Lecture, Conference Presentation, Keynote
The Autonomy Ecosystem: Finance (5 of 8)
- A rapid transition is expected from privately owned gasoline vehicles to electric, self-driving algorithms, triggering a massive shift of capital from insurance, auto loans, and the used car market.
- Insurance premiums are projected to rise in the next few years due to vehicle costs and potential for high-damage incidents, despite a prior steady decline in fatalities per vehicle mile, with the recent uptick attributed to human factors like speeding and intoxication rather than smartphone distractions.
- Long-term forecasts from Morgan Stanley and BCG predict that Level 5 autonomous vehicles will avoid 95% of accidents through conservative programming and rapid fleet-wide algorithmic improvements.
- The insurance business model is anticipated to shift from B2C to B2B as premiums dramatically shrink and fleet operators achieve sufficient scale to self-insure, potentially causing traditional insurers to vanish.
- Auto loan volumes and the used car market, currently valued at upwards of $740 billion with 38 million annual transactions, are expected to decline or be replaced by a fleet-based ownership model where consumers do not take out personal loans or resell vehicles.
- The traditional airport car rental market is forecast to reach zero, while advertising spend for auto loans, sales, and used car transactions is projected to fall to zero, eliminating approximately 10% of all U.S. ad spend before shifting to different product categories.
- Battery components from retired self-driving vehicles are proposed for recycling to recover raw materials or repurposing as utility-grade storage facilities for wind and solar power.
- Allstate has signaled expectations in its 2015 annual report that driverless cars will have a material impact on product demand.