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14.10.2016

Trend Analysis: Self-Driving Cars - The End of Trains, Trams, and Taxis?

Selbstfahrende Autos

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Self-driving cars are underestimated by most in the debate: the automotive industry for one, but above all public transport and the taxi businesses. This trend analysis describes which companies are under extreme threat and what industries will find new opportunities to reinvent themselves.

 

You may have read the news: self-driving UBER taxis have been driving the streets of Pittsburgh since late August. While human drivers are, in fact, sitting behind the wheel of these converted Volvo XC90s, their sole task is intervening in case of emergency. In a single summer, taxi drivers have been demoted to full-time vehicle chaperones. It now seems only a matter of months until taxi drivers disappear from the picture entirely. UBER has officially stated that it plans to replace one million UBER drivers – and that "as quickly as possible."

 

UBER's biggest competitor is Lyft. Lyft offers more or less the same service as UBER, minus a few billion in venture capital but with more emotional appeal. Lyft uses symbols and rituals to push the community concept: driver and pas-senger should feel that they are on the same wavelength. And better still: the business model behind this community concept is ride sharing. Lyft CEO John Zimmer landed in Germany's WirtschaftsWoche with the company's roadmap: He plans to have self-driving cars in use by 2017: by 2021 the majority of all rides will be sans human drivers. Zimmer predicts the end of private car ownership by 2025.

 

This is no sensationalism. We futurists have been forecasting the same for years. In our own work, for example, I describe production-ready autopilots for private vehicles in 2020 in my book "2020 – How We'll Live in the Future," which appeared in 2009. In the companion volume "2025 – How We'll Work in the Future," readers find a description of 100% driverless vehicles five years later.

 

Concerning specific business models, the 2b AHEAD ThinkTank's Managing Director for Research & Analysis, Michael Carl, predicted precisely today's situation in his analysis of the topic from last year.

 

Read more here: Why Self-Driving Cars Won't Have Steering Wheels

 

 

And yet there is still need to cover the topic, because obviously many of the corporations affected aren't thinking far enough. On the one hand, this is certainly true for (German) automobile companies, who by now all have in-house Chief Digital Officers to drive innovation forward. All too often, however, their prognoses also stop far short. On the other hand we have public transportation and rail companies like Deutsche Bahn, where most strategists are still intentionally ignoring the existential danger.

 

This is why I would like to use today's trend analysis to familiarize readers with the most important emerging developments in self-driving cars. You will see why self-driving cars promise us customers a wonderful era: because with them, mobility will not only become highly personalized and comfortable, but also virtually free.

 

At the same time, I would like us to consider what industries are extremely threatened by self-driving cars and how the companies can reinvent themselves. I also have something to say about what this will mean for the evolution of our ci-ties, streets, and houses.

 

Driverless cars - The four phases

 

Let's not begin by arguing about whether self-driving cars will arrive in three years or in five. This is pointless. But come they will. All of the experts are unanimous here. And, not surprisingly, the technology will emerge in a series of consecutive stages.

 

Four phases can be predicted from to-day's perspective. What is interesting for us futurists and innovation consultants is that the automobile industry has already incorporated the first two phases in its roadmaps while continuing to ignore Phases 3 and 4. Other players in mobility, including railway companies, public transport, and the taxi sector, but also city planners and transportation departments, have largely failed to incorporate even the probable consequences of Phases 1 and 2 in their planning.

 

Let's start by taking a detailed look at the four phases:

 

PHASE 1: THE STEERING WHEEL DISAPPEARS

 

Like many, you might have wondered why there has been such a fuss about these self-driving cars. "If everyone really agrees that this is the future, then why not just go on and build the things?" The question is tempting.

 

In reality, however, car manufacturers are far from agreement here. They all speak of self-driving cars while meaning entirely different things. Thus the Chief Development Officer of one of Ger-many's largest auto corporations was cited in a major headline with the words: "There will always be a steering wheel in our automobiles..." while the company Chairman and Chief Digital Officer were heard the next day claiming that driverless cars (sans steering wheel, to boot) would shape the mobility landscape within three to five years!! How does it come to this?

 

The reason is practically mundane. In summary: There is the typical German view of self-driving cars, and there is the typical American view. And these two predominant perspectives part at one precise point: the steering wheel.

 

The typical German view follows the ground rule that there is a driver and that it is the auto maker's job to create a vehicle around this driver – a vehicle as fast, safe, and comfortable as possible. Those who put their faith in the person of the driver will invent the best driver's seat, the best pedals, the best steering wheel, the best seat belt, rear-view mirror, windshield, driver assistance systems, etc., etc. We Germans are the world champions here. Unfortunately for us, our title rests on a single, fragile assumption: the driver seated at the wheel.

 

Those who do not believe in cars built for active drivers as the ideal solution, but rather in spaces that move autonomously from Point A to Point B will come to an entirely different outlook. They will never invent a steering wheel, because that would be pointless. And the vehicle they build will have no center console, no drivers' seat, no seat belt as we know them today (but other safety nets instead), no parking break, no windshield … This is the American perspective.

 

The American approach turns existing concepts of the automobile upside down. In this concept, it's not important how the car drives from Point A to B. What matters is what the passenger is doing during this time. Will they have dinner? Play with their kids? Will they sleep? Work? Exercise? Or get a haircut?

 

For experts in future studies and innovation consulting, arguing the question of whether the American or the German view will prevail is a waste of breath. Available resources will be the deciding factor. The market capitalization of UBER amounts to $11 billion at microscopic operating costs (the company hardly has any ballast beyond an app). Ask about the investment budget at App-le Car and you'll get the answer: "Unlimited!" Not hard to believe with cash reserves of $230 billion.

 

The obvious forecast for Phase 1 in the development of self-driving cars is self-rolling spaces with adaptive interiors. "Adaptive" here means: The interior adapts itself automatically to each user individually AND to changing usage situations while moving from Point A to Point B.

 

In all probability, when we speak of self-driving cars we do not mean existing sports-car conversions à la Tesla or Audi R8s or A7s. Instead, the likely form will be van-sized vehicles whose larger interior space would allow the possibility of adapting to varying usage requirements.

 

Obviously there will be some sort of shield offering protection from the wind. But it will not be transparent. Inside, it will serve as a display. Maybe (and just maybe) there will be the optional feature: "Make the display transparent! I want to look outside!"

 

PHASE 2: THE BUSINESS MODEL EVOLVES

 

In Phase 2 of self-driving technology, the focus is no longer the vehicle itself, but the business model behind it. Ask Volkswagen's new Chief Digital Officer, Johann "JJ" Jungwirth, about the consequence for VW's business model, and you'll get the answer: "We'll be selling fewer cars than today but making more money!"

 

How can that work? The reason why VW (and everyone else) will be selling fewer cars in the future is obvious: It will make no sense for the average customer to own a self-driving car of their own that spends 96% of its time parked like we know from today. Self-driving cars will do exactly what they do best when their owners aren't using them: drive themselves! In other words, they will put themselves to work.

 

The result will be that many car owners will make their vehicles available to others as self-driving taxis. The vast majority, however, will come to another conclusion. Their thinking will be: If I can make a couple clicks on my smartphone at any time to order a car pick me up and affordably take me to my destination, then why bother to buy one in the first place?

 

This is why JJ predicts fewer car sales. The strategy for auto makers will thus be placing their own self-driving fleets in cities and high-density areas. These customers will not pay per vehicle, but rather per ride.

 

The car companies, however, are not the only ones who want to sell their fleets to the cities. The airlines, the rail companies, the rental agencies, the taxi firms, the major commercial chains, and not least of all tech giants from Google and Apple to AirBnB, UBER and Lyft all have the same future concept. They will all become mobility providers, with services based off of intelligent software systems on their customers' smartphones. The more the app knows about its user's mobility behavior, the greater market power the provider will have. Therefore success will not come down to auto-making prowess, but rather knowledge of customer mobility profiles.

 

This is why market dominance is by no means a given for auto makers. However, those who are already massively present on their customers' dis-plays (and have access to their personal data) will have a much stronger starting position: Lufthansa with its Lufthansa-App, Deustche Bahn with the Bahncard are two examples, but most notable are data giants like Google and AirBnB.

 

Watch Johann "JJ" Jungwirth's full speech from the 15th 2b AHEAD Future Congress in June, 2016

 

AirBnB?

 

In consider the notion that AirBnb means major competition for hotels as a broker of houses and private rooms a misunderstanding of the situation. The fact that this misunderstanding is widespread does nothing to make it true ...

 

The real strength of AirBnB is it's ability to gather masses of data on the mobility behavior of its customers. Fully automated! Without the need for human staff to press a single button. Where is the customer traveling to? From where? When? What modes of transportation do they use? What is their budget? Are they the impulsive type who always co-mes 2 minutes before departure, or a safe player with an hour's buffer time? What music do they listen to? What restaurants do they visit on location? What do they do on the way? How long do they sleep? … With all of this data, AirBnB will also become the ideal intelligent mobility assistant.

 

What does that mean?

 

Talk to the auto corporations who have mutated into self-proclaimed mobility providers and you will hear that they analyze data in their vehicles and then work on using this data to the customer's advantage.

 

The major challenge for them will be grasping the fact that this data on oil pres-sure and average speed may be import-ant in the aging German perspective, but not in its predominant US counterpart.

 

This data is important when it comes to creating the best possible driving experi-ence for an active driver. But it becomes unimportant (or even a commodity item) if you operate on the assumption that the car will be driving itself. And this is the operating assumption today.

 

In this phase, it will be difficult for auto-makers to understand that they need an entirely different kind of data ... and that AirBnB therefore is in a much better po-sition to win this race than they are.

 

PHASE 3: MOBILITY BECOMES A FREE SERVICE

 

As we've covered: Phases 1 and 2 are already happening in the strategy papers of the automobile corporations. It is highly unlikely, however, that the development will stop there.

 

Because what will actually happen when so many self-styled mobility providers (airlines, railways, auto rental companies, taxi firms, major commercial chains, Google, Apple, AirBnB, UBER, Lyft, etc.) all want to land their self-driving fleets in our cities and charge their customers for the ride from Point A to Point B?

 

It doesn't take a psychic to answer this question. You can see it everywhere where UBER and Lyft are already working well today: the simple dynamics of a market economy. Low supply and higher demand means rising prices. High supply, low demand, and price sink. We will soon flooded with supply here. At all times! So what happens then?

 

The answer is simple: The more providers there are, the lower the prices will go. Finally, they will tend towards zero. Mobility in self-driving cars will become virtually free!

 

By the way, this is not surprising. We are seeing a similar phenomenon where, thanks to strong liberalization of the markets and massive competition, every-thing in our world is headed toward be-coming a commodity: Starting with things ranging from electricity to telephone minutes. Mobility will seamlessly merge in line here.

 

In times where huge numbers of self-driving cars fill the streets, the prices for a ride from A to B will fall. The marginal costs will approach zero. Mobility in self-driving cars will become free.

 

So who can hope to earn money here?

 

A look to neighboring industries can help here as well. If no one pays for transportation anymore, then they will pay for additional services. The future of mobility will look just like the information and telecommunication markets do today.

 

The best example of this is Google. Everyone is familiar with the principle: The core service (for Google, web searches) will be offered free of charge. In the time when Google occupies the customer's attention, however, it can sell that person other things. With Google this means ads and commissions from the sales of the products, flights, etc., that come up in its searches.

 

Transfer the Google principle to mobility and you will come to a simple revelation: The cost-free mobility of the future will revolve around the question of what additional services I can sell the customer sitting in my self-driving car as I take them across town?

 

So the concrete answer is: Someone sit-ting in a car for longer periods of time will pay to watch films or play games. Those going for shorter rides will do their weekly shopping as the side-window displays fill with supermarket shelves where the passenger chooses the items they want and has them delivered to their homes. The same will go for travel bookings an all sorts of commerce.

 

A passenger on a very short ride will finance the trip by passively accepting advertising. Correspondingly, these cars will not take the direct route from A to B, but will take an acceptable detour. The detour will not be significant enough to be painful to the customer, but by chance (of course), the car will take them past the Apple store where that screen has just displayed 10% off every-thing in the shop ...

 

Visitors to the city will simply tell the cars: "restaurant" and be taken to a restaurant that suits their tastes. Who pays for this ride, of course? The restaurant.

 

Those who know the town will not be taken immediately to their favorite Italian place this time, perhaps, but first past another Italian restaurant that will register special offers as the car approaches.

 

The reconquest of the moving automobile for Google's marketing logic – so far only prevalent in PCs and smartphones – will likely be one of the greatest market conquests in the history of marketing, right up there next to the appearance of Google itself.

 

I'm sure that every cent invested by my Mountain View colleagues in their "bubbly little" Google Car will pay dividends.

 

Of course, there will also be a small tar-get group of individuals who just want to be left alone during the ride ... who want to sleep or maybe look out the window. No problem! The self-driving car offers this kind of ride, too – at the low price of €15,20 for that short trip...

 

PHASE 4: BLOCKCHAIN MOBILITY

 

As challenging as the ideas of business models based on free mobility may be for traditional car companies, things only get better ...

 

We've all read about the blockchain. Only a few, however, will really grasp the difference between the functionality of operating systems for decentralized peer-to-peer computer networks versus centralized, server-based computer networks.

 

Talk to the people who have not only understood the development, but who are actively shaping it, and you will get a radically expanded view of the mobility of the future.

 

One of these people is Christoph Jentzsch. Last spring, the German programmer set up the first company in the world that operates without a single employee.

 

All of the company's processes are predefined in so-called "smart contracts" on the basis of the Etherium blockchain. And it works. Within three weeks' time, the company took in $160 million in investor capital. The comparison has its limits, but all the same: The same sum took Facebook four years.

 

And the most shocking about his company without staff: It doesn't have an ow-ner, either. Once Jentzsch uploaded his software to the internet, he gave up all control over it. It has been copied mil-lions of times and would automatically recognize any change to any single copy and instantly destroy it. No one has control over it.

 

Talk to people like Christoph Jentzsch and other blockchain experts about to-morrow's self-driving cars, in fact, and you will soon come to an astounding prediction: It seems not only possible, but practically obvious, that blockchain cars will not only drive themselves, but will also collect customer payments themselves, recognize wear and tear on their own and drive themselves to the shop for repairs, fill up on gas them-selves, and so on. This kind of blockchain car has no need of an owner: neither an individual nor a company.

 

The car owns itself!

 

A car that owns itself will naturally find passengers on its own as well. When a major trade fair takes place in Paris tomorrow, then in all likelihood self-driving cars will stream in from Nantes, Le Havre, Lyon, Orléans, and Marseille on their own initiative.

 

A car that owns itself and does business on its own will also likely need an ac-count ... at the very least a PayPal account. And once it has one, then it can begin to barter with other cars. About what? About speed! Take a moment to really imagine a world full of self-driving cars that communicate with one another: All coordinate to drive at the same speed with the same distance between cars, so that there are no accidents or traffic jams. While top speeds will thereby drop, average speeds will actually rise.

 

What's more: Your car will be able to predict the exact time of arrival. Reliably! Without unpredictable traffic problems: You will arrive at that meeting with your customer at exactly 10:13. Not bad, don't you think?

 

But the problem appears when you need to be there at 10:00. In today's traffic conditions, you might be able to manage that: fast lane, 140 mph, constantly flashing headlights. It's not pretty, but it could work. But how does that work in a world of self-driving cars without pedals or steering wheels?

 

Work it will! But in a different way. Just ask your car what it needs to arrive punctually at 10:00: 45 euros. If punctuality is worth 45 euros this time, then your car will begin to barter with other fast movers in front of it: "How many cents will it cost to have you quickly change lanes and let me pass?" The exchange – including transaction – will of course take only milliseconds. The bill to your Paypal Account, too. You won't register anything beyond the initial inquiry about those 45 euros ...

 

Those who think this scenario through a bit will soon see some funny business models in their mind's eye, full of autonomous cars whose sole business is blocking the left lane and charging a premium to let interested customers pass. So obviously we will need new traffic regulations. Not so surprising is that we will not need a lot of the old ones anymore, including traffic lights and street si-gns.

 

Welcome to the blockchain!

 

THE FORENSIC CONCEPT OF THE LEGAL PERSON

 

The greatest obstacle lying in the path of these four phases of the self-driving development is known not to be the technology but the regulations.

 

But as long as we continue to discuss the question of whether a car in a crisis situation should either turn left and hit the old lady or right and hit the child, we have failed to gain a deep understanding of the two most important points of the topic.

 

First: A self-driving car will never have to make the tortured choice between hit-ting the child or the elderly woman. Just as little as we people do, by the way. Let's not pretend that humans are capable of making a conscious ethical choice between the kid or the grandma in the milliseconds before the accident hap-pens.

 

Fortunately only human beings face this ethical problem! Machines know no belated reactions As soon as it is capable of recognizing the child and the elderly woman, it will not hit either of them. It won't hit anyone! Ever! 

 

This doesn't mean that machines are in-fallible. But they do not make human errors. They make machine errors. Their error would lie in their sensors not recognizing an object or doing so too late. At that point, it is irrelevant to ethical debate whether this object is a child or an elderly person. Machine problems are technological problems, not ethical ones.

 

There will be these technological problems – at the beginning there will be many. There will also be accidents, and probably fatal ones! There will be far fewer than with human drivers, but they will happen nonetheless. Thus the question: Who is liable?

 

Second: The question of liability in case of accidents is not an ethical one, either. It is a legal question. Is the manufacturer of the self-driving car guilty, or the passenger inside? Automakers today at-tempt to strategically solve this problem through insurance. They declare that they will take on liability for all damages.

 

Forensically, however, this is only half the answer. It only works in the civil-law context of compensation for damages. It can offer no answer to questions of criminal law. When it comes to criminal accidents, who is the guilty party? Who must be punished?

 

It obviously can't be the passenger, who can do nothing to influence events. How could they then be found guilty?

 

But the automaker won't be the liable party, either. Because here we are talking about the age of "deep learning" or "machine learning." Self-driving cars won't only be self-driving, but also self-learning.

 

The car company produces a basic model and releases it into the world. To make a comparison from human life, this basis model is like an 18-year-old whose just become an adult. This computer on wheels constantly gathers experience, learns from it, and increases its intelligence. When this self-owning car causes an accident five years later, then it has basically nothing left in common with the basis model that the manufacturer produced long ago. Impossible, then, to hold the automaker liable!

 

Watch Prof. Thomas Klindt's full speech from the 15th 2b AHEAD Future Congress in June, 2016

 

 

The answer is very simple: The car itself is guilty!

 

Obviously this sounds absurd. Cars are not capable of legal liability in today's justice system. Only two types of persons are subject to criminal liability: The first type are natural persons – in other words, human beings. The second are legal persons, such as organizations or companies. And this is precisely the problem!

 

The solution lies neither with the car company nor the passenger. It lies with the legal system. Those in contact with leading experts in law will invariably run across Prof. Thomas Klindt. And those who ask him about the imaginary tipping point at which the German legal system moves from merely reacting to technological progress to actually shaping it will hear the following sentence:

 

"Our legal system needs a third type of criminally liable person: the electronic person." Electronic persons are autonomously deciding, self-learning electronic systems.

 

Here we need to remain aware that the call for a third type of liable person in our legal systems seems fanciful. That is, unless we recall that "legal persons" are also a late entry in our judicial system. A bitter debate raged between legal experts here for decades until the concept was finally admitted in 1900.

 

A look at the history of the "legal person" gives the impression that a few decades of debate could feasibly lead to the introduction of the electronic person as well.

 

 

The end of taxis ... and public transport!

 

The developmental phases of self-driving cars discussed so far, from self-driving vehicles to adaptive mobile usage spaces to mobility as a free service to autonomous electronic persons may seem threatening to auto companies, perhaps particularly among Germany's traditional giants. For other players in the mobility market, however, they will likely signal the end.

 

Especially for taxis and public transportation.

 

Not much needs likely to be said about today's business model for taxis. Not be-cause the concept of the taxi will disappear, but because the other players in mobility will also become taxis. This is why today's business model for taxis is obsolete. In all likelihood, taxi firms can do nothing to stop the momentum.

 

Few of today's drivers will be able to find refuge in the minuscule premium sector for chauffeur's services. Everyone else will be swept away by the masses of free self-driving cars soon to hit the streets.

 

Our forecasts see the looming end of buses and trains as well. An objective look at the business model behind public transport in our cities today quickly shows a system resting on two obvious pillars: First comes the fixed price for the ride from A to B. And second, a mode of mass transport that drives fixed routes at fixed times. Both of these pillars will be utterly swept away by the advent of self-driving transportation.

 

Germany's Wirtschaftswoche recently cited (Issue 42/July 7, 2017) a position paper by the Association of German Transport Companies. The paper sees "the existence of today's local and long-distance transit threatened by self-driving cars." A correct conclusion!

 

What sounds ominous from the perspective of the companies affected, however, happens to look practically peachy for the customer. Free mobility – individualized and adaptive enough for everyone's needs. What more could you want?

 

 

Are cities aware of the key questions about the future of their mobility?

 

A host of calculations can be found for the probable mobility scenario in the cities of the year 2025. The International Traffic Forum calculates a 37% reduction in urban traffic. My colleagues at BCG predict 57% fewer private vehicles on the streets and the complete disappearance of intercity buses. Local bus lines will also become irrelevant, and even "trams will be ready for the scrap heap" … and in these scenarios, our fellow futurists do not even factor in the probable availability of free mobility.

 

These calculations need not be the object of uncritical acceptance – the future remains impossible to calculate. It can neither be counted nor measured.

 

A few things, however, can safely be accepted as highly probable: Conventional modes of mass transportation operating fixed routes (buses and trams) have zero chance of survival in competition with the advantages offered by self-driving cars.

 

The mass-scale conveyance of people in cities in the future will likely function via UBER-type pools much as today. Large self-driving vehicles will take on 2-12 passengers, basically what we have called "taxi vans" so far. They are ordered by the passenger via smartphone to the pick-up location and take each passenger to their individual destination. Travel routes will be calculated and constantly updated in real time on the basis of an intelligent predictive operating system.

 

On the other hand, skepticism is justified in terms of the predicted decline in numbers of vehicles on the streets. While only half as many cars will, in fact, be sold, this far from means that the number of cars on the streets will sink as well.

 

Much more probable is a decline in the number of cars filling our parking spaces. Yes, there will be fewer cars in the future: But when these are not parked, but sent to work autonomously in our cities 24/7, then the streets will hardly become empty even in if the parking lots do.

 

And even if some of these self-driving cars don't operate as taxis in their "down time," it may still be cheaper to have them drive around in circles rather than paying horrendous parking fees or risking painful parking tickets.

 

Do our city planners actually have a plan for dealing with the hordes of empty self-driving cars prowling for free parking?

 

Or for what to do with the free space, when when 95% of the expensive parking spaces remain unused (see the study by the International Traffic Forum)?

 

THE REINVENTION OF RAIL TRANSPORT?

 

Just as existential a threat as that faced by trams and taxis also looms for the future of rail-transport companies like Germany's Deutsche Bahn. In their current study, consultants at BCG predict that the rail giant will lose 40% of its passengers to self-driving cars.

 

A prediction very friendly to the Bahn! More probable are considerably higher losses. The numbers game here fails to factor in the two most important qualitative risk factors:

 

First: the attack on Deutsche Bahn's pricing model through the free mobility brought by self-driving cars. And second, the attack on the company's USP through adaptive vehicles.

 

Both factors touch on the foundations of Deusche Bahn's business model. It knows no other pricing model than the calculation of the route from A to B. When precisely this basic principle, however, is no longer merely under pressure (as is already the case today thanks to long-distance bus services), but in fact practically pulverized by a cost-free alternative, what can rail operators like Deutsche Bahn do?

 

And when this is compounded by the promise of self-driving cars that their passengers will be able to dine, sleep, work, read, and play en route, then rail operators will utterly lose their most important USPs versus conventional car trips. And even worse: Self-driving cars promise preciely these USPs plus a degree of privacy and comfort companies like Deutsche Bahn could never achieve.

 

And now?

 

Obviously it isn't the case that the effects of self-driving cars are not being discussed in railway boardrooms as well. And how could things be different here: As with the automobile corporations, Deutsche Bahn et al also have some top managers with the typically German perspective, some with the typically American one: sometimes even on the same floor ...

 

Some answer the question of how, say, Deutsche Bahn will react to self-driving cars by claiming to have already calculated the future. The result? The complete digitalization of the rail network for potentially self-driving trains will certainly take until 2035. In other words, there's still time.

 

Obviously at this point the false assumption has come into play that self-driving trains would require the digitalization of the entire rail network. This is clearly absurd, because full digitalization of the rail network -including switches, signals, etc. - is unnecessary ...

 

... just as a complete digitalization of road networks with their traffic lights, street signs, sidewalks, and guard rails is not needed by tomorrow's self-driving cars. The digitalization of the individual vehicles is enough. It's the same situation on the tracks. Here it would work even faster, however, because the rail system is less complex and thus safer than the road network.

 

This is why, as the story goes, the "American minded" managers in the discussion answered with the recommendation: Just pour concrete over the rail network and we'll definitely arrive at our goal well before 2035 ...

  

Will rail transport also become free? 

 

These polemics aside, there remains the question of how companies like Deutsche Bahn can defend themselves in these risk areas? If long-distance travel in self-driving cars becomes free, will rail transport also have to if it hopes to survive?

 

The question justifies a simple thought experiment: Look at last year's passenger count at Deutsche Bahn and you will see that its rail transport could become entirely free if the company could manage to sell an average of €5.70 worth of additional services per passenger: advertising, films, video games, grocery shopping, all sorts of retail products ...

 

Obviously things are not quite so simple, because the numbers also include the masses of local commuters who would never pay €5.70 worth of additional services for a ten-minute ride. The calculation does, however, show the mindset of the new attackers in mobility.

 

A mindset that Deutsche Bahn may be forced to adopt very soon.

 

Aside from the question of price, rail operators have three possible unique selling points in competition with self-driving cars:

 

1. High speed

2. Travelers in need of large rooms / more space

3. Self-driving cars on tracks

 

 

High speed?

 

One problem with self-driving cars will always be their speed. In a digitally optimized road network, average speed may rise, but top speed will also decline. Hardly anyone will really be able to move faster than the other drivers.

 

This means an opportunity for high-speed providers. New players in the industry like HYPERLOOP founder Dirk Ahlborn have understood this. They are currently working on projects in Europe based on this USP. And here lies a huge opportunity for Deutsche Bahn and companies like it as well.

 

Watch Dirk Ahlborn's full speech from the 15th 2b AHEAD Future Congress in June, 2016

 

 

Travelers in need of large rooms / More space?

 

What will happen when passengers no longer view trains as the best solution for their need to eat, sleep, work, read, and play while traveling, but rather self-driving cars?

 

Will Deutsche Bahn have to go searching for new customer needs that self-driving cars cannot fulfill? What are these needs?

 

Could they have something to do with the greater amount of available space than cars can offer? What about train trips as visits to the fitness club, to the stylist? The doctor?

 

Or would they rather be tied to the higher numbers of people seated in train cars?

 

 

Sefl-Driving cars on rails?

 

These suggested USPs might be too weak to address Deutsche Bahn's situation. Maybe too few customers need high speeds or lots of room while traveling.

 

A potential solution lies even closer to home: Why should self-driving cars only drive on the street? Why not on tracks? Especially when you consider that highways are notoriously congested while the rail network remains largely unused?

 

Does putting cars on the rails seem a crazy idea to you? Understandably! This is because our existing concept of trains traveling along tracks comes from an older age.

 

That trains consist of several rail cars and that safety is guaranteed by virtue of track sections where a train can only enter when the one before it has exited all dates back to the time when signalmen stationed every few kilometers looked out their windows to check and signal for a clear track.

 

This time is long gone. Comically, however, modern rail systems still work on this basic principle. Cars on the autobahn traveling at 200 kmh whip by every few seconds, mere meters apart, while the intervals between trains are measured in minutes and kilometers. Why is that?

 

Because there is an "American perspective" and a "German perspective" here, too. Proponents of the German view feel the need to hold fast to an outdated credo from bygone times. Just as traditional auto top-managers hold on to their concept of the active driver, it seems that the rail bosses are unable to break with two ground rules:

 

1. The creation of safety by signaling clear track segments

2. The ideal of trains as elongated series of coupled rail cars – the longer the better.

 

Perhaps the greatest achievement of self-driving cars will be that they succeed in getting these rules out of our heads.

 

What about a modern vision for the future where thousands of individual self-driving cars autonomously move on our rail networks? They keep a safe distance of a few seconds between each other, much like on highways today. They have no need of central signal towers for switches, because they turn independently without needing a switch of the track. And once they get to the station? They drive off the tracks and keep going on the streets.

 

Sounds preposterous? Then just wait wait until things really start to hurt.

 

Read more here: A few patent registrations have already been filed for this scenario.

 

 

 

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