Self-Driving Cars: New Business Models & Widespread Disruption

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Although it might be some time before self-driving cars are available at local dealerships, there’s no question that the technology is rapidly coming online

Many people are excited at the prospect of having a self-driving car of their own, but the impact on society will likely be far larger than many imagine, with innovative uses taking center stage and a broad range of industries poised to face significant disruption. Here are a few business models likely to be enabled by self-driving cars and some of the effects the technology will have on society.

Mobile Internet Access

When driving, most people use their mobile internet access for streaming music or podcasts, which take up relatively little bandwidth. As drivers become passengers and perhaps invest in vehicles with entertainment capabilities that rival home theaters, more will likely be interested in watching their favorite Netflix show in 4k ultra HD while en route. Self-driving cars are likely to increase demand for bandwidth significantly, perhaps leading to mobile-heavy plans and vigorous competition. As 5G networks come online, service providers will need to ensure they’re able to offer adequate bandwidth for rush hour. There may even be interest in using other methods of transmitting video. Over-the-air broadcasts, for example, can deliver entertainment at a fraction of the cost of individual mobile streams, potentially creating new business opportunities that resemble technology being phased out.

Delivery

Online shopping has lead to a decrease in the price of shipping as companies have found more efficient ways to deliver products. However, all delivery vehicles require a human driver, which raises the cost of delivery significantly. Because of this, food delivery is usually reserved for special events. With self-driving vehicles, companies can send out orders at a far lower cost, allowing individuals to order meals from a larger range of restaurants. Although pizza will likely remain a staple of birthday parties and sports gatherings, self-driving delivery services can open up a number of business opportunities. Restaurants that rely on the experience of in-restaurant dining might have to evaluate if their customer base will shrink when self-driving delivery comes online. Furthermore, kitchen-only restaurants may be able to operate in much smaller spaces, leading to lower costs and industry-wide disruption.

Mobile Hotels

Travel by air and by rail will remain popular even when self-driving cars come online. However, the lower cost of self-driving vehicles might lead to a resurgence in a somewhat niche form of travel: Mobile hotels. For certain routes, the time spent dealing with airports isn’t worth the time saved while in the air, yet trains are limited in many places and might not offer convenient schedules. Mobile hotels, where passengers are provided with small but private sleeping areas, are already in use in certain routes. With the lower cost of self-driving vehicles, these routes may drop in price. Furthermore, self-driving vehicles promise to offer significantly better efficiency and even the possibility of traveling on renewable energy sources, potentially lowering fares even further. Charter travel options, or routing based on unforeseen demand, can enable better flexibility. It may be the case that mobile hotels eventually become a staple of travel, disrupting more established travel options.

New Marketing Options

Self-driving cars might lead to people spending more time in the vehicles, as having a long commute is far more tolerable as a passenger than as a driver. Furthermore, people who previously spent little time online might find themselves on social media and enjoying streaming content. Customized advertisements targeting this new demographic, passengers in self-driving vehicles, has the potential to disrupt more established players in the advertising field. Furthermore, the small size of vehicles is likely to change how people consume entertainment. Wider screens can provide a more dynamic experience, and curved screens might work better in the small confines of vehicles. Advertisers able to best leverage these living room replacements stand to provide excellent value for their clients.

Transportation

One of the questions about self-driving cars is how many people will want to buy them. By eliminating the need to pay a driver, passengers can expect to pay far less than they would for taxi or ride-sharing services. Even those with lengthy commutes might find it to be more convenient to pay for a ride from a third-party provider than to deal with the hassles of vehicle ownership and maintenance. Regardless, more people will rely on vehicle rentals, and public transportation might not see as much usage if the cost of renting a self-driving car is comparable to taking the train or bus and offers superior comfort and convenience. Could we see a merging of the Uber and Airbnb models?

Disruption is often viewed as a phenomenon on a commercial level. Major changes in how people move about a city, however, will have significant ramifications on a civic level.

Self-Driving Cars: New Business Models & Widespread Disruption TechNative
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