that this new type of automobile will be more tech gadget than horseless carriage.

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As befits a computing device in the 21st century, the Google self-driving car will almost assuredly ship with the ability to connect to other devices and the Internet at large. If traffic signals and other road infrastructure can communicate with vehicles, road delays could be reduced and cars automatically rerouted in case of accidents or road closure. Companies that operate large fleets of vehicles will most likely be able to achieve significant improvements in efficiency because currently, most cars sit idle much of the time, but if they can be directed remotely, they’ll be able to operate nearly around-the-clock. A prime example, as told by Science Recorder, are taxis and the potential benefits of automated “robo-taxis”. People using the driverless cars, because they won’t have to focus on the road, will be able to surf the web, compose important business documents and engage in other pursuits more rewarding than personally directing large piles of metal and plastic across town.

Other advantages of nonhuman drivers don’t require the use of online communications at all. Fully computer-driven cars have already proven to be much safer than flesh-and-blood drivers. They’re programmed to follow all the rules of the road and tend to act in a much more defensive manner than human drivers. As driverless vehicles become part of the mainstream, we’ll see the number of accidents lowered, leading to a consequent reduction in deaths, property damage and insurance premiums. At the same time, people with reduced mobility or who have other problems preventing them from sitting behind the wheel will see their freedom and independence grow through the use of this automated technology.

Perhaps the most far-reaching impact of this exciting, new tech will be in the environmental sphere. These cars consume less fuel than old-school automobiles because computers can make better decisions about braking and accelerating. With in-built GPS capabilities, there will little fuel wasted from getting lost or taking a scenic route to a destination, as existing efforts by Teletrac demonstrate. And according to an Alberta Energy survey, if automatically driven vehicles come to dominate the marketplace to the point that human drivers are rare or non-existent, then additional fuel economy gains could be realized by redesigning cars to eliminate bulky safety equipment. Seat belts, airbags and mirrors won’t really be needed once traveling by automobile becomes much safer than it is today. Although the increased convenience of road travel will probably cause the total number of miles driven to increase, the reduced environmental impact of each mile of travel will more than compensate for this.

While estimates vary on how close driverless cars are to being ready for consumer adoption, hardly anybody doubts that they’ll eventually become standard. The automotive, in-car entertainment, travel, fuel, and insurance industries will either have to get with the program or risk being consigned to oblivion.

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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