Being Taken For a Ride – The Self-Driving Car
In this episode of the Dave & Dave Show, David Katz, Senior Audit Manager in EisnerAmper’s Technology and Life Sciences Practice, gives a “state of the union” on self-driving cars, an overview of Uber’s unique experiment in Pittsburgh, and a glimpse of what we can expect in the marketplace over the next few years.
Dave Plaskow: Hello and welcome to EisnerAmper's technology podcast series. With more than 500 technology clients, we're always interested in the latest industry trends and developments as well as any related business and accounting opportunities and challenges. Today's topic is self-driving cars. I'm your host Dave Plaskow and with us today is Dave Katz, Senior Manager at EisnerAmper's Technology and Life Sciences practice. We like to call this the Dave and Dave show. Dave, good seeing you again.
Dave Katz: Pleasure to be here, as always.
DP: So tell us, self-driving cars. We're hearing about them on the fringe here and there. I've never seen one. I don't know anyone who has one. Where are we at with these things?
DK: So they're moving. Google has done extensive testing on modified vehicles, and its vehicles have logged more than 2 million autonomous miles on public roads. The company hopes to go to market with autonomous cars by 2020. You saw just recently, the Google car can now do a three-point turn. So certainly things are happening in several car companies where they are also working on self-driving vehicles. You've seen a lot in the news.
DP: So what's the legislation out there? What auspices are these operating under?
DK: Well, of course, vehicle codes and states are simply not written with self-driving cars in mind. However, there are several states that have created legislation allowing the testing of self-driving cars on public roads. Several car makers and technology companies are developing a coalition advocating for a single U.S. legal code on self-driving cars: standards outlining how automated vehicles should react if their technology fails, how to protect passenger privacy and how riders should be protected in the event of an accident. It's all a work in progress.
DP: Where are we with safety? I mean, safety is obviously the paramount concern. Are there any reports from the tests regarding accidents, fender benders? What can you tell us?
DK: Google reported at least 14 minor collisions, however, it claims in all but one of these cases the other driver was at fault. A driver using Tesla's autopilot service was killed in a collision with a tractor trailer. That crash is still under investigation.
DP: Beyond safety, are there any other concerns out there for motorists?
DK: Sure. So the obvious question is, would consumers feel comfortable riding in self-driving cars? A 2013 survey of 1,500 people from 10 countries by Cisco Systems found that 57 percent would. Another question is, what would be the sticker price on self-driving vehicles? One estimate adds $7,000 to $10,000 to the price of each self-driving car by 2025. That number will decrease by 2035.
DP: That doesn't sound too bad to me.
DK: As with any technology-based system, data security certainly becomes an issue. What safety will there be for the information someone's car collects? Will hackers be able to take control of a driverless car? This all remains to be seen.
DP: Uber. They're doing something interesting with self-driving cars in Pittsburgh. Tell us about that.
DK: It announced a $300 million deal with Volvo to develop self-driving cars by 2021. Starting this summer, Uber began offering self-driving rides in Pittsburgh using dozens of custom Volvo XC 90s SUVs and Ford Fusions. Cars do have a safety person sitting at the wheel, should a manual intervention become necessary, but Pittsburgh officials have been very supportive of Uber's efforts, and the company has also received assistance from Carnegie Mellon University's Robotics Department. And along with Uber's agreement with Volvo, Uber also recently acquired Otto, a company developing self-driving trucks for commercial use.
DP: So there's both personal and commercial overtones here.
DK: That's right. And more than 9,000 miles away, Singapore now offers self-driving cabs developed by NuTonomy, a startup. They are specially equipped Renault and Mitsubishi Electric vehicles.
DP: Aside from safety and costs, how would insurance work for something like this?
DK: The cars aren't for sale yet, so insurance companies haven't had to author any policies yet, but it's something they'll certainly have to look at relatively soon. One of my colleagues in our insurance practice told me that she heard some chatter about pay-for-usage coverage. For example, you type in where you're going and you pay insurance for that specific route. It might be offered by Google rather than a major insurer. But it'd be interesting to see how automated cars impact insurance companies in general and how they impact the bottom line.
DP: We saw a few years ago when the Segway came out. It was supposed to be disruptive technology, a term that gets thrown around a lot. What do you think about self-driving cars? Are they disruptive?
DK: Experts predict self-driving cars will lead to everything from decreased crime to increased urban sprawl. Well, that's open for debate based on Uber's experiment. Be it will be interesting to see how it will impact employment for millions of cab drivers, delivery people, transit employees, and other vehicle-based workers.
DP: What about for you, Dave? What does this mean for accounting practitioners? What opportunities are out there?
DK: It certainly impacts our insurance clients. We're following how this will play out. We don't really know yet whether rates will increase or whether there is any impact on reassurance. It's all open for debate right now. And then from an investment standpoint, as these start rolling out, certainly there will be opportunities for technology and investment to enhance self-driving cars.
DP: Would you ride in one of these?
DK: I think so, but I'm waiting to see the result of some of these accident investigations - to give me a little reassurance as to their safety.
DP: I'm with you. I need to see more on this. Thanks Dave, and thank you for listening to the Dave and Dave show as part of the EisnerAmper podcast series. Visit EisnerAmper.com for more information on this and a host of other topics, and join us for our next EisnerAmper podcast when we get down to business.
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