Driverless Cars (Post 3 of series)

by Michael Keane

This post will be covering the effects of driverless cars on the oil, insurance, and government taxing authorities. With Google already logging in over 1 million road miles, and the successes that have been created, these vehicles are not far from hitting the consumer markets. Problems show that it will eliminate demand for oil and insurance industries, while at the same time removing a significant source of revenue from tickets and crashes. Possible solutions include finding new uses and new sources of revenue. Links to the previous 2 articles (general post 1 here, and more focused article for post 2 here).

Most driverless cars will be almost certainly electric vehicles. This is not a good sign for the oil companies. If car companies are going to invest in the technology to have a driverless car, electric engines will be a no brainer.

Insurance companies are almost certain to lose massive revenue from driverless cars. The continually mounting data is showing that driverless cars are far safer than cars driven by human beings. That will hit premiums in a big way. This one simple savings point could drive more people to driverless cars in the same way that gas prices drive consumers to electric vehicles. Knowing the trends and cycles as Insurance companies create the thought pattern that this situation is being worked on and that a plan to replace the premium revenue with another stream is likely.

Not unlike the insurance companies are local and state governments. This is because with the same data, extrapolating the idea that there will be less tickets from speeding and accidents is almost a no brainer. But unlike insurance companies, it can be fairly certain that governments are not working on this idea. Maybe this article will get them to do so. They should be looking at their revenue models (because that is what ticket revenue really is) and adapt it to future items and personal behaviors in order to replace the loss that not having speeding ticket and accident ticket revenues.  A possibility is to update roads with assistant type technology for the vehicles and charge the vehicle owners for that particular service.

Driverless cars will create an opportunity for consumers to possibly lessen the costs of insurance, energy, and tickets.  These industries would be very wise to have plans on replacing the current revenue with new plans in the pipeline.

Electric and Driverless Vehicles (pt.2)

by Michael Keane

Electric and Driverless Cars  Part 2

Electric Vehicles

In a previous post, a couple of large issues that the transportation industry was outlined. In this article, the focus will be on how the energy, insurance and governmental taxing agencies will handle the growing use of electric vehicles. Will energy companies be able to pivot off of its reliance on vehicle gasoline for profit? Will insurance companies be able to handle the likely decreased premiums due to vehicles no longer needing protection against gas related incidents? Will taxing authorities be able to pivot off of the taxes received from gas?

Energy companies are in a very precarious position. They are finding that there is a glut of fossil fuel energy while at the same time a lessening of demand for it. A big and growing culprit of this is the expansion of the electric vehicle. With non-fossil sources of fuel Companies like Tesla, GM, BMW, and others have put in large resources to build out these vehicles. as alternative fueling grows, so does demand for the vehicles. This increased demand is bringing costs down into an area where the masses are able to participate.  

One possible rock to lean on during this time is the time period just as the automobile was becoming more and more popular. Energy companies faced a similar threat to their business as electric lights replaced oil in homes. The question becomes what is the switch they need to make. The larger companies should be able to absorb some of the trouble. But overall, margins are going to get squeezed.

In terms of insurance, there is one item that I can think of that should lessen premiums. That item is the removal of gas and oil (extremely flammable) from the vehicles. In an article by InsideEV’s (link here), information shows a large improvement when it comes to safety when comparing EV’s with standard vehicles. This could bring down the price of premiums.  One possible solution in the short term is to raise other parts of the monthly premium as the vehicles are generally more expensive and can be more of a steal target because of the newness of the segment.

Taxing authorities should already be figuring out solutions to this issue. The more electric vehicles that are registered in the state, the less revenue they will receive from taxes on gasoline. For example, in my home of Chicago, taxes on a gallon of gas are around $0.30 per gallon. I sure hope they are working on a plan that replaces this revenue. Because with more and more EV’s hitting Illinois roads, revenue is increasingly getting smaller and smaller. But there are alternatives like a flat annual tax on EV’s or an increase in taxes for electricity not generated by NFES. Also, promotion of these vehicles will increase the favorabel environmental effects which should offset some of the financial loss. There aren’t too many administrations who end of badly for making their area cleaner and healthier for their constituents. If you have or plan to buy and EV, reach out to your local office holders and remind them of the benefits for the area.

There are more than a few issues facing the oil, insurance, and taxing authority agencies when it comes to handling the increase of EV’s on the road. But there are ways to continue profitability and success while embracing the change. It is very important not to have blinders on or have your figurative head in the sand at this moment. Acknowledge what is, and plan and act however needed.