Will your Next Car be Self-Driving

Some pundits suggest that private ownership of autonomous (self-driving) cars is right around the corner. But that’s not the conclusion of Bern Grush, a systems engineer, futurist and the author of a recently published study on the subject.  He suggests that before they begin to be purchased in large numbers by private individuals, autonomous vehicles will first find their place with taxi and taxi-substitute companies like Uber and Lyft and seriously impact public bus services.  Large-scale private ownership of self-driving vehicles won’t occur until the late 2020s at the earliest, according to the study.

Recent research by Goldman Sachs Group has found less than 10 per cent of travel in North America is currently taken in non-personally owned vehicles, but the personal transport industry should get ready for a change. Grush says that by 2030, that percentage may climb to 25 per cent or higher as more people turn to robo-taxis, micro-transit and ride sharing. Why? His report claims automation will make these systems more reliable and far cheaper than today's taxi and bus services. Going further, the report contends ridesharing will be less expensive than personal car ownership for an increasing number of consumers. Improvements in vehicle automation, combined with a sharing economy, will vastly expand the robo-taxi and micro-transit juggernaut being readied by providers such as Uber, Lyft and Google's Waymo.

"We saw what happened with the town council in Innisfil (Ontario, Canada), which contracted with Uber rather than investing in a traditional bus system,” Grush said.  “This type of disruption will spread to other municipalities. Once these commercial providers begin to automate their fleets, their role in public transit and goods movement will accelerate."

Despite predictions that ridesharing in self-driving cars is imminent, the report has identified many barriers to getting people out of their personal cars and into robo-shuttles or robo-taxis. These include the safety concern of having young children in a car seat; being disabled and traveling with assistive gear; driving with a pet; and the fear that an automated car won't take a passenger everywhere she or he wants to go.  Grush calls this "access anxiety.” As these barriers are dealt with, the need for personal vehicles, as well as non-automated taxis and buses, will diminish dramatically over 15 years, the report "Ontario Must Prepare for Vehicle Automation: How Skilled Governance Can Influence its Outcome” said.

Right now, there is a lot of hype surrounding fully automated vehicles that can operate without a driver in any imaginable circumstance. Due to many hurdles, Grush does not anticipate this type of autonomous vehicle until well after 2050, when the technical issues of having driverless vehicles operate in every possible condition will have been addressed.

Grush encourages governments to prepare for this future by determining now how to influence the role fleets of shared AVs will have in cities and towns. The key to harnessing this technology is for governments and the private sector to work together to implement a regulatory system that will enhance mobility for all, the report said. Grush’s concept, the Harmonization Management System (HMS), would provide the digital tools to incorporate a subsidy and pricing system, and optimize the distribution and social performance of commercial fleets. 

 

New Economy Standards Provoke Controversy

European observers have to wonder what the Americans are up to when it comes to fuel economy. For decades, European countries have limited their use of petroleum by instituting stiff taxes on motor fuel. This takes a big chunk from the earnings of every European driver, but it also cuts down on fuel usage in a fairly direct manner. In contrast, Europeans who understand the American system for curbing petroleum use, the federal Corporate Average Fuel Economy (CAFE), are struck by its obtuseness. And now the Obama administration is poised to kick CAFE into overdrive, proposing a 56-mpg fuel economy requirement by 2025. Should the regulations be imposed, the world’s automobile companies will have to figure out a way to not only build vehicles that can deliver 56-mpg performance, but also persuade enough Americans to buy them. Auto industry experts agree that the latter is much more difficult to accomplish than the former.

In making the new proposal, the U.S. government has spread the word that the proposed standards, which almost double the current requirements, can be achieved simply by adding cost in the vehicle-manufacturing process. Some hybridization here and there and, bingo, cars can meet the new standards. It has also taken the line that the additional costs involved in manufacturing and marketing vehicles that can achieve the drastically higher fuel economy ratings -- costs that presumably will be passed on to consumers -- will be recouped by those same consumers from the cost savings that will accompany higher fuel efficiency.  The story is that consumers will pay more for the vehicle upfront, but they will get that money back in gas savings. Independent observers question how realistic that is, though, because there are several items that the proposal’s proponents either miss entirely or gloss over.

For example, buyers will be forced to pay more for new vehicles than they otherwise would have had to pay for the new, more fuel-efficient technology, but the payback period for that added expense will likely extend well beyond the typical ownership cycle. They’ll pay more initially; that’s clear. But when, or if, they will get that money back is decidedly unclear. The payback period will depend on fuel prices. If fuel prices are $3 per gallon (inflation-adjusted), then the payback period will be far longer than if fuel prices are $5 per gallon. What should be clear is the higher purchase prices for new vehicles will have a significant negative effect on overall demand. If you kick up the price of the average new car by $2,500 -- roughly 10 percent -- it will clobber demand for new vehicles. What happens when demand for new vehicles diminishes? You don’t have to be a Rhodes Scholar to figure out that fewer new cars will be built and sold, and because of that, a number of men and women involved in the manufacturing, marketing and sale of new cars will suffer economically. There is little doubt many will lose their jobs. In reaction to the higher prices for new cars, consumers will continue to drive their current vehicles longer, meaning the new regulations will, in essence, keep older, less-fuel-efficient and higher-emission vehicles on the road longer. The values of used vehicles will go up, making it more difficult for low-income consumers to buy any cars at all.

So, despite the rosy predictions that the higher fuel economy standards are a win-win, there is virtually no doubt that both consumers and the car industry will be hurt if the higher standards are instituted. Those familiar with the European model wonder why Americans don’t simply institute dramatically higher fuel taxes if the goal is to curb fuel use. The answer is that politicians lack the will to do that because it would jeopardize their chances of re-election. Instead, they continue to shift the burden to the car companies and to consumers.

Should Fuel Taxes Be Raised?

Do you think the taxes you pay are too low? Not many of you are likely to say “Yes” to that question, but a new study might change your mind at least in one area: state fuel taxes. A new analysis from the Institute on Taxation and Economic Policy (ITEP), a nonprofit that examines the implications of United States tax policy, says that state governments are losing out on more than $10 billion in transportation-related revenue each year. Critics might say that keeping that money away from bumbling governmental spenders is a good thing, but since the money raised by gas taxes would typically go directly to improving roads and related infrastructure, consumers and commerce might well be suffering from this revenue shortfall. The ITEP report suggests that the lost fuel tax revenue results in an estimated $130 billion drain on the economy resulting from higher vehicle repair costs and travel-time delays.

The organization says that state lawmakers who are understandably reluctant to raise gasoline taxes have cost their states, on average, $201 million in annual revenues by not pegging gasoline taxes to inflation. These losses are accompanied by the declining value of the current federal gas tax, which also supports state transportation projects. It has not been raised since 1993 and it has lost 41 percent of its value because of inflation over that time timespan.

“Unfortunately, many politicians won’t consider touching the gas tax,” says Carl Davis, senior analyst at ITEP and author of the study. “They are raising sales taxes, fees on vehicles, tolls on roads, even looting education funds, all to make up for the stagnant gas tax. But they can’t bring themselves to modernize the biggest source of transportation revenue that’s actually under their control. It makes no sense.”

The report “Building a Better Gas Tax” shows that the average state has not increased its gasoline tax rate in more than a decade, and 14 states have gone 20 years or longer without an increase. One has to believe that citizens of those states have reasons to be happy about that, but while state gas taxes remain flat, the cost of paving roads and building bridges has risen markedly, often at a rate higher than general inflation.

“It’s basic math,” says Davis. “The road repairs you could buy in 1990 with 20 cents, for example, are going to cost 34 cents today. But we still see some states collecting the same flat 20-cent tax that they did back in 1990. That’s the definition of unsustainable.”

After adjusting for construction cost growth and general inflation, the average state’s effective gasoline tax rate is down by 20 percent, or 6.8 cents per gallon, since the last time it was raised. The effective rate of taxes on diesel fuel is off by 18 percent, or 6.0 cents per gallon. Note that the taxes haven’t been lowered; they simply have not been raised to keep up with inflation.

Today’s state gas taxes make up a smaller portion of family budgets than at any time since the tax was first widely instituted in the 1920s, the study says. So should we raise gasoline taxes? That is the thorny issue. A 10-cent-per-gallon increase would cost today’s average driver $4.31 per month, and the 6.8-cent-per-gallon increase needed in the average state would cost the average driver $2.93 per month, according to the report. But the report also acknowledges that a gasoline tax is regressive, that is, it has a disproportionate effect on low-income families, who often use as much gasoline as high-income families.

“Building a Better Gas Tax” offers three specific policy recommendations for modernizing -- and increasing -- state gasoline taxes. They are:

1.    Increase gas tax rates to reverse their long-term declines; the “appropriate rate” of increase desired varies by state.

2.    Peg gas tax to grow alongside the cost of transportation construction projects.

3.    Create or enhance targeted tax credits for low-income families to offset the impact of gas tax increases.

Will the proposal fly? In these days of economic malaise, often made worse by high taxes, onerous regulations, and red tape, it might struggle for air. But as consumers and businessmen alike see the country’s roads and bridges crumble, it might well gain traction.

House of Representatives Investigates Fuel-economy Deal

A few short months ago, the Obama administration announced its fuel-economy proposal, hailing it as a win-win. Endorsed by auto manufacturers and environmentalists alike, the aggressive set of standards had the appearance of a good old-fashioned political compromise. But in the weeks after the standards were introduced, there has been revisionist thinking on the proposal.

Some environmentalists have expressed disappointment that the standards were more stringent. Their goal was 60 miles per gallon. Meanwhile, some auto industry groups have proclaimed that the mpg bogeys proposed by the standards will be much more difficult -- and more expensive -- to reach than the administration claims. Now, Congress -- specifically the House Committee on Oversight and Government Reform, chaired by Republican Rep. Darrell Issa of California -- has held a hearing to question the Environmental Protection Agency’s (EPA) decision to impose those costly new standards. One major issue is whether or not the EPA has the authority to impose any fuel-economy standards at all.

“The Environmental Protection Agency is carrying out a power grab of breathtaking proportions,” says Senior Fellow Marlo Lewis of the Competitive Enterprise Institute, a conservative think-tank based in Washington, D.C. “The Clean Air Act was neither designed nor intended to regulate greenhouse gases, and it provides no authority to regulate fuel economy.”

The EPA claims that it has the authority to regulate fuel economy because so-called greenhouse gas emissions are inextricably linked to climate change. By labeling greenhouse gases as “pollution” responsible for “global warming,” the agency says regulating fuel economy is merely an implementation of the Clean Air Act. But, as Lewis notes in his testimony, the Clean Air Act was enacted in 1970, “almost two decades before global warming emerged as a public concern and five years before Congress enacted the nation’s first fuel-economy statute.” Thus, he suggests that Congress had no intention of allowing the EPA to construct standards for fuel economy.

So why have the car companies apparently signed on to the proposed standards rather than opposing them on the grounds that they would cause substantial harm to the industry and car buyers? Lewis says the EPA pursued a strategy of “regulatory extortion,” confronting auto companies with the economically ruinous prospect of allowing state-by-state fuel economy and greenhouse gas regulations if they did not waive their right to sue the EPA and sign on to the president’s proposal.

The EPA has asserted its power to regulate fuel economy despite the fact that a federal stature titled the Energy Policy and Conservation Act expressly prohibits states from adopting laws or regulations related to fuel economy. In the same act, Congress delegated the responsibility to regulate fuel economy to the National Highway Traffic Safety Administration (NHTSA).

Currently, no vehicles except plug-ins or battery-electric cars meet the 54.5 mpg standard that has been proposed for 2025. The administration has claimed that the standards can be met at a cost of something like $2,000 per vehicle, but others say the cost could well be more than $10,000 per car. The Defour Group estimates that 220,000 jobs may be gone by 2025 as the auto industry struggles to meet the new standards. In this era in which job creation -- not destruction -- is so important, the probability that the standards will cost jobs is a key reason why the House is taking a long look at the proposed standards.