Misconception 8: Self-driving cars will increase congestion in cities

Fleets of self-driving cars will reduce the cost of individual motorized mobility and increase its accessibility to people without driver’s license. Many city planners fear that this will induce extra request and significantly increase miles traveled with the result of even more congestion in our already strenuously congested cities.

Fortunately, there are many reasons why an increase in person-miles traveled with self-driving cars will not lead to an increase in congestion. The opposite may be true: we may find that self-driving cars, while certainly enhancing person-miles traveled will actually reduce the congestion in our cities. Congestion is not a direct function of the number of vehicles on a road; it depends on driver deeds, routes taken, road utilization per vehicle and systems for flow optimization (traffic management systems etc.). If we increase the number of miles driven and keep all other parameters constant, then congestion will certainly increase. But with fleets of self-driving cars, all of these parameters will switch, some significantly.

In the following we will very first look the reasons why self-driving cars are likely to reduce congestion compared to human-driven cars. Items one and two showcase that there is significant potential for congestion-reduction (which in turn means that the risk of induced mobility leading to more congestion is diminished).

1. Driving behavior: The driving behavior of a self-driving car differs from the driving behavior of human drivers. Autonomous cars don’t exhibit the lane-hopping and other congestion-creating behavior. Simulations have found that even a petite percentage of self-driving cars among many human-driven cars on a lane reduces congestion because the self-driving vehicles help to smoothen the traffic flow. Self-driving vehicles also reduce the typical delay of the average human driver at a stop light turning green and thus ensure that more vehicles can pass that stop light in a given time framework. A self-driving vehicle will not sit idle for a 2nd after the car in front has began moving. This number can be further enlargened if the self-driving car uses an optimized acceleration pattern at a stop light. Thus, with an enlargening ratio of self-driving cars, the throughput will increase at the bottlenecks which will lead to significant reduction of congestion.

Two) Road capacity utilization:

2a) Road space: Self-driving fleet cars used for urban driving will be smaller and thus use less road capacity. Self-driving cars will also systematically adhere to an optimal minimum distance to the car in front which significantly increases the number of vehicles that a given road segment can support during powerful traffic.

2b) Parking space: Fleets of self-driving cars will be in operation most of the time, especially when mobility requests (and with it traffic) is high. Thus cities will need much less parking space and can use parking space of other purposes. In some cases, parking spaces could be turned into extra lanes, further enlargening throughput. This is an option but we expect most of the parking spaces that are liberated up to be put to other use. Note that self-driving car fleets may need very little dedicated parking space because they could simply use existing lanes that are no longer needed during off-peak times or at night for parking.

2c) Convoy driving: As the ratio of self-driving cars in traffic increases, these cars will more frequently find another self-driving car in front or behind and can then coordinate their driving behavior. This can lead to further reduction of distances inbetween the cars and can further improve reaction times at stop lights.

2d) Lane sharing: Self-driving cars can drive consistently with more lateral precision than human drivers. Thus they can operate on narrower lanes. This also makes it possible that more self-driving cars can drive next each other than the number of lanes available. For example, three self-driving cars may rail next to each other on a two-lane highway. This could be another variant of convoy driving and would need communication inbetween the vehicles.

2e) Micro-cars: Very puny self-driving pods could be built so that two of them fit next to each other on a single lane. An example has been proposed by Harald Buschbacher (albeit these two wheelers with auto-retractable stabilizer wheels are envisioned as private rapid transit vehicles using their own very narrow lanes).

The previous two items (Driving behavior and road capacity utilization) ensure that the congestion-inducing effect of a self-driving car is much lower than the average human-driven car which in turn permits to significantly increase the number of person-miles traveled without enhancing congestion. But the next item is the key reasons why we can be certain that self-driving car fleets will not increase congestion, even if they significantly increase the number of person-miles:

Three) Internalizing the costs of congestion paves the way for combating congestion:

Today, congestion on our roads leads to enormous economic costs. Unluckily, these costs are distributed among the many traffic participants which at the same time are cause and victims of congestion. It is difficult to whip out market compels to find ways for reducing congestion because it is difficult to set prices for congestion-free roads nor can we correctly attribute congestion-costs to those who cause it and make them pay. This switches once collective fleets of self-driving cars provide a significant share of local mobility because these fleets internalize a adequately large part of congestion costs.

Fleet managers will concentrate on the bottom line and they have every incentive to maximize their comeback on capital. They will attempt to minimize the size of their fleet and to maximize the throughput of their cars. To them, congestion translates directly to cost. When they send a car through a congested area, this increases the cost of the car, reduces revenue opportunities and it also increases the throughput for other cars of the fleet that may need to take the same route a little later. After a few months of operations, fleet controllers will be able to quantify exactly how much their bottom line would improve if the throughput in a certain bottleneck could be improved by a few percent. They would find that many investments in infrastructure, signalling algorithms, routing methods etc. would have a positive come back because their costs (of congestion-reducing activities) are lower than their benefits (enlargened fleet revenues, lower fleet size (capital stock)).

From an economic perspective, collective fleets of self-driving cars aggregate the mobility requests and the congestion-related effects of their large group of customers. This aggregation permits the fleet to find much better ways of treating congestion – taking into account both the preferences of their customers with respect to congestion-related costs, the congestion-inducing effects of different routes and mobility solutions and internal or outer potentially costly mechanisms that reduce congestion. The fleet will very clearly understand (and be able to quantify) its effect and the effect of each of their customer’s trips on congestion. In contrast to the individual driver on the way to the office very morning, who is oblivious to his share in making congestion and who simply wants to take the fastest route, the fleet will not be worried with the speed of the individual journey but will make sure that the trips are routed in such a way that the throughput of all their vehicles will be maximized. The goals of the fleet with respect to congestion are very much aligned with the aim of the city as a entire: that throughput is maximized.

This argument may sound academic. But the effects will be very real. Fleets that are petite will not have a large influence on cities. But once fleets process a significant share of local mobility, they will have the best skill about traffic and congestion patterns in the city. Their cars will provide them with detailed up-to-the minute traffic information for all parts of the city. Economic rationale will lead them to build complicated models of traffic flow and look for ways in which throughput can be improved and they will be able to very clearly indicate what approaches in which areas of the city could lead to which level of congestion reduction. They will work with city official to optimize their signaling infrastructure, they will even be willing to invest into that infrastructure (if the cost is lower than the benefits from congestion reduction). The fleets will also look for ways to shift mobility request (so that some people defer their trips to non-peak times) and to reduce congestion cost per tour by combining trips (through ride-sharing or by inventing fresh variants of ride-sharing that actually appeal to their customers).

In summary, there is no reason for city managers to worry about congestion-inducing effects of collective fleets of self-driving cars. These fleets will have large benefits for the city. They will actively combat and reduce congestion because they are the very first entity that internalizes the costs of congestion. They will reduce the ecological footprint of mobility because they will be mostly electrical vehicles and the average vehicle will be smaller and lighter than the vehicles today. They will accelerate the transition to electrified vehicles because the collective utilization of short-range vehicles is the optimal use case for electrical vehicles. They will free up parking spaces and eliminate traffic looking for parking (which can be a very significant share in internal cities).

If you are still worried about the congestion-inducing effects of self-driving car fleets, here is a ordinary, political argument: Self-driving car fleets won’t increase congestion in our cities because we will not let that happen. Such fleets will not populate our cities over night. They will primarily service a puny fraction of the population and can not instantaneously cause significant increases in congestion. As these fleets become larger, politicians will certainly not sit idle if congestion enhanced and neither would the electorate accept more and clearly attributable congestion. This in turn would increase the economic pressure on such fleets to find ways for reducing congestion (the most straightforward would be to limit their size by adding congestion charges to their pricing structure).

Note: This is part of a larger series of misconceptions related to self-driving cars. The other misconceptions are discussed here. A PDF document with all misconceptions is also available for download.

German cabinet heats to self-driving cars

After passing a law regulating driver assistance systems recently (which unluckily falls brief of permitting fully self-driving cars) and receiving the report (PDF) from the German ethics panel on self-driving cars, the German cabinet seems to warm to a future with self-driving cars.

In June, German Chancellor Angela Merkel provided the following forecast as part of her reaction to a question about what the world would look like twenty years from with the the statement that “In twenty years, we will need a special permit if we want to drive a car by hand.”…”We are the largest risk.” (Source: Die Welt, Auto Motor Sport, 2017-06-09). Also in early June, Germany’s minister for transport and infrastructure, Alexander Dobrindt, said that he wants Germany to have the world’s most modern public transport by 2025, a vision which builds on self-driving electrical buses (Source: Bayernkurier, 2017-06-09).

In a country, where many jobs directly or indirectly depend on the auto industry, these statements may be an indication that Germany is taking a future with autonomous vehicles more earnestly and starts to give some thoughts to the near- and long term implications of self-driving car technology. There are few indications, however, that the transport ministry has begun to consider the effects of self-driving cars, trucks and buses on the national road infrastructure (the recently released national traffic infrastructure plan two thousand thirty does not take self-driving vehicles into account). Plans to reduce the current and projected shortage of truck overnight parking spaces along German highways don’t take into account that request for such spaces may peak in the early twenties. As with many other countries (including the EU, that is presently considering a costly infrastructure requirement for EV charging stations that totally disregards the likely switches for parking, EV charging and mobility caused by autonomous vehicles) , the enabling relationship inbetween self-driving car technology and the adoption of electrified vehicles is still not recognized. Neither are the influence on rail-based transport, which will likely see a decline on many routes and which will also liberate much of its environmental advantage (so popular with many environmental thinkers and infrastructure planners) with the rise of self-driving scheduled and on-demand electrified buses.

Today billions of Euros are mis-allocated in city-planning, construction, traffic infrastructure development because planners assume that mobility and transport patterns of the future will be similar today. It is time for German, European and the world’s leaders to gravely consider the switches that result from self-driving vehicles. Hopefully the latest statements from the Germany cabinet are an indication that politicians are beginning to leisurely budge into this direction…

Self-driving car workshops in Detroit and Frankfurt a success; next workshops in October and November

Two full-day workshops on the strategic implications of self-driving car technology were held by Dr. Hars in Frankfurt in March and in Detroit in May. Attendees came from the auto industry including GM, Ford, Magna, Bosch, Continental, Tenneco, as well as the insurance and telecommunications industry. In a fast-paced day many topics as diverse as the cost structure of self-driving mobility services, decision points for consumer adoption of / transition to self-driving taxis and buses both for and long and brief distance trips, emerging business models related to autonomous vehicle technology (including hte monetizability of customer data) were discussed. Two follow-on workshops are already planned for the fall, October twenty four in Frankfurt and November, two in Detroit (Auburn Hills).

Five key impediments to a successful self-driving car strategy

The auto industry increasingly recognizes the threats and opportunities associated with self-driving cars. Unluckily several impediments stand in the way of formulating and implementing a strategy for dealing with self-driving car technology and its impacts:

Albeit the competition in autonomous car technology has heated up considerably over the last two years, most industry experts proceed to expect a slow adoption curve which could lightly span two to three decades. Unluckily, adoption of self-driving car technology (level four and up) will be much quicker than traditional adoption rates of fresh technologies in the auto industry. A key accelerator is the enormous net benefit of the technology not just in terms of safety but also as increase of available individual time, competitive position (for companies and countries) and a significant decrease of costs (labour, fuel, insurance, capital). As a consequence there is much less time to formulate a sound strategy for self-driving cars.

Two) Collective auto industry perspective clouds influence analysis

Collective convictions and practices make it much more difficult for the industry (including their consultants) to think through fundamental, deep, disruptive switches in the architecture of mobility. Whether it is the joy of driving, the importance of brand for the consumer, the assessment of the legislative and regulatory environment, the consumer’s propensity to use collective self-driving mobility services or the likely business models, industry insiders tend to reinforce a perspective on the influence of self-driving cars that remains much too close to the current model, practices and structure.

Trio) Lack of understanding for self-driving car business models

For many years, the auto industry has recognized a trend towards collective mobility services. Automakers understand that self-driving fleets will accelerate this trend. But they seem to spend very little effort to think through the dynamics of this market (which differs fundamentally from the traditional car-sharing and mobility-brokering markets), the way that collective mobility services will operate and contest, the regulatory environment that will emerge around fleet oligopolies, the differences inbetween urban and long distance collective self-driving mobility services or the cost structure, maintenance strategy and model mix for such services.

In addition, there are many other business models besides collective fleets which may provide opportunities related to self-driving car technology which established players need to cautiously consider, evaluate and prioritize.

Four) Relationship inbetween electrical vehicles and self-driving cars not understood

In parallel to the self-driving car phenomenon the auto industry is involved in the switch towards alternative propulsion modes. But the relationship inbetween self-driving car technology and alternative fuels is widely overlooked: Because self-driving cars will switch mobility patterns (increase of urban mobility services, switches in long-distance travel patterns) and self-driving fleet vehicles will be able to refuel autonomously (or nearly-autonomously), the context for the adoption of alternative fuels switches dramatically. Battery range will become much less significant; rather than optimizing cars for maximum range they will be optimized for an optimal range with respect to the mobility pattern which they are used for. When fleets carry a larger share of traffic the dimensioning of an adequate charging infrastructure becomes much lighter and much more economically viable. Thus autonomous vehicle technology will serve as an accelerator for the introduction of electrical and alternative fuel vehicles.

Five) Fear of cannibalization / resistance to switch

Any organization that faces major switch and must consider the effects of a disruption of its primary business model will encounter tremendous internal resistance. Those who see the writing on the wall will hesitate to become advocates of (painful) switch because internal opposition is fierce, uncertainty abounds and – as a result – career risks are high. It is useful to earnestly probe other industries and companies which had to face disruptive switch. One of many examples is Kodak, a company that had developed the very first digital camera already in the Seventies and brought the very first digital camera to the market in 1995. There may be some parallels to the auto industry, which has a multi-decade history of developing technologies for self-driving cars. But Kodak hesitated far too long to adapt and rethink its business models, fearing cannibalization of their very profitable film camera business. When their profits began dwindling, it was too late. The auto industry cannot afford to make the same mistake.

For more on this topic please join us at the upcoming 1-day seminars on self-driving cars in Frankfurt (March 23) and Auburn Hills (May 16). The seminar will be run by Dr. Hars and will help to develop a better understanding and analysis of implications of self-driving cars. More info…

Workshop: Self-driving cars – strategic implications for the auto industry

Please join us for this 1-day workshop on March twenty three in Frankfurt, Germany or on May sixteen in Auburn Hills, USA. The workshop examines the disruptive implications of self-driving car technology and the strategic consequences for the auto industry, its suppliers and related industries. The workshop will be led by Dr. Alexander Hars.

The workshop embarks with a review of the current state of the global, distributed innovation process related to self-driving cars, and examines the underlying technical, economic, legal and geopolitical factors upon which it depends.
Key implications for the mobility space will be discussed through an in-depth analysis of the many facets of the economics of self-driving mobility services.
We will examine how fully self-driving cars will affect different aspects of individual mobility – the propensity to use self-driving mobility services for local or long distance travel, the decision to purchase a car, buyer preferences for specific car models and features as well as the transition towards electrical vehicles.
We will then concentrate on the various players in the SDC field, including leading OEMs, fresh entrants such as Google, Uber, key suppliers, including sensor and hardware providers as well as various governments, including the US, UK, Singapore, Japan and China.
We explore four potential strategic responses for the auto industry and discuss business models associated with self-driving vehicles and their suitability for the various players.
We review key implications for model mix, volume, as well as sales and design processes.

Who should attend?

This workshop is intended for executives who need to think through the consequences of self-driving cars on the automotive sector. It offers frameworks and insights to help them develop their understanding and analysis of the threats and opportunities of SDCs for the industry. It will help them to understand the implications of SDCs and to formulate suitable strategies for their business.

More information, event agenda and registration

This event is organized by Autelligence. Further details are available on Autelligence site.

Self-driving vehicles as instruments for the coordination of mobility

Autonomous cars will switch the way we think about traffic. Today traffic is primarily regarded as the result of the independent deeds of thousands of drivers. A view from above on any city would display large numbers of vehicles pursuing their own trajectories through the labyrinth of roads. The cities’ traffic management systems attempt their best to observe, identify and somewhat channel the grand flows.

At very first glance, autonomous vehicles do not seem to switch this situation very much. From above, self-driving cars will not be distinguishable from human driven cars and they too, will seek their individual paths through the labyrinth of roads. The picture switches, however, when we consider fleets of self-driving cars. Latest statements by Ford, Uber, BMW and others clearly demonstrate that fleets of self-driving cars will emerge early and have the potential to capture a significant share of individual motorized mobility.

This introduces a crucial difference: Fleet vehicles no longer pursue their local optimum; rather than completing the individual journey as quickly as possible, fleet management will seek to maximize throughput for all of its vehicles – for the fleet as a entire. The operational goals of fleet management are therefore very much aligned with the traffic flow goals of a city as a entire.

Primarily, autonomous fleet vehicles will be instruments which fleet management systems can use to understand, model and predict the detailed traffic situation. The vehicles will be used as sensors and relay significant information to the fleet management system.

As fleets grow, fleet managers will find that the vehicles can be used to influence the flow of traffic. Many different strategies are possible (and their effectiveness varies greatly with the ratio of fleet cars to total number cars): fleet vehicles can purposefully slow down the build-up of traffic ahead of arteries which are in danger of clogging. Fleet cars can reliably calculate and selectively or pre-emptively use alternative routes. As the percentage of fleet vehicles in relation to total traffic grows, fleet vehicles may travel part of the way in more densely packed convoys. They may even switch their acceleration behavior at stop-lights (using a somewhat quicker acceleration pattern than the standard acceleration pattern of human drivers) which may or may not be copied by human drivers.

Because both city traffic managers and fleet managers will recognize early on that their interests are very much aligned, we can expect many ways in which both parties will cooperate. Fleet managers will make real-time traffic information gained via their cars used as sensors available to the city traffic managers. Fleets are likely to ask city traffic managers to adjust stop light phases to improve traffic flow (and fleets will provide the data and models to prove that these switches will be beneficial). We can expect that this will lead to much more real-time traffic management for stop lights and fleet vehicles may come to very directly influence traffic signals. Eventually, as the differences in driving behavior inbetween human-driven and autonomous vehicles become more apparent and fleet vehicles exceed twenty percent of traffic (primarily mostly likely in urban centers), we may find that cities will reserve some lanes or roads for self-driving vehicles because they are more effective at providing local mobility than individual cars, or because the throughput on autonomous-vehicle-only lanes can be twice the throughput of human-driven lanes (mostly due to shorter distances inbetween vehicles and better reaction times/acceleration behavior at stop lights, in some cases also because two conventional lanes might be re-fitted into three narrower lanes for autonomous fleet vehicles).

But this is only the peak of the iceberg. Fleet managers will understand local traffic very well and want to avoid their most valuable resources to be stuck in traffic. They will be able to predict the actual duration for a journey at any given point in time and will aim to minimize trips which incur powerful congestion. Instead of just driving a customer every day to work at a time of his choosing, they will look for ways to reduce the peak blast on the fleet. Ridesharing is only one of many approaches: Fleets will provide prizes to those who stay out of the rush hour (or add congestion pricing, which in turn will drive down congestion). They may find ways to systematically phase traffic flows in certain areas, work with employers and schools to adjust working hours, provide an in-car environment that permits workers to begin their work while commuting (and ensure employers’ approval), provide a reliable forecast of journey times (and a clear indication how expected journey times can be diminished by leaving earlier or later).

Time will tell which of these many possible deeds will yield the most benefit (and through which other approaches fleets of self-driving vehicles will improve the overall traffic flow in a city). But it is evident that fleets of autonomous vehicles will lead to a very different thinking about traffic. Where today we have thousands of actors all pursuing their own little traffic goals, these fleets will embark us thinking about how traffic can be optimized not just locally but as a entire. It is clear that this optimization does not necessarily commence when a excursion starts, but potentially already before – when a mobility request for a journey from a certain location to another location in a certain time range is known. Fleets will pave the way by optimizing their trips against the entire fleet. And the lessons we learn from managing trips for autonomous vehicle fleets will deeply switch our thinking about traffic and how traffic should be organized.

Thus, autonomous vehicles not only drive themselves; they switch the cost structure of mobility, which in turn enables collective autonomous mobility services to grab a significant part of the market for motorized individual mobility. These collective services will necessarily implement a centralized perspective on mobility which requires finding (and negotiating) ways to optimize the mobility requests of large groups, even cities. In the end, we will likely think about all mobility – whether in a fleet vehicle, in privately possessed autonomous or conventional car – from a perspective of global optimization. It won’t be long before our mayors, regulators and politicians will see the potential of self-driving vehicles for traffic management and begin to develop policies that lead traffic away from today’s intensely congested local optima towards structures that come much closer to the global optimum.

Transformations 2025: How Volkswagen prepares for the (driverless?) future

Echoing a growing sentiment in the auto industry, Volkswagen’s CEO Matthias Mueller warned last week of “a rapid and hard transformation” coming to the auto industry. He introduced Volkswagen’s strategy “Convert 2025+” to cope with these switches. It includes major job cuts to prepare for the transition and many fresh initiatives.

But his strategy also shows how difficult it is to switch the direction of the tanker which all major auto makers have become. Practice accumulated in the last one hundred years, collective convictions and values make it difficult to adjust the concentrate and prepare for fundamental switches coming the industry. Many trends are presently challenging for attention: electrification, mobility services, connected vehicles, digital platforms and ultimately the shift towards autonomous vehicles. It does not come as a surprise, that Volkswagen wants to become a leader in most of these topics:

It plans to establish an extra (thirteenth) major brand around mobility services. It wants to become a leader in electrified vehicles. It has just established a digital lab to develop cutting-edge digital services related to mobility, connectivity, its brands and its products.

But the strategy fails to consider the tectonic shift which may be caused by autonomous vehicles and the way that self-driving car technology will affect the key aspects of the auto business. Mueller plans to lay the foundation for autonomous driving in the years from two thousand twenty to two thousand twenty five and then have the necessary business models in place around self-driving cars after 2025. Given the rapid progress of the field, he may not have that much time.

But more importantly, self-driving car technology is associated with a very specific danger (and chance): It switches the dynamics of each of the auto industry’s strategic topics. Mobility services based on self-driving car fleets differ fundamentally from Uber’s, Car2Go’s and other mobility services fleets on parameters such as total cost per mile, optimal car model and characteristics, volume, utilization, profitability, etc. Similarly electrification differs greatly whether it is targeted towards autonomous vehicles (which will originally predominantly be flipped out as elements of urban self-driving car fleets) or towards the consumer. The economic justification, battery cost, vehicle range, charging infrastructure requirements, innovation diffusion path and cost-effectiveness differ fundamentally!

A little bit of everything is not the right treatment. Volkswagen, like most other auto makers, suffers from the problem hat it attempts to address each and every strategic topic on its own without considering the relationships and interdependence with a paradigm-changing technology. Then, when autonomous vehicle technology comes in the market they will find that the original assumptions no longer hold and that very little time remains to catch up and refocus the many different aspects of their business.

It is good that the auto industry is enhancing their efforts to think about a radically different future. But they extrapolate forward from today to the next Five, Ten, fifteen years, and their thinking remains mostly rooted in the classic automobile world with a concentrate on volume leadership, consumer cars as primary product, traditional branding approaches, etc. However, in the face of transformational switch, a different mode of analysis is needed: Very first the more distant future needs to be conceptualized, a future where autonomous vehicle technology has already matured, the current doubts and questions about viability, legality and acceptance have been overcome, self-driving vehicles are in the market and where laws and regulations have been updated (as we know they will) to permit productive use of the technology. The key aspects of this future need to be considered: Mobility service markets (separately for urban and non-urban regions, for local and long distance traffic), consumer segmentation and purchase decisions, influence on road infrastructure, influence on traffic flow (which will be enormous both for urban and for long-distance roads) and fleet management algorithms, truck, bus and autonomous machine markets. For such a future key switches (including the various types of mobility service business models) need to be calculated through in detail, using quantitative models. This analysis must be unencumbered by the current “realities” of the auto market. It must include the screenplays, business models and market dynamics that may entice investors to pour funds into promising opportunities.

After such an analysis, the concentrate can be turned back from the future to the present and the transition period. Many likely switches will become evident and the paths and the relationships inbetween the different technologies being considered today will be much clearer. For Volkswagen and all other auto makers it means allocating major resources to autonomous vehicle technology today: make sure that they catch up with the leaders in the space; prepare mobility services for the autonomous fleet screenplay rather than as also-run next to all the players already established in this field and make sure that they have electrified vehicle models that can be used as backbone of self-driving car fleets. Develop, consider and prioritize business models beyond consumer cars and fleet vehicles/mobility services, for trucks, buses, autonomous machines and beyond. Each of these activities is future-proof and establishes a beachhead in the transition towards autonomous vehicles.

This is not a call to put all eggs into one basket. But auto makers need to take the fundamental switches that will be caused by self-driving car technology earnestly and prepare to adapt to these fresh challenges today by making them a cornerstone of their strategy.

Misconception 7: To woo us that they are safe, self-driving cars must drive hundreds of millions of miles

One of the most difficult questions for self-driving cars concerns their safety: How can we determine whether a particular self-driving car model is safe? The most popular answer to this question is based on a straightforward application of statistics and leads to conclusions such as that “…fully autonomous vehicles would have to be driven hundreds of millions of miles and sometimes hundreds of billions of miles to demonstrate their reliability…”. This statement comes from a latest RAND report by Nidri Kalra and Susan Paddock on the topic. Unluckily, these statements are untenable in this form because the statistical argument contains major oversights and mistakes, which we will point out in the following.

7.1 Failure rate estimation

The argument is usually introduced as a problem of failure rate estimation where observed failures (accidents involving self-driving cars) are compared against a known failure rate (accident rates of human drivers). Accidents are modeled as discrete, independent and random events that are determined by a (statistically constant) failure rate. The failure rate for fatal accidents can be calculated by dividing the number of accidents with fatalities by the number of vehicle miles traveled. If we consider the 32,166 crashes with fatalities in traffic in the US in two thousand fifteen and relate them to the Trio.113 billion miles which motor vehicles traveled, then the failure rate is 32,166 / Three.113 billion = 1.03 fatalities per one hundred million miles. The probability that a crash with fatality occurs on a spread of one mile is extremely low (0,0000010273%) and the opposite, the success rate, the probability that no accident with fatality occurs on a spread of one vehicle-mile-traveled (VMT) is very high (99,999998972%). By observing cars driving themselves, we can obtain estimates of their failure rate. The confidence that such estimates reflect the true failure rate increases with the number of vehicle miles traveled. Plain formulas for binomial probability distributions can be used to calculate the number of miles which need to be driven without failure to reach a certain confidence level: two hundred ninety one million miles need to be driven by a self-driving car without fatality to be able to claim with a 95% confidence level that self-driving cars are as reliable as human drivers. This is almost three times the distance inbetween fatalities that occur during human driving. If we loosen the required confidence level to 50%, then at least sixty seven million miles need to be driven without fatality before we can be confident that self-driving cars are safe. Albeit this calculation is elementary most authors – including the authors of the RAND report – use the wrong measures. Instead of dividing the number of crashes involving fatalities (32,166) by VMT, they divide the number of fatalities (35,091) by VMT. This overstates the failure rate of human drivers because a single accident may lead to numerous fatalities and the number of fatalities per fatal accident may depend on many factors other than the reliability of the driver.

The race for fully self-driving cars has reached a pivotal point

Several events from the last months provide a strong signal that autonomous vehicle technology has led the auto industry to a pivotal point: The very first auto makers are adapting their business model for fully self-driving cars and are providing explicit time frames!

Earlier this year GM invested five hundred million USD in Lyft, purchased self-driving technology startup Cruise Automation for more than one billion USD and announced in July that GM will build its very first self-driving cars for use within the Lyft fleet as self-driving taxi. In May BMW announced that they would have a self-driving car on the market within five years. Next came Uber, which acquired autonomous truck startup Otto for six hundred eighty Million USD and is now beginning field trials of fully self-driving taxis in Pittsburgh. But the key switch at Uber is the way that its CEO Kalanick frames the issue. He makes it clear that Uber’s survival depends on being very first (or tied for very first) in rolling out a self-driving taxi network.

The latest announcement comes from Ford which plans to provide mobility services with fully autonomous self-driving Fords by 2021. This is a major effort: Ford is doubling its development staff in Silicon Valley, aims to have the largest fleet of self-driving car prototypes by the end of this year and will triple the size of this fleet again next year. It has also purchased three companies related to autonomous driving technology and has purchased a stake in Velodyne, the leading manufacturer of LIDARs for autonomous driving.

When we embarked to monitor the development of self-driving car technology in two thousand nine we expected that this technology would turn into an avalanche that sweeps through the auto industry. There have been many signs over the past years that the avalanche is picking up speed but until now we have been reluctant to claim that it is in utter sway because even tho’ the auto industry was continually enlargening their activity around self-driving car technology all players had been very reluctant to openly call this a race and to publicly position fully self-driving cars as a key element of their strategy. There was a lot of posturing, many eye-catching public demonstrations of self-driving car prototypes but very little tangible activity aimed at turning fully self-driving car prototypes into a real product.

After these latest signals, this situation has switched. It is now clear that auto makers have begun contesting in earnest to adapt their business models to the coming wave of fully self-driving cars. No longer is Google the only company which is stepping on the gas; auto industry executives (and Uber) are now openly challenging to bring the very first self-driving cars on the market. It will come as no surprise to the readers of this blog that the initial business models are not worried with selling cars but to provide mobility services.

These signals are significant in themselves. They warmth up the competition and force the rest of the auto industry to determine how to adapt their business model to fully self-driving cars and to explain this strategy to their investors, journalists and analysts. They increase the value of companies in the space and increase the competition for human capital (Google has very likely lost inbetween five hundred million and one billion USD in human capital from the exodus of key members of their self-driving car group in this year (680 mio USD Uber paid for the Otto startup founded early two thousand sixteen by four Googlers (including Anthony Levandowski), plus Chris Urmson.). They also increase the effort of all parties involved (auto industry, suppliers, regulators, journalists, related industries such as transport & logistics, insurance, health care etc.) to understand the implications of fully self-driving cars which step by step drives away the many misconceptions and more clearly shows risks and opportunities. We are in the middle of a global, distributed innovation process around self-driving cars and driverless mobility where all parties are learning, refining their thinking, switching their vision of the future and adapting their deeds accordingly. The avalanche is in utter sway now and it will be a harsh rail for those who fail to adapt while there is still time…

Fatal Tesla accident exposes fundamental flaws in the levels of driving automation framework

Ill-conceived standards can kill. The Tesla accident in which Joshua D. Brown was killed in early May could not have happened if SAE (Society of Automative Engineers), NHTSA and BAST had not provided a rationalization for placing cars with incomplete and inadequate driving software on the road.

Since their publication the frameworks for driving automation (by SAE 2014, NHTSA 2013, BAST 2010) have been criticized for disregarding established skill in human factors. All experts in the field agree that it is not possible to expect human drivers to continuously supervise driving automation software and correct its shortcomings and errors at split-second notice when problematic traffic situations occur. SAE Level two and level three are therefore inherently unsafe and these levels should not have appeared as a viable variant of driving automation software in any framework at all!

Frameworks are not arbitrary. Unluckily, the driving automation frameworks were strongly influenced by the perceived needs of the auto industry which already had driver assistance systems on the road and favored a gradual evolution of their systems towards fully autonomous driving. It is understandable that the authors wished a framework that simplifies the path towards fully autonomous driving not just from a technical but also from a legal and commercialization perspective where automation can occur in baby-steps, most of which would not involve fundamental switches and would not require legislators to take a hard look at the underlying technology.

This is how Tesla was able to put their vehicle with auto-pilot software on the market. It was introduced as a puny step from cruise control to total lateral and acceleration/deceleration control by the system. Nothing else should switch, they argued: the human is still in utter control and bears utter responsibility (which means that the driver will always be the scapegoat if something goes wrong!); the vehicle does not have the ambition of performing all tasks by itself. The frameworks clearly provide support for this argument. But they overlook the key difference: the software now treats the driving task continuously, for longer opens up of time without the need for human act. There is a fundamental difference inbetween continuous driving systems vs. ad-hoc, short-term operations of driver assistance systems (i.e. parking, emergency braking, lane warning etc.) which only take over driving functions for brief periods of time. Any framework for automated driving should have included this distinction!

Software that assumes the driving task continuously switches everything! Human drivers can and will unwind. Their minds will no longer be on the traffic around them at all times. It is well known that human drivers tend to trust autonomous driving algorithms too quickly and underestimate their deficiencies. And it takes a significant amount of time to get back into the loop when the car needs to comeback the control function back to the driver. Unluckily the authors of the framework failed to think through the details and problems that go after on levels two and Three. They thought about strategies for handing back the control from the car to the human; but evidently they did not perform a risk analysis where they considered how potential crisis situations that require rapid reaction could be mastered. Such an analysis would have shown instantly that

a) there are many possible critical situations where a hand-off from the vehicle to the driver can not be carried out quickly enough to avoid catastrophic consequences and

b) there are many situations where a driver in supervision mode is not able to detect a lack of capability or misbehavior by the driving automation software swift enough.

The Tesla accident is a good example to illustrate these problems. Albeit the accident occurred on May 7th, only some details have been released. The accident occurred around Trio:40 PM on a divided highway five hundred near Williston, Florida (view the map). A tractor-trailer turned left, crossing the path of the Tesla. Without braking at all, the Tesla hit the trailer approximately in the middle, went under it, emerged on the other side and continued driving for several hundred feet before coming to a stop at a telephone pole. More info on the accident (including the police sketch). The weather was good, no rain, dry road, good visibility. The road runs straight for miles. At Three:40 PM the sun stood in the West, behind the Tesla. The speed limit on the road was 65mph (104km/h), which translates into a stopping distance of sixty four meters. Stopping time would have been about four seconds (which would also have been enough time for the truck to clear the intersection). The size of the tractor-trailer has not been made public but it was very likely inbetween sixty five and seventy three feet (20 and twenty two meters). Assuming a standard lane width of twelve feet (Three.7m), and estimating the distance inbetween both sections of the divided highway based on the Google earth pic to be about 20m, the trailer had almost enough available space inbetween both lanes to make the ninety degree turn and could then proceed straight on crossing the two lanes of the highway. If we assume that the left turn (the part at the lowest average speed) takes at least six seconds (time estimated from a movie displaying trailer trucks making a left turn) and the truck then passes the intersection at an average speed of 10mph (16km/h), then the truck needs an extra six seconds to clear the intersection. As the trailer was hit in the middle by the Tesla driving in the outer lane, the truck must have been about thirty feet (10m) brief of clearing the intersection. Thus the tractor-trailer would have cleared the intersection about two seconds later.

At the moment, much of the discussion about the accident centers around the driver’s attention. We will never know whether or when the driver spotted the truck. There are several possible scripts: If we take the time horizon of ten seconds (=6+6-2) before the accident when the trailer-truck initiated the turn, then the Tesla had a distance of about two hundred eighty meters to the intersection. At this distance, the large trailer-truck moving into the intersection would have been clearly visible. A driver engaged in the driving task (not on auto-pilot) could not have failed to see the truck and – given the lack of other nearby traffic or visual distractions – would have noticed with enough lead time that the truck is continuing onto the intersection. A step on the brake would have defused the situation and avoided the accident.

The script looks very different with auto-pilot. The driver knew that the road went straight for miles, with optimal visibility which translates into a low overall driving risk. The driver may have paid attention, but not as much attention as when driving without auto pilot. When a car drives by itself for many miles a driver won’t be as alert as when he performs the driving function himself. The attention will wane, the truck on the left side may have received a brief glance by the driver. The truck’s intent to make a left turn would have been visible; but the truck slowed down when he entered the turn about ten seconds before influence and the driver would certainly have expected that the truck will come to a stop and that the auto-pilot is also aware of the large truck. Thus even if the driver spotted the truck initiate the turn, he would most likely not have been worried or inclined to pay special attention to the truck. This was just another one of most likely thousands of intersections that Joshua Brown, who used the auto-pilot frequently and blogged about it, had passed. His confidence in the Tesla for treating intersections may have been high. Albeit he knew that the auto-pilot is not ideal, he very likely did not expect that a large truck would be overlooked. In addition, he was very likely aware of a Youtube movie entitled “Tesla saves the day” which had circulated widely a few months ago. It showcased how a Tesla had auto-braked just in time for a car crossing the path from the left.

The critical time window for recognizing the gravity of the situation and acting to prevent the accident was less then ten seconds; and only six seconds before influence was it unmistakably clear that the truck is moving into the intersection instead of coming to a stop. If the driver was not fully focused on the road all the time but was alert in the three seconds inbetween six and three seconds prior to influence he could have prevented the accident. But it is unrealistic to expect that a non-active driver will become fully focused on the traffic at each and every intersection that a car on auto-pilot passes and that he will always be alert for hard to anticipate, utterly uncommon but very critical short-term situations.

Even if the driver spotted the truck and recognized that it was moving into the intersection three to six seconds before influence, then other problems arise: he has to hop into activity and take over from the car. This needs time – both for the decision to revoke control from the car and for physically assuming control of the vehicle. Part of the driver’s brain has to work through the expected behavior of the car: If the car has not yet decelerated does this mean that it has not seen the large truck at all or does it mean that it is not necessary to brake (the car may have come to the conclusion that the trailer-truck will clear the intersection in time). Could it truly be that the car does not see this blatantly visible trailer-truck….? Have I totally overestimated the capability of this car? The shorter the remaining reaction time when the driver realizes the oncoming crisis, the more dangerous and potentially paralyzing this extra mental geyser may become.

Developers of driver assistance systems can not expect that drivers are fully alert all the time and ready to takeover in a split 2nd. Moreover, they can not expect that drivers understand and can instantly recognize deficiencies or inadequacies of the software. Who would have expected that Tesla’s auto pilot does not recognize a tractor trailer in the middle of an intersection?

But the key problem is not a software issue. It is the mindset which offloads the responsibility from the driving software to the driver. Developers will be much more inclined to release imperfect software if they can expect the driver to pack any gap. That Tesla uses a non-redundant mono camera is another illustration of the problem. What if the camera all of a sudden malfunctions or dies on a winding road with the auto-pilot engaged and the driver does not pay enough attention to take over in a split-second? How is it possible to release such a system fully knowing that drivers using these systems will not always be paying utter attention. This is only possible because we have standards that let developers offload the responsibility to the driver.

The often-raised counter argument that the level two auto pilot has already saved lives is not valid: it confuses two different kinds of driver assistance systems: those – such as emergency braking systems – which only take over the driving function for brief periods of time when they are indeed needed and those that assume continuous control of the driving function for longer spreads of time and thus lead human drivers to take their minds off the road at least part of the time. Brief term functions such as emergency braking are not controversial. They do not depend on the auto-pilot and it is them, not the auto-pilot, which is saving the lives.

There is only one variant in which software that assumes the driving task continually, for longer opens up of time can be developed and released to the market: the autonomous driving system must take total responsibility for the driving task and it may not require human supervision when engaged. Thus Levels four and up are viable approaches. The Tesla accident does not only display a software problem; it illustrates the dangers of levels two and levels Trio. Theses levels must be scrapped from the framework!

Driverless car market see, Gearing up to save lives, reduce costs, resource consumption

Misconception 8: Self-driving cars will increase congestion in cities

Fortunately, there are many reasons why an increase in person-miles traveled with self-driving cars will not lead to an increase in congestion. The opposite may be true: we may find that self-driving cars, while certainly enlargening person-miles traveled will actually reduce the congestion in our cities. Congestion is not a direct function of the number of vehicles on a road; it depends on driver deeds, routes taken, road utilization per vehicle and systems for flow optimization (traffic management systems etc.). If we increase the number of miles driven and keep all other parameters constant, then congestion will certainly increase. But with fleets of self-driving cars, all of these parameters will switch, some significantly.

1. Driving behavior: The driving behavior of a self-driving car differs from the driving behavior of human drivers. Autonomous cars don’t exhibit the lane-hopping and other congestion-creating behavior. Simulations have found that even a petite percentage of self-driving cars among many human-driven cars on a lane reduces congestion because the self-driving vehicles help to smoothen the traffic flow. Self-driving vehicles also reduce the typical delay of the average human driver at a stop light turning green and thus ensure that more vehicles can pass that stop light in a given time framework. A self-driving vehicle will not sit idle for a 2nd after the car in front has commenced moving. This number can be further enlargened if the self-driving car uses an optimized acceleration pattern at a stop light. Thus, with an enhancing ratio of self-driving cars, the throughput will increase at the bottlenecks which will lead to significant reduction of congestion.

Two) Road capacity utilization:

The previous two items (Driving behavior and road capacity utilization) ensure that the congestion-inducing effect of a self-driving car is much lower than the average human-driven car which in turn permits to significantly increase the number of person-miles traveled without enlargening congestion. But the next item is the key reasons why we can be certain that self-driving car fleets will not increase congestion, even if they significantly increase the number of person-miles:

Three) Internalizing the costs of congestion paves the way for combating congestion:

Fleet managers will concentrate on the bottom line and they have every incentive to maximize their come back on capital. They will attempt to minimize the size of their fleet and to maximize the throughput of their cars. To them, congestion translates directly to cost. When they send a car through a congested area, this increases the cost of the car, reduces revenue opportunities and it also increases the throughput for other cars of the fleet that may need to take the same route a little later. After a few months of operations, fleet controllers will be able to quantify exactly how much their bottom line would improve if the throughput in a certain bottleneck could be improved by a few percent. They would find that many investments in infrastructure, signalling algorithms, routing methods etc. would have a positive comeback because their costs (of congestion-reducing activities) are lower than their benefits (enlargened fleet revenues, lower fleet size (capital stock)).

From an economic perspective, collective fleets of self-driving cars aggregate the mobility requests and the congestion-related effects of their large group of customers. This aggregation permits the fleet to find much better ways of treating congestion – taking into account both the preferences of their customers with respect to congestion-related costs, the congestion-inducing effects of different routes and mobility solutions and internal or outer potentially costly mechanisms that reduce congestion. The fleet will very clearly understand (and be able to quantify) its effect and the effect of each of their customer’s trips on congestion. In contrast to the individual driver on the way to the office very morning, who is oblivious to his share in making congestion and who simply wants to take the fastest route, the fleet will not be worried with the speed of the individual journey but will make sure that the trips are routed in such a way that the throughput of all their vehicles will be maximized. The goals of the fleet with respect to congestion are very much aligned with the objective of the city as a entire: that throughput is maximized.

This argument may sound academic. But the effects will be very real. Fleets that are puny will not have a large influence on cities. But once fleets process a significant share of local mobility, they will have the best skill about traffic and congestion patterns in the city. Their cars will provide them with detailed up-to-the minute traffic information for all parts of the city. Economic rationale will lead them to build elaborate models of traffic flow and look for ways in which throughput can be improved and they will be able to very clearly indicate what approaches in which areas of the city could lead to which level of congestion reduction. They will work with city official to optimize their signaling infrastructure, they will even be willing to invest into that infrastructure (if the cost is lower than the benefits from congestion reduction). The fleets will also look for ways to shift mobility request (so that some people defer their trips to non-peak times) and to reduce congestion cost per journey by combining trips (through ride-sharing or by inventing fresh variants of ride-sharing that actually appeal to their customers).

If you are still worried about the congestion-inducing effects of self-driving car fleets, here is a elementary, political argument: Self-driving car fleets won’t increase congestion in our cities because we will not let that happen. Such fleets will not populate our cities over night. They will primarily service a petite fraction of the population and can not instantly cause significant increases in congestion. As these fleets become larger, politicians will certainly not sit idle if congestion enlargened and neither would the electorate accept more and clearly attributable congestion. This in turn would increase the economic pressure on such fleets to find ways for reducing congestion (the most straightforward would be to limit their size by adding congestion charges to their pricing structure).

German cabinet heats to self-driving cars

In June, German Chancellor Angela Merkel provided the following forecast as part of her response to a question about what the world would look like twenty years from with the the statement that “In twenty years, we will need a special permit if we want to drive a car by hand.”…”We are the fattest risk.” (Source: Die Welt, Auto Motor Sport, 2017-06-09). Also in early June, Germany’s minister for transport and infrastructure, Alexander Dobrindt, said that he wants Germany to have the world’s most modern public transport by 2025, a vision which builds on self-driving electrified buses (Source: Bayernkurier, 2017-06-09).

In a country, where many jobs directly or indirectly depend on the auto industry, these statements may be an indication that Germany is taking a future with autonomous vehicles more gravely and commences to give some thoughts to the near- and long term implications of self-driving car technology. There are few indications, however, that the transport ministry has begun to consider the effects of self-driving cars, trucks and buses on the national road infrastructure (the recently released national traffic infrastructure plan two thousand thirty does not take self-driving vehicles into account). Plans to reduce the current and projected shortage of truck overnight parking spaces along German highways don’t take into account that request for such spaces may peak in the early twenties. As with many other countries (including the EU, that is presently considering a costly infrastructure requirement for EV charging stations that downright disregards the likely switches for parking, EV charging and mobility caused by autonomous vehicles) , the enabling relationship inbetween self-driving car technology and the adoption of electrified vehicles is still not recognized. Neither are the influence on rail-based transport, which will likely see a decline on many routes and which will also liberate much of its environmental advantage (so popular with many environmental thinkers and infrastructure planners) with the rise of self-driving scheduled and on-demand electrified buses.

Today billions of Euros are mis-allocated in city-planning, construction, traffic infrastructure development because planners assume that mobility and transport patterns of the future will be similar today. It is time for German, European and the world’s leaders to earnestly consider the switches that result from self-driving vehicles. Hopefully the latest statements from the Germany cabinet are an indication that politicians are beginning to leisurely stir into this direction…

Self-driving car workshops in Detroit and Frankfurt a success; next workshops in October and November

Five key impediments to a successful self-driving car strategy

Albeit the competition in autonomous car technology has heated up considerably over the last two years, most industry experts proceed to expect a slow adoption curve which could lightly span two to three decades. Unluckily, adoption of self-driving car technology (level four and up) will be much swifter than traditional adoption rates of fresh technologies in the auto industry. A key accelerator is the enormous net benefit of the technology not just in terms of safety but also as increase of available private time, competitive position (for companies and countries) and a significant decrease of costs (labour, fuel, insurance, capital). As a consequence there is much less time to formulate a sound strategy for self-driving cars.

Two) Collective auto industry perspective clouds influence analysis

Three) Lack of understanding for self-driving car business models

For many years, the auto industry has recognized a trend towards collective mobility services. Automakers understand that self-driving fleets will accelerate this trend. But they seem to spend very little effort to think through the dynamics of this market (which differs fundamentally from the traditional car-sharing and mobility-brokering markets), the way that collective mobility services will operate and rival, the regulatory environment that will emerge around fleet oligopolies, the differences inbetween urban and long distance collective self-driving mobility services or the cost structure, maintenance strategy and model mix for such services.

Four) Relationship inbetween electrified vehicles and self-driving cars not understood

Five) Fear of cannibalization / resistance to switch

Any organization that faces major switch and must consider the effects of a disruption of its primary business model will encounter tremendous internal resistance. Those who see the writing on the wall will hesitate to become advocates of (painful) switch because internal opposition is fierce, uncertainty abounds and – as a result – career risks are high. It is useful to gravely explore other industries and companies which had to face disruptive switch. One of many examples is Kodak, a company that had developed the very first digital camera already in the Seventies and brought the very first digital camera to the market in 1995. There may be some parallels to the auto industry, which has a multi-decade history of developing technologies for self-driving cars. But Kodak hesitated far too long to adapt and rethink its business models, fearing cannibalization of their very profitable film camera business. When their profits began dwindling, it was too late. The auto industry cannot afford to make the same mistake.

Workshop: Self-driving cars – strategic implications for the auto industry

The workshop starts with a review of the current state of the global, distributed innovation process related to self-driving cars, and examines the underlying technical, economic, legal and geopolitical factors upon which it depends.
Key implications for the mobility space will be discussed through an in-depth analysis of the many facets of the economics of self-driving mobility services.
We will examine how fully self-driving cars will affect different aspects of private mobility – the propensity to use self-driving mobility services for local or long distance travel, the decision to purchase a car, buyer preferences for specific car models and features as well as the transition towards electrical vehicles.
We will then concentrate on the various players in the SDC field, including leading OEMs, fresh entrants such as Google, Uber, key suppliers, including sensor and hardware providers as well as various governments, including the US, UK, Singapore, Japan and China.
We explore four potential strategic responses for the auto industry and discuss business models associated with self-driving vehicles and their suitability for the various players.
We review key implications for model mix, volume, as well as sales and design processes.

Who should attend?

More information, event agenda and registration

This event is organized by Autelligence. Further details are available on Autelligence site.

Self-driving vehicles as instruments for the coordination of mobility

Autonomous cars will switch the way we think about traffic. Today traffic is primarily regarded as the result of the independent deeds of thousands of drivers. A view from above on any city would demonstrate large numbers of vehicles pursuing their own trajectories through the labyrinth of roads. The cities’ traffic management systems attempt their best to observe, identify and somewhat channel the grand flows.

This introduces a crucial difference: Fleet vehicles no longer pursue their local optimum; rather than completing the individual excursion as quickly as possible, fleet management will seek to maximize throughput for all of its vehicles – for the fleet as a entire. The operational goals of fleet management are therefore very much aligned with the traffic flow goals of a city as a entire.

As fleets grow, fleet managers will find that the vehicles can be used to influence the flow of traffic. Many different strategies are possible (and their effectiveness varies greatly with the ratio of fleet cars to total number cars): fleet vehicles can purposefully slow down the build-up of traffic ahead of arteries which are in danger of clogging. Fleet cars can reliably calculate and selectively or pre-emptively use alternative routes. As the percentage of fleet vehicles in relation to total traffic grows, fleet vehicles may travel part of the way in more densely packed convoys. They may even switch their acceleration behavior at stop-lights (using a somewhat swifter acceleration pattern than the standard acceleration pattern of human drivers) which may or may not be copied by human drivers.

Because both city traffic managers and fleet managers will recognize early on that their interests are very much aligned, we can expect many ways in which both parties will cooperate. Fleet managers will make real-time traffic information gained via their cars used as sensors available to the city traffic managers. Fleets are likely to ask city traffic managers to adjust stop light phases to improve traffic flow (and fleets will provide the data and models to prove that these switches will be beneficial). We can expect that this will lead to much more real-time traffic management for stop lights and fleet vehicles may come to very directly influence traffic signals. Eventually, as the differences in driving behavior inbetween human-driven and autonomous vehicles become more apparent and fleet vehicles exceed twenty percent of traffic (originally mostly likely in urban centers), we may find that cities will reserve some lanes or roads for self-driving vehicles because they are more effective at providing local mobility than individual cars, or because the throughput on autonomous-vehicle-only lanes can be twice the throughput of human-driven lanes (mostly due to shorter distances inbetween vehicles and better reaction times/acceleration behavior at stop lights, in some cases also because two conventional lanes might be re-fitted into three narrower lanes for autonomous fleet vehicles).

But this is only the peak of the iceberg. Fleet managers will understand local traffic very well and want to avoid their most valuable resources to be stuck in traffic. They will be able to predict the actual duration for a journey at any given point in time and will aim to minimize trips which incur strong congestion. Instead of just driving a customer every day to work at a time of his choosing, they will look for ways to reduce the peak blast on the fleet. Ridesharing is only one of many approaches: Fleets will provide prizes to those who stay out of the rush hour (or add congestion pricing, which in turn will drive down congestion). They may find ways to systematically phase traffic flows in certain areas, work with employers and schools to adjust working hours, provide an in-car environment that permits workers to begin their work while commuting (and ensure employers’ approval), provide a reliable forecast of journey times (and a clear indication how expected tour times can be diminished by leaving earlier or later).

Time will tell which of these many possible deeds will yield the most benefit (and through which other approaches fleets of self-driving vehicles will improve the overall traffic flow in a city). But it is visible that fleets of autonomous vehicles will lead to a very different thinking about traffic. Where today we have thousands of actors all pursuing their own little traffic goals, these fleets will commence us thinking about how traffic can be optimized not just locally but as a entire. It is clear that this optimization does not necessarily begin when a journey embarks, but potentially already before – when a mobility request for a journey from a certain location to another location in a certain time range is known. Fleets will pave the way by optimizing their trips against the entire fleet. And the lessons we learn from managing trips for autonomous vehicle fleets will deeply switch our thinking about traffic and how traffic should be organized.

Thus, autonomous vehicles not only drive themselves; they switch the cost structure of mobility, which in turn enables collective autonomous mobility services to grab a significant part of the market for motorized individual mobility. These collective services will necessarily implement a centralized perspective on mobility which requires finding (and negotiating) ways to optimize the mobility requests of large groups, even cities. In the end, we will likely think about all mobility – whether in a fleet vehicle, in privately possessed autonomous or conventional car – from a perspective of global optimization. It won’t be long before our mayors, regulators and politicians will see the potential of self-driving vehicles for traffic management and begin to develop policies that lead traffic away from today’s strenuously congested local optima towards structures that come much closer to the global optimum.

Transformations 2025: How Volkswagen prepares for the (driverless?) future

It plans to establish an extra (thirteenth) major brand around mobility services. It wants to become a leader in electrical vehicles. It has just established a digital lab to develop cutting-edge digital services related to mobility, connectivity, its brands and its products.

But more importantly, self-driving car technology is associated with a very specific danger (and chance): It switches the dynamics of each of the auto industry’s strategic topics. Mobility services based on self-driving car fleets differ fundamentally from Uber’s, Car2Go’s and other mobility services fleets on parameters such as total cost per mile, optimal car model and characteristics, volume, utilization, profitability, etc. Similarly electrification differs greatly whether it is targeted towards autonomous vehicles (which will primarily predominantly be spinned out as elements of urban self-driving car fleets) or towards the consumer. The economic justification, battery cost, vehicle range, charging infrastructure requirements, innovation diffusion path and cost-effectiveness differ fundamentally!

After such an analysis, the concentrate can be turned back from the future to the present and the transition period. Many likely switches will become visible and the paths and the relationships inbetween the different technologies being considered today will be much clearer. For Volkswagen and all other auto makers it means allocating major resources to autonomous vehicle technology today: make sure that they catch up with the leaders in the space; prepare mobility services for the autonomous fleet script rather than as also-run next to all the players already established in this field and make sure that they have electrified vehicle models that can be used as backbone of self-driving car fleets. Develop, consider and prioritize business models beyond consumer cars and fleet vehicles/mobility services, for trucks, buses, autonomous machines and beyond. Each of these activities is future-proof and establishes a beachhead in the transition towards autonomous vehicles.

Misconception 7: To woo us that they are safe, self-driving cars must drive hundreds of millions of miles

7.1 Failure rate estimation

The argument is usually introduced as a problem of failure rate estimation where observed failures (accidents involving self-driving cars) are compared against a known failure rate (accident rates of human drivers). Accidents are modeled as discrete, independent and random events that are determined by a (statistically constant) failure rate. The failure rate for fatal accidents can be calculated by dividing the number of accidents with fatalities by the number of vehicle miles traveled. If we consider the 32,166 crashes with fatalities in traffic in the US in two thousand fifteen and relate them to the Three.113 billion miles which motor vehicles traveled, then the failure rate is 32,166 / Three.113 billion = 1.03 fatalities per one hundred million miles. The probability that a crash with fatality occurs on a spread of one mile is extremely low (0,0000010273%) and the opposite, the success rate, the probability that no accident with fatality occurs on a spread of one vehicle-mile-traveled (VMT) is very high (99,999998972%). By observing cars driving themselves, we can obtain estimates of their failure rate. The confidence that such estimates reflect the true failure rate increases with the number of vehicle miles traveled. Ordinary formulas for binomial probability distributions can be used to calculate the number of miles which need to be driven without failure to reach a certain confidence level: two hundred ninety one million miles need to be driven by a self-driving car without fatality to be able to claim with a 95% confidence level that self-driving cars are as reliable as human drivers. This is almost three times the distance inbetween fatalities that occur during human driving. If we unwind the required confidence level to 50%, then at least sixty seven million miles need to be driven without fatality before we can be confident that self-driving cars are safe. Albeit this calculation is ordinary most authors – including the authors of the RAND report – use the wrong measures. Instead of dividing the number of crashes involving fatalities (32,166) by VMT, they divide the number of fatalities (35,091) by VMT. This overstates the failure rate of human drivers because a single accident may lead to numerous fatalities and the number of fatalities per fatal accident may depend on many factors other than the reliability of the driver.

The race for fully self-driving cars has reached a pivotal point

When we embarked to monitor the development of self-driving car technology in two thousand nine we expected that this technology would turn into an avalanche that sweeps through the auto industry. There have been many signs over the past years that the avalanche is picking up speed but until now we have been reluctant to claim that it is in utter sway because even however the auto industry was continually enlargening their activity around self-driving car technology all players had been very reluctant to openly call this a race and to publicly position fully self-driving cars as a key element of their strategy. There was a lot of posturing, many eye-catching public demonstrations of self-driving car prototypes but very little tangible act aimed at turning fully self-driving car prototypes into a real product.

After these latest signals, this situation has switched. It is now clear that auto makers have begun rivaling in earnest to adapt their business models to the coming wave of fully self-driving cars. No longer is Google the only company which is stepping on the gas; auto industry executives (and Uber) are now openly challenging to bring the very first self-driving cars on the market. It will come as no surprise to the readers of this blog that the initial business models are not worried with selling cars but to provide mobility services.

These signals are significant in themselves. They warmth up the competition and force the rest of the auto industry to determine how to adapt their business model to fully self-driving cars and to explain this strategy to their investors, journalists and analysts. They increase the value of companies in the space and increase the competition for human capital (Google has very likely lost inbetween five hundred million and one billion USD in human capital from the exodus of key members of their self-driving car group in this year (680 mio USD Uber paid for the Otto startup founded early two thousand sixteen by four Googlers (including Anthony Levandowski), plus Chris Urmson.). They also increase the effort of all parties involved (auto industry, suppliers, regulators, journalists, related industries such as transport & logistics, insurance, health care etc.) to understand the implications of fully self-driving cars which step by step drives away the many misconceptions and more clearly shows risks and opportunities. We are in the middle of a global, distributed innovation process around self-driving cars and driverless mobility where all parties are learning, refining their thinking, switching their vision of the future and adapting their deeds accordingly. The avalanche is in utter sway now and it will be a rough rail for those who fail to adapt while there is still time…

Fatal Tesla accident exposes fundamental flaws in the levels of driving automation framework

Since their publication the frameworks for driving automation (by SAE 2014, NHTSA 2013, BAST 2010) have been criticized for overlooking established skill in human factors. All experts in the field agree that it is not possible to expect human drivers to continuously supervise driving automation software and correct its shortcomings and errors at split-second notice when problematic traffic situations occur. SAE Level two and level three are therefore inherently unsafe and these levels should not have appeared as a viable variant of driving automation software in any framework at all!

Frameworks are not arbitrary. Unluckily, the driving automation frameworks were intensely influenced by the perceived needs of the auto industry which already had driver assistance systems on the road and favored a gradual evolution of their systems towards fully autonomous driving. It is understandable that the authors desired a framework that simplifies the path towards fully autonomous driving not just from a technical but also from a legal and commercialization perspective where automation can occur in baby-steps, most of which would not involve fundamental switches and would not require legislators to take a hard look at the underlying technology.

This is how Tesla was able to put their vehicle with auto-pilot software on the market. It was introduced as a petite step from cruise control to utter lateral and acceleration/deceleration control by the system. Nothing else should switch, they argued: the human is still in total control and bears utter responsibility (which means that the driver will always be the scapegoat if something goes wrong!); the vehicle does not have the ambition of performing all tasks by itself. The frameworks clearly provide support for this argument. But they overlook the key difference: the software now treats the driving task continuously, for longer opens up of time without the need for human activity. There is a fundamental difference inbetween continuous driving systems vs. ad-hoc, short-term operations of driver assistance systems (i.e. parking, emergency braking, lane warning etc.) which only take over driving functions for brief periods of time. Any framework for automated driving should have included this distinction!

Software that assumes the driving task continuously switches everything! Human drivers can and will unwind. Their minds will no longer be on the traffic around them at all times. It is well known that human drivers tend to trust autonomous driving algorithms too quickly and underestimate their deficiencies. And it takes a significant amount of time to get back into the loop when the car needs to come back the control function back to the driver. Unluckily the authors of the framework failed to think through the details and problems that go after on levels two and Three. They thought about strategies for handing back the control from the car to the human; but evidently they did not perform a risk analysis where they considered how potential crisis situations that require rapid reaction could be mastered. Such an analysis would have shown instantly that

a) there are many possible critical situations where a hand-off from the vehicle to the driver can not be carried out quickly enough to avoid catastrophic consequences and

b) there are many situations where a driver in supervision mode is not able to detect a lack of capability or misbehavior by the driving automation software prompt enough.

The Tesla accident is a good example to illustrate these problems. Albeit the accident occurred on May 7th, only some details have been released. The accident occurred around Trio:40 PM on a divided highway five hundred near Williston, Florida (view the map). A tractor-trailer turned left, crossing the path of the Tesla. Without braking at all, the Tesla hit the trailer approximately in the middle, went under it, emerged on the other side and continued driving for several hundred feet before coming to a stop at a telephone pole. More info on the accident (including the police sketch). The weather was good, no rain, dry road, good visibility. The road runs straight for miles. At Trio:40 PM the sun stood in the West, behind the Tesla. The speed limit on the road was 65mph (104km/h), which translates into a stopping distance of sixty four meters. Stopping time would have been about four seconds (which would also have been enough time for the truck to clear the intersection). The size of the tractor-trailer has not been made public but it was very likely inbetween sixty five and seventy three feet (20 and twenty two meters). Assuming a standard lane width of twelve feet (Trio.7m), and estimating the distance inbetween both sections of the divided highway based on the Google earth pic to be about 20m, the trailer had almost enough available space inbetween both lanes to make the ninety degree turn and could then proceed straight on crossing the two lanes of the highway. If we assume that the left turn (the part at the lowest average speed) takes at least six seconds (time estimated from a movie displaying trailer trucks making a left turn) and the truck then passes the intersection at an average speed of 10mph (16km/h), then the truck needs an extra six seconds to clear the intersection. As the trailer was hit in the middle by the Tesla driving in the outer lane, the truck must have been about thirty feet (10m) brief of clearing the intersection. Thus the tractor-trailer would have cleared the intersection about two seconds later.

At the moment, much of the discussion about the accident centers around the driver’s attention. We will never know whether or when the driver witnessed the truck. There are several possible screenplays: If we take the time horizon of ten seconds (=6+6-2) before the accident when the trailer-truck initiated the turn, then the Tesla had a distance of about two hundred eighty meters to the intersection. At this distance, the large trailer-truck moving into the intersection would have been clearly visible. A driver engaged in the driving task (not on auto-pilot) could not have failed to see the truck and – given the lack of other nearby traffic or visual distractions – would have noticed with enough lead time that the truck is continuing onto the intersection. A step on the brake would have defused the situation and avoided the accident.

The screenplay looks very different with auto-pilot. The driver knew that the road went straight for miles, with optimal visibility which translates into a low overall driving risk. The driver may have paid attention, but not as much attention as when driving without auto pilot. When a car drives by itself for many miles a driver won’t be as alert as when he performs the driving function himself. The attention will wane, the truck on the left side may have received a brief glance by the driver. The truck’s intent to make a left turn would have been evident; but the truck slowed down when he entered the turn about ten seconds before influence and the driver would certainly have expected that the truck will come to a stop and that the auto-pilot is also aware of the large truck. Thus even if the driver eyed the truck initiate the turn, he would most likely not have been worried or inclined to pay special attention to the truck. This was just another one of most likely thousands of intersections that Joshua Brown, who used the auto-pilot frequently and blogged about it, had passed. His confidence in the Tesla for treating intersections may have been high. Albeit he knew that the auto-pilot is not ideal, he most likely did not expect that a large truck would be overlooked. In addition, he was most likely aware of a Youtube movie entitled “Tesla saves the day” which had circulated widely a few months ago. It demonstrated how a Tesla had auto-braked just in time for a car crossing the path from the left.

Even if the driver spotted the truck and recognized that it was moving into the intersection three to six seconds before influence, then other problems arise: he has to hop into activity and take over from the car. This needs time – both for the decision to revoke control from the car and for physically assuming control of the vehicle. Part of the driver’s brain has to work through the expected behavior of the car: If the car has not yet decelerated does this mean that it has not seen the large truck at all or does it mean that it is not necessary to brake (the car may have come to the conclusion that the trailer-truck will clear the intersection in time). Could it indeed be that the car does not see this blatantly demonstrable trailer-truck….? Have I downright overestimated the capability of this car? The shorter the remaining reaction time when the driver realizes the oncoming crisis, the more dangerous and potentially paralyzing this extra mental stream may become.

But the key problem is not a software issue. It is the mindset which offloads the responsibility from the driving software to the driver. Developers will be much more inclined to release imperfect software if they can expect the driver to pack any gap. That Tesla uses a non-redundant mono camera is another illustration of the problem. What if the camera all of a sudden malfunctions or dies on a winding road with the auto-pilot engaged and the driver does not pay enough attention to take over in a split-second? How is it possible to release such a system fully knowing that drivers using these systems will not always be paying total attention. This is only possible because we have standards that let developers offload the responsibility to the driver.

The often-raised counter argument that the level two auto pilot has already saved lives is not valid: it confuses two different kinds of driver assistance systems: those – such as emergency braking systems – which only take over the driving function for brief periods of time when they are indeed needed and those that assume continuous control of the driving function for longer opens up of time and thus lead human drivers to take their minds off the road at least part of the time. Brief term functions such as emergency braking are not controversial. They do not depend on the auto-pilot and it is them, not the auto-pilot, which is saving the lives.

There is only one variant in which software that assumes the driving task continually, for longer opens up of time can be developed and released to the market: the autonomous driving system must take total responsibility for the driving task and it may not require human supervision when engaged. Thus Levels four and up are viable approaches. The Tesla accident does not only showcase a software problem; it illustrates the dangers of levels two and levels Three. Theses levels must be scrapped from the framework!

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