Understanding the Impact of Autonomous Vehicles

German Chancellor Angela Merkel and Dieter Zetsche, Chairman of Daimler AG, look at a Smart Vision EQ Fortwo autonomous electric concept car at the 2017 IAA Frankfurt Auto Show last week.

ASU/Thunderbird professor and Chief Executive contributor Jeff Cunningham brings CEOs up to speed on autonomous vehicle technology—and why it could be a game-changer for their organizations. This is part 2 of 2. Click here to read part 1.

The advent of autonomous vehicles and driverless cars should give chief executives a rich set of opportunities to think about, but there will be many questions and no easy answers.

If your staff commutes each day, what happens with that extra hour or two? Does it belong to the employee? Does the company subsidize the car service, like Facebook and Google do in Silicon Valley? For Google, it may make sense to provide for its 72,000 employees, but what if you’re Walmart with over 2 million people who need to get to work? It changes the calculus a bit.

Does the workday itself change? Do employees even need to come to the office more than occasionally? And what about services like dropping off children at school, are they something people will want the company to take on? When an employee is laid off or fired, are they corporate orphans, living far from a dense city and unable to access those services? Will that turn company provided autonomous transport into an entitlement like healthcare?

“Autonomy will be the perfect solution for companies that see far ahead, understand technology and make preliminary and smart investments.”

What about the real estate impact? Do you even need a large, flashy headquarters anymore if everyone is ride sharing to multiple locations? The chief executives I know spend less than 25% of their time at headquarters. Why waste all that space on empty offices?

Any company that relies on distribution has to consider the changes as a 100-year storm. Just imagine UPS or Amazon finding out their costs of transport go down by 40 percent, part savings on drivers (assuming Unions will cooperate) and part the maintenance free electric engines. But what of long distance carriers, railroads and airline freight shippers? Do they simply shrink like the proverbial buggy whip business?

Certain jobs will take a big hit, as well. For instance, truck driver is the №1 job in America, including in two of our most populous states, California and Texas. Those are scheduled to disappear early in the era of autonomy.

Perhaps the biggest hurdle, however, is us. We will have to learn like the first time an aircraft pilot turned on the autopilot, to trust a computer to guide us through rush hour traffic at 70 mph.

There will be a litany of disruption in everything that is transported or whose business model is linked to auto usage such as car dealerships, garage mechanics, auto parts, gas stations, accident insurers, revenue from tolls and parking, rest stops and real estate relying on rush hours or short distance commuting, even policing. Police officers spend 40 percent of their day on traffic-related matters.

Parking fines will be an anachronism (New York stands to lose over half a billion a year from parking tickets). Parking lots will shut down, freeing up quite a bit of real estate, and sudden increases in capacity tend to have a negative effect on the value of inventory. In other words, more disruption for people, balance sheets, and the economy.

Autonomy will be the perfect solution for companies that see far ahead, understand technology and make preliminary and smart investments. But it will be the perfect storm for those who hang on to the status quo and wait for the changes to come to them.

Read more:
Why CEOs Shouldn’t Ignore Autonomous Vehicles

Jeff Cunningham is Chief Executive magazine's editor-at-large and a professor of leadership at Arizona State University/Thunderbird School of Global Management, where he has also endowed the Cunningham Global Fellowship for next-generation leaders. He also is the founder of Thunderbird Opinions poll of business trends. He was previously publisher of Forbes Magazine and CEO of Zip2 (founded by Elon Musk). Watch his YouTube interviews at Iconic Voices and connect on Twitter @CunninghamJeff and LinkedIn.