Smart Driving Cars:The Rudimentary Business Case

What Is In It For Whom?

Alain L. KornhauserProfessor, Operations Research & Financial Engineering

Director, Program in Transportation Faculty Chair, PAVE (Princeton Autonomous Vehicle Engineering

Princeton University

Board Chair, Advanced Transit Association (ATRA)

April 19, 2013

Current State of Driverless Cars• Much of the public interest has

been promoted by the car. http://www.youtube.com/watch?v=cdgQpa1pUUE

– It is not driverless…• Not yet

– But substantial advancements have focused on:• Development of a self-driving vehicle that can operate

in the existing environment.– Motivated by fact: >90% of road traffic accidents involve

human error. So… remove the human from the loop.– Often… People really do not want to drive.

• Driven over 500,000 miles in self-driving mode

http://gawker.com/5825012/how-a-top-google-executive-nearly-killed-a-guy

What is in it for whom?• Players

– Consumers– Automobile Companies– Infrastructure Providers/Managers (DoT, NJTPA, PANYNJ)– Transit Operators – Insurance Companies– Society/The Economy

What is in it for whom?• Consumers

– Main Values: Increased Safety, Comfort and Convenience.– AAA:

What is in it for whom?• Consumers

– Main Values: Increased Safety, Comfort and Convenience.– AAA:

What is in it for whom?• Consumers

– Main Values: Increased Safety, Comfort and Convenience.– AAA:

What is in it for whom?• Consumers

– Main Values: Increased Safety, Comfort and Convenience.

DOT HS 810 767 Pre-Crash Scenario Typology for Crash Avoidance Research

What is in it for whom?• Consumers

– Main Values: Increased Safety, Comfort and Convenience.

DOT HS 810 767 Pre-Crash Scenario Typology for Crash Avoidance Research

What is in it for whom?• Consumer

– Main Values: Increased Safety, Comfort and Convenience.

DOT HS 810 767 Pre-Crash Scenario Typology for Crash Avoidance Research

$475 are Pass-through Dollars

$475 are “Pass-through” Dollars

$450 Discount for You

$25 for Flo or the Gecko

Could Discount Finance?:

Assume: Emergence of “Price Leading” Insurer

What is in it for whom?

Probably only 2/3rds the safety of Google Car

$300/yr to Mercedes

$20/yr for Flo or the Gecko

Could “Pass-through” FinanceMercedes Lane Keeping + Jam Assist

to be Available in 2014 Models

$475 Pass-through becomes: $320

You get (for free): • Prob. of your car killing you reduced factor: 2/3*.81= 0.54 (half)• Prob. of your car injuring you reduced factor: 2/3*.65= 0.44• “Save” expected “deductible self-insurance”: $247/yr• Comfort• Convenience• “Anxiety” relief

What is in it for whom?• New Jersey Consumers

What is in if for whom?• Society

Can’t really place value on the

injuries and lives that will be saved

Priceless!Self-driving Technology has a REAL business model!

Thank YouAlaink@Princeton.edu