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An Automotive Expert’s Excitement–and Worry–About Self-Driving Vehicles

This sculpture by Rodin, at the Legion of Honor in San Francisco, embodies the frustrations of the first industrial revolution. The era of self-driving cars may lead to even more anxieties for workers. (photo by John Suh)

This sculpture by Rodin, at the Legion of Honor in San Francisco, embodies the frustrations of the first industrial revolution. The era of self-driving cars may lead to even more anxieties for workers. (photo by John Suh)

(Another in our continuing series of articles by participants in this fall’s Techonomy 2016 conference.)

I work in the automotive industry as a corporate venture capitalist. There has never been a more exciting time in automotive than now. We are beginning perhaps the greatest transformation of the industry since the adoption of assembly line manufacturing and mass production. We are going to make cars and mobility safer, more exciting, more accessible, and more eco-friendly. One the most exciting things is progress towards self-driving vehicles. Among the benefits will be a reduction in fatalities for pedestrians, for other road users, and for passengers in cars. Another benefit: self-driving cars will extend mobility to those who can’t drive because of their age, lack of a license, physical condition, or income. But there is a dark side to the promise I see coming.

As an investor I try to anticipate how markets are changing, to find new opportunities at the intersection of two or more industries, and understand the impact and trajectories of technology over time. Self-driving cars could have many second-order effects.

One possible consequence is an acceleration of urban sprawl, especially where you have land-constrained limits to physical growth and a housing market with more demand than supply. Self-driving vehicles may allow distant commuters, who would otherwise have to tolerate gridlocked commutes, to do other things like read, browse, attend to their personal hygiene, exercise, and even sleep. While there might not be time savings, appealing benefits would include greater productivity and lower home prices.

Innovation is far more than the mere application of technology in an enterprise or in products. It should be about strengthening and improving the very fabric of society. Cars and trucks were an important innovation in part because they led to the creation of solid middle class jobs.

But there is a growing fear across the world that jobs may be eliminated by automation. And in many jobs the main task is driving. In 2014, the US Department of Labor reported that there were almost 1.8 million people employed as heavy and tractor-trailer truck drivers. If self-driving technology applied to trucks, those jobs could be at risk of elimination. There may be plenty of benefits: lowered shipping and insurance costs, increased vehicle safety, and the possibility of round-the-clock operation.

The problem is that truck driving is a solid middle class job. In 2012 the U.S. Census Bureau calculated that truck driving was the second or third most common job for people from the 20th to 70th percentile of income. The middle class in America is already suffering a decline and we are seeing considerable reaction to that in the 2016 presidential campaign.

One can argue about exactly when self-driving cars will come to market. Is it 5 years? 7 years? 11 years? Considering that self-driving cars and trucks are largely enabled by general purpose technologies like deep-learning computing systems and 3D cameras, radar, and lidar, viable self-driving vehicles may be closer than they appear.

So while in previous industrial revolutions there might have been time for society to adjust, I worry that time is not on humanity’s side when it comes to helping those displaced from jobs by self-driving technologies. What kinds of jobs will we retrain truck drivers for? We should make sure they aren’t jobs could also be eliminated by automation. It won’t be easy.

The automation challenge extends beyond truck driving to other industries and types of jobs, such as production jobs like plant operators, welders, operators of machines that make metal and plastic parts, and painters, whose wages range from $13 to $32 per hour, acccording to McKinsey. Then there are 1.6 million bookkeeping accounting and auditing clerks whose pay averages $17.60 an hour. McKinsey calculates that the percentage of the current work of such people that could be automated by demonstrated existing technology ranges from 86% upward. This is an even higher percentage than for heavy truck drivers, 69% of whose work could potentially be automated.

There’s likely no way to avoid gut-wrenching changes. It is easy to look back upon the times before the first and second industrial revolution with nostalgia. But in those times people and cultures were uprooted. The great sculptor Auguste Rodin created a work called the Three Shades around 1880, in the midst of the second industrial revolution. A version of it is at the Legion of Honor in San Francisco. A plaque accompanying the work reads “In their undulating forms and downcast gaze, they embody the pessimistic tensions and frustrations of life at the end of the 19th century, the result of rapid industrialization.” Put the sculptors on alert. This time it could be worse.

At the Techonomy 2011 conference in Tucson, Tyler Cowen of George Mason University and Erik Brynjolfsson of MIT had a fascinating debate about technology’ impact on growth. The U.S. was then recovering from the Great Recession which ended in June 2009 and so there was a real eagerness that technology should lead to recovery and prosperity. But Cowen argued that technology was not living up to its hype as an enabler of economic growth. Brynjolfsson, however, said digital technology was still early in its transformation of the economy and that we would yet see the benefits of this new, third industrial revolution. Prior to the session, I firmly believed that technology can be a great contributor to economic growth and jobs. But Cowen got me worried. The seeds of this article were planted at that conference nearly 5 years ago. As an automotive expert I’m excited. But as a citizen, I’m worried.

John Suh is Executive Director of Hyundai Ventures, which makes strategic investments and partnerships in the United States for the Hyundai Motor Group.

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  • Lukas Leander Rosenstock

    It’s a huge question whether there are new jobs not prone to automation for those who lose their jobs due to automation such as the truck drivers you mentioned. I assume that society needs to restructure itself to accomodate for a large portion of it not having jobs and paying them an unconditional basic income instead.

  • disqus_QZX8ENhLyb

    I look at things from an individual-freedom, private-property, and systems engineering aspect. I haven’t thought through all the legal aspects, but somehow I sense that SOMEONE, not a computer with its software (and software developers) must be financially and legally responsible for the different phases of INEVITABLE accidents and tragedies. I don’t know of any ABSOLUTELY PERFECT fail-safe systems. Perhaps insurance companies could work out the best environment for allowing the operation of “self-driving” vehicles.

    I suspect that carried to its ultimate conclusion, nothing but automated mass-transit vehicles will be allowed on main thoroughfares. Human-operated vehicles will be restricted to low-density traffic areas and act as shuttles to and from major terminals, with more and more government control of the sheeple.