Governments around the world are working hard to introduce autonomous vehicles to society. With prospects of improved safety, increased efficiency of public transportation and long term sustainability, it is not difficult to see why many countries are headed towards this direction.
The Autonomous Vehicle Readiness Index that we recently published ranked Singapore as the 2nd readiest country to roll-out autonomous vehicles among the 25 countries that were assessed, trailing only behind Netherlands.
While the Netherlands benefits from European leadership in public transportation, Singapore’s ecosystem benefits from its brilliance in being a forward-thinking small island nation with a thoroughly developed road system.
Just recently, the Ministry of Transport, Sentosa Development Corporation, and ST Engineering began trialing on-demand autonomous shuttle buses in Sentosa.
In this trial, visitors will be able to get around Sentosa for free using any of the four autonomous vehicles deployed, which comprises of two mini-buses and two smaller shuttles.
Which Industries Beyond Transportation Will Likely To Be Disrupted In Singapore
While it is easy to get excited about the idea of autonomous vehicles, the impact of its introduction to other industries is often overlooked. Here are three industries in Singapore that will need adjust in the advent of autonomous vehicles;
1. Traffic Enforcement
Fewer resources will be required for policing since no licensed programmer will program autonomous vehicles to break traffic laws. As the enforcement of speed limits, illegal turns, running stop signs and failing to comply with no parking signs turn obsolete, police officers will need to reskill and learn how to interact with autonomous vehicles, interpret collected data when accidents occur and probably forcibly disable an autonomous vehicle on the road.
2. Ride-Hailing and Deliveries
While these types of companies may no longer require the same driver fleet, they would likely have to own the cars to compete on the best user experience. For ride-hailing services, users could determine the type of the trip in addition to pick up and destination i.e. business, family or holiday trip. The ride-hailing app will then link the user with the vehicle which has the right interior design and features for this journey.
Similarly, the user experience will be key for delivery companies as there will be less need for the traditional method if customers can program their cars to pick up food, groceries, laundry and furniture.
3. Insurance
Perhaps what would be most adversely affected by this new change is the insurance industry, an actuarial analysis that we conducted in recent years suggested that in the US alone, the personal automotive insurance sector could contract by 40%.
This change would force Singapore’s insurers to rethink their business model, with an eventual lower demand for drivers to purchase extensive motor insurance policies, insurers will have to shift their focus towards carmakers and suppliers of communications systems, software, and sensors.
Some companies are already seeing the writing on the wall, automotive firms like Changan in China and Volvo have begun offering a differentiated insurance to their customers, with Volvo going so far as to accept full liability whenever its cars are in autonomous mode.
Insurers need to ask the question “If no one is driving, why do we need to offer a motor insurance? Considering new service offering that embrace the use of autonomous vehicle e.g. through cutting premium to drivers the more they engage autopilot, or through protecting autonomous vehicle manufacturers if users forgot to download the latest firmware or event against a software hacking.
Conclusion
While autonomous vehicles do open up many new doors, defining innovation strategies to adapt to new realities will help businesses benefit from these opportunities.
Featured picture: Autonomous bus Singapore, via MOT
