2017: Year 1 of Driverless Cars

This year may be remembered as the year that driverless cars became real. This is because Waymo has officially started operating driverless cars, without back-up drivers, in a public ride-sharing service in several suburbs of Phoenix, Arizona.

Driverless cars are legal in most states so long as a licensed driver is at the wheel ready to take over if there is a problem the computer can’t handle. Without the back-up driver, they technically aren’t legal anywhere. But the governor of Arizona, Doug Ducey, has promoted a “rules-free environment” for driverless car experimentation.

This past year was also a record year for Amtrak. This puts the lie to transit-agency claims that low fuel prices are the main culprit behind recent ridership declines. An interviewer asked five transit executives what their most important challenges were and not one of them mentioned competition from ride-sharing companies. Like transit, Amtrak must compete with modes that benefit from low fuel prices, but so far it doesn’t have to deal with ride sharing. The fact that it is doing fine shows that ride sharing, not low fuel prices, are the most important source of transit woes.

Amtrak’s growth may not last once driverless ride-sharing starts competing on intercity routes. If ride-sharing companies charge 55 cents a mile (roughly the cost of driving if you replace your car with a new one every five years), a trip from Portland to Seattle would cost less than $100. Amtrak fares start at $26 but go as high as $63 if you have to buy on short notice. So ride sharing would be less expensive than Amtrak for four people with advance notice and for two people with short notice, and more convenient either way.

Of course, prices are likely to quickly fall below 55 cents a mile, a rate that presumes the car is driven 15,000 miles per year. Ride-sharing vehicles can probably come closer to 100,000 miles per year, reducing the cost per mile to 30 to 35 cents, which is less than two people on Amtrak’s lowest fare or one person on Amtrak’s highest fare.

Just as ride sharing is eating into transit’s customer base without taking all of it’s customers, intercity driverless ride sharing will soon begin eating into Amtrak’s customer base without emptying out the trains. So 2017 may be one of the last years that Amtrak will be able to report record ridership and earnings.
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Intercity driverless ride sharing may also impact short-hop airline service. Destinations that are now remote from scheduled air service may become more popular.

What kind of cars will ride-sharing services use? While some are looking forward to an age of all-electric cars, I suspect that, for intercity travel anyway, plug-in hybrids will be more popular. At least twenty plug-in hybrids are available on the U.S. market this year. Waymo is using seven-passenger plug-in hybrid minivans for its Arizona program.

When used in the city, the disadvantage of the plug-in hybrids, as opposed to all-electrics, is their short range in electric mode. The Chrysler Pacifica, which Waymo uses, goes only 33 or so miles on a charge compared with more than 200 for some Teslas and the Chevy Bolt. But when used between cities, the advantage of the plug-in hybrids, as opposed to all-electrics, is their long range in all modes: when the electrics run out of batteries, they are dead, but the Pacifica can go well over 500 miles, getting 45 percent better miles per gallon than the non-hybird Pacifica when operating in gasoline mode.

Last month, General Motors responded to Ford’s 2016 promise to have fleets of driverless cars in 2021 by making its own promise to mass produce driverless cars by 2019. Both of these promises seem more oriented to Wall Street than travelers–Ford’s CEO was replaced because he failed to convince either Wall Street or his board that he could make the target–but suggest that competition is going to bring driverless cars to the roads sooner rather than later.

If nothing else, 2017 has convinced many skeptics that driverless cars will happen soon. This makes all plans to spend tax dollars on long-term transit and intercity rail projects even more questionable than they already are.