Will Driver-less Cars Kill The Taxi Industry?
It was widely reported last week that Elon Musk has set his sights on launching a fleet of driver-less taxis. His comments follow announcements from other leading taxi firms such as Uber and Lyft that they too have plans for autonomous cabs that can be hailed from the street. Tesla want to have their cabs in service by as early as 2019, so the threat to the traditional cab industry is not real, it's also imminent.
Or is it? Taxicabs have been with us in one form or another since the late 17th century and with every change – such as the move from horse power to the rise of the internal combustion engine – people have hailed taxis. The most recent – and arguably the most potent threat - came with the arrival of Uber. Suddenly anyone with a car could be a cabbie. They were cheap, plentiful and were hailed at the click of an app. Private hire firms were dead and buried… Except they weren't. According to the government the number of private hire firms grew by over 9% between 2013 and 2015, this despite Ubers arrival in the UK in 2012.
So is this latest change really the beginning of the end, or is it just another chapter in the industry's long and colourful history. In this latest blog from Your Taxi Insurance, the taxi insurance specialists, we'll look at its potential impact and consider whether driver-less cabs will kill the taxi industry.
Ask any cab firm owner or cab driver and they'll tell you that the costs of running their business have risen sharply over the past few years. Between historic fuel price rises, and increases in taxi insurance costs owing to changes in the Ogden Rate and increases in insurance premium tax, running a taxi isn't cheap. Margins have also been massively eroded as disruptors such as Uber have lowered fare levels, making a living far from easy.
So how about cutting costs at a stroke by doing away with those pesky drivers who need breaks, insurance and wages and just let a computer do it all? With no need for sleep they can work for longer. With sat-nav hardwired in they will always know where the traffic congestion is and how to avoid it. Being summoned by apps they will always know where their next fare is, and pesky things like carrying cash will be a hazardous thing of the past. They will also drive more carefully and remove the element that is said to cause 90% of traffic accidents: humans. Be you a driver or a taxi firm owner, all you need to do is invest in a driver-less car, programme it up and let it do the work while you bank the fares.
Since the VW emissions scandal diesels have become public enemy number one. With 40,000 deaths in the UK each year associated with polluted air and with concerns over climate change becoming ever starker, diesel's fate has been sealed. By 2040 – or sooner if the European Parliament has its way – fossil fuelled vehicles will be banned. As early as 2019 new charges will start to come in for drivers wanting to enter cities such as London, Oxford, Glasgow and Nottingham as Clean Air Zones (CAZ) come in. In London the T-Charge will cost up to £21.50 per day to enter parts of the city which will hit taxi drivers hard.
So why not be done with all those dirty diesels and get yourself a fleet of ultra clean electric cabs which don't need a driver? These will be exempt from congestion charges, offer an environmentally sustainable mode of transport and gift owners with a great marketing story to boot.
The one thing any cabbie needs is a car, ideally their own. Almost all private hire drivers – 73% of all registered taxis in the UK – own their own car. Fast forward 15 years and the number of those who will actually own a car will have plunged by 80% according to a new study. In future we won't own cars, rather we'll simply hail electric vehicles as we do cabs now. This drop in the supply of available vehicles and the rise of driverless taxis means the sector is set to come to an end.
In the internet-connected age in which we live, statements like, 'Where's that?' or 'Sorry, they're stuck in traffic' will soon be a thing of the past. Driver-less cabs will have unlimited knowledge of the most alien of cities, will instantly plan alternative routes long before they run into trouble and will be on call 24/7, 365 days a year. As a taxi company owner being able to offer an unlimited service at a competitive price is something customers are going to love.
So that's that then. We should all get ready to either buy driverless vehicles and earn an easy living or retrain as an IT specialist to re-programme these things when they go wrong. Well, no as the picture isn't quite as clear as some of the advocates of these things would have us believe…
Just because you can, it doesn't mean you will. You can put your life savings into Bitcoin, but the fact is most people won't. You can allow the products in your fridge to automatically re-order themselves when they are getting low or close to their use by date, but again most people don't. You can get into a taxi that's solely controlled by a piece of software and trust it to deliver you safely to your destination. You can, but most people won't – certainly not in the short-term.
Levels of public acceptance of the idea of driverless vehicles is low at present. Over 50% of Americans in a recent survey said they wouldn't get in one, and that's with them remaining an idea rather than a reality. There have, at the time of writing, been 4 fatalities involving driverless car tests involving Uber and Tesla, and Google's Waymo has had accidents. Small numbers, but given this is all still in early testing it's worrying.
Before anything like mass adoption can take place, driverless cabs will need to have been proven to work en-masse. And that's going to be tricky: how do you show the masses that something's safe if the masses won't test them?
This may seem a tenuous reason, but its actually pretty massive. As you know when you run a cab you get your vehicle, get your taxi insurance quote and off you go. But who pays when the vehicle is being driven by a computer? Is it the vehicle owner? The manufacturer or the even the provider of the software? This is a heated debate with everyone trying to pass the buck to someone else, and with good reason. If someone is injured or even killed by a driverless taxi then the potential pay-outs could be massive, and if no one's prepared to pay for that cover, then those cabs are going nowhere.
Electrically powered vehicles are a good idea. Cleaner, cheaper to run, easier to maintain and sustainable, what's not to like? Well nothing until you run out of juice miles from a charging station. Tesla plan to launch their service in cities and other large metropolitan areas and one of the reasons for this, we suspect, is that they know they will need to have good access to fast charging points. These are still thin on the ground in the UK and while more and more are coming on stream, they are centred on urban areas. That's fine if you live in a city, but suppose you live a small town or village and rely on taxis to get you about, what then? Or what if you need to do an airport run from, say, Ely to Gatwick. Even the most efficient electric car is going to struggle to do 260 miles on a charge, especially given that they will have to do a lot of fast motorway driving to do it.
No, for the foreseeable future traditional taxis will have a big part to play in the transport infrastructure of rural areas and for longer journeys as a whole.
At this stage we're pretty confident that we can say no, it won't. If we re-phrase the question slightly and ask, 'Will driver-less cabs change the taxi industry?' then the answer is yes, definitely. The whole nature of transport is set for massive changes in terms of ownership, power and control. The industry has proved itself resilient to change though and it will adapt and embrace these changes as it has so many before.
If you'd like to know more about saving on your taxi insurance, then please feel to get in touch by calling us on 0800 1313 345, or if you'd like to get a taxi insurance quote then please click here now.
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