The winners and losers.
This week, the US House of Representatives is scheduled to vote on legislation governing self-driving vehicles. The law would allow up to 25,000 autonomous vehicles – true AVs, without a human behind the wheel who can take control if needed – to ply the streets during the first year of the bill.
Up to 100,000 vehicles each year could be added to the total for the next three years. Companies that work on AV technology, such as Alphabet, and automakers would still have to get permits for their AVs and provide safety assessment reports to regulators.
At the state level, 22 states and Washington D.C. have passed legislation and governors of four states have issued executive orders related to autonomous vehicles. Other states are working on similar legislation.
Ford expects to have a fully autonomous vehicle without steering wheel and pedals on the market by 2021, to be used by rideshare services. Initially, the number will be small in the overall scheme of things. Other automakers have similar plans. Alphabet will not build cars, but it’s trying to develop the system that runs AVs, and it’s putting a lot of money into it in order to be the leader and control the industry.
Auto insurers are grappling with it. Some “self-driving” features that allow the driver to take hands and feet off the controls are already available in mass-produced vehicles, and the transition to full AV technology without a driver on board will be gradual. But clarity about this transition is lacking, according to the Insurance Information Institute:
Except that the number of crashes will be greatly reduced, the insurance aspects of this gradual transformation are at present unclear.
So the US is getting ready for fully autonomous vehicles. No one knows for sure when they will be produced in large numbers. But once they are, they will have a devastating impact on the entire job category of drivers, that will join the fate of other jobs that have been automated away.
And the combination of driverless cars and rideshare technologies “will reshape housing,” according to John Burns Real Estate Consulting.
It expects AVs to become “commonplace” in 10 to 20 years – so more than just a few hundred-thousand vehicles on the road. While the transition, including broad consumer acceptance, will have some “hiccups,” the combination of ridesharing and AV technology will be “disrupting entire industries while triggering structural shifts in housing and the economy.”
As AV technology gets cheaper, and as rideshare services are combined with it, consumers will do a basic calculation: What’s cheaper and more convenient for their particular needs – rideshare services based on AVs or traditional ownership of a vehicle? Once the answer becomes clear, consumers will begin to switch – not all consumers, but enough to impact the economy.
At that point, consumers will spend less on getting around and have more time and money left for other things. And given the ease of commute-by-shared-AV, productivity will increase, and people could even get some work done on their way to work.
So the report sees a number of big impacts on housing, including these:
Prime real estate will be unlocked for new home construction as parking lots, auto dealerships and gas stations become obsolete. Additional supply in historically supply constrained locations will likely dampen home price appreciation and alleviate housing shortages in many cities. Due to increased housing supply in good locations, there will initially be less demand for outlying locations, even though commutes will be easier.
Get ready for more homes per acre, with the days of wide streets, massive driveways, and two-/three-car garages a thing of the past. Builders will be able to get significantly higher density, and consumers will be buying a home where 100% of the square footage is truly livable. We’re already seeing apartment developers shifting to zero parking.
Construction costs should decline as transportation costs plummet for moving building products from manufacturing facilities/warehouses to new home construction sites. Construction timelines should also improve for home builders as the transportation of building products becomes a 24/7 operation handled by AVs.
Unneeded garages will be repurposed into “functioning living space,” which would require “complete overhauls.” This would benefit the home repair and remodel industry. Parking garages could be torn down or possibly repurposed, which would benefit builders. All these changes would create more supply of housing closer to city centers.
AVs will make “aging in place” more possible for the elderly, who can stay in their homes and maintain their independence by using AVs to get around, the report points out. This creates some more winners and losers:
- The brokerage business may get the short end of the stick: “Longer-term housing turnover will likely be suppressed,” and sales volume may decline.
- Assisted-living facilities may get hit by these aging-in-place trends.
- But the home repair and remodel industry will benefit by adapting homes to suit the elderly. “Grab bars, slip-resistant flooring, and wider doors/hallways to accommodate wheel chairs are just a few examples of remodeling projects associated with aging in place.”
The report cautions that uncertainties still dominate as the technology, government regulations, and consumer acceptance evolve, and “how it shakes out and who the industry winners/losers will be remain up for debate.” But it’s “imperative” that homebuilders and developers not already doing so “begin strategizing” on how their business may shift as shared AVs become a common feature in the economy.
But it seems you get to own and steer a car for a while longer, if you insist. Read… What Ford’s New Guy Said about the Future of Self-Driving Cars