Driverless cars can rev up Singapore economy

Country has what it takes to lead transformation worldwide

By Daniel James Morton, Published The Straits Times, 2 Mar 2013

AS A long-time admirer of Singapore, my bold yet feasible proposal is that Singapore deploy the first city-wide driverless car network. This will spawn a trillion-dollar Self-Driving Economy that dwarfs the current $2 billion vehicle tax revenue.

Further benefits include improved mobility, greater safety, more energy independence, international prestige, new services and enhanced social unity.

The country's strong government institutions and advanced economic development provide the competitive advantage to initiate this transformation. Singapore can lead this change worldwide at no cost and derive a financial windfall larger than any existing industry in the country.

The rate at which the transformation towards the driverless economy occurs is a decision - a business decision. The transformation is no longer an engineering challenge but a financial equation. The personal lives of drivers and non-drivers will be improved. The Singapore Government need only enact legislation to give birth to the Self-Driving Economy (Car 2.0).

Driverless cars receive little media attention and are portrayed as futuristic gadgets. After decades of research, the engineering target has been reached: The driverless car is safe and affordable. It may not be perfect, but it is better than the human alternative with drivers who text, call, sleep, drink, get distracted, get lost, lose their eyesight and hearing.

Just as motor vehicles proved their superior safety over the horse, and airplanes went from apocalyptic to nearly flawless, driverless cars will be commonplace. In time, error-prone and slow responsive human driving will become uninsurable.

A handful of initiatives globally are testing driverless cars, yet they lack support from all the actors in the ecosystem required for disruptive transformation.

Singapore can lead the way towards the adoption of ubiquitous driverless mobility.

What are the main benefits to Singapore?

For the country, it improves the lives of its citizens. Life-changing transportation options will be available to everyone. It facilitates family life and eases childcare. It reclaims roads and parking lots and helps alleviate housing problems.

Engineers and jobs at professionals, managers, executives and technicians (PMET) level can be nurtured with Carpolis (similar to Biopolis). There will be significant productivity and financial gains and improved energy security and independence. And there will be national pride through global recognition.

For the individual, there is greater safety - no more high-speed Ferraris colliding with taxis, or lorries killing cyclists and pedestrians. There is a proliferation of faster, affordable on-demand transportation summoned to pick you up. Personal modes of transport - cycling, jogging and walking - become more enjoyable, safer and healthier.

There will be an increase in personal productivity and leisure time while being chauffeured. There will also be new services such as home or office courier services.

And expect an explosion in new jobs with the birth of the Self-Driving Economy. Lastly, it offers the silver generation a "new" freedom.

Time for what Singapore does best: Incentives

THE Self-Driving Economy is now a financial equation. As with any technological disruption, some players will adapt and benefit, and others will die.

Car 2.0 is so transformative, it may be one of the biggest Blue Ocean opportunities globally. Google's emergence leading the US lobbying efforts is indicative of the coming change. Understanding each agent's motives and incentives in the Self-Driving Economy is complex.

The obvious innovators are the car manufacturers. Car 1.0 is led by mechanical engineers, whose companies' expertise lies in building 2-tonne armoured cars, albeit increasingly computerised. Heavy metal becomes unnecessary and unwanted with Car 2.0 as a result of greater safety.

In contrast, Car 2.0 is led by software programmers and designers iterating continuously. Furthermore, the car companies face the chicken-and-egg problem: They cannot commercialise an optimised Car 2.0 (that is, lightweight) into an armoured transportation eco-system. This co-dependency hampers any individual car company from breaking out.

Car 2.0 also raises the issue of product liability risk. Car companies are adding more driver-assisted functions (self-parking, lane-changing, automatic breaking), yet they fear (and rightly so) that Car 2.0 eliminates any driver responsibility.

So who assumes the risk? Regulators could replicate the US national vaccine law, which provides a compensation fund for victims since the private market price strangled the industry. So far, regulators have not provided guidance.

Insurance companies could also offer a private solution by pricing the risk, providing existing and new entrants the financial basis to make a risk-return calculation. But car insurance companies will suffer as accident rates decrease, and hence so will premiums. During the transitional period, increased uncertainty may allow them to generate large gains. But this opportunity will be arbitraged out as the premiums are reduced to reflect the real reduced risk.

A small, controlled environment, absent of entrenched interest groups, such as Singapore is an ideal place to launch. The car can be re-imagined, forming the Self-Driving Hardware Economy to be later overtaken by the Self-Driving Services Economy.

Recall the IT revolution - hardware was king, and then software and services moved up the value chain. A similar shift will occur in the car industry.

Singapore's edge: Seven advantages to lead innovation

THE country has one single centralised regulatory body, and the ability to create consensus among public and private stakeholders. There is excellent urban planning and engineering expertise.

Significant funds are allocated for public transportation. Singapore has the longest experience globally in congestion charge systems.

It is also a technologically accepting society. And it has the world's most expensive car ownership market.

How Singapore can lead global change

SINGAPORE can be a catalyst for global adoption and dominate the Self-Driving Economy. Singapore does not need to fund Car 2.0, only create the framework so it can thrive.

Deploying Car 2.0 will create a range of intellectual property assets that Singapore and new local businesses can export globally, deriving trillions of dollars in financial benefits.

Why now?

THESE benefits are not far detached from the most controversial topic in Singapore at the moment: the Population White Paper.

Population growth is adding constraints on transport and housing. The Government is investing significantly in the transportation network, but as with all public transport, it is designed for near-peak loads and hence underutilised.

Car 2.0 would exponentially improve the utilisation rate of transport. Everyone would have access on demand to driverless transport on both a private (single-occupant or single-family) vehicle and shared basis (bus) for individualised trips.

Reduced and easier commuting combined with converting excess roads and parking for living areas will improve housing conditions.

The Self-Driving Economy is very much a solution to the demographic and infrastructure nexus as it is to creating a long-term economic boom.

The writer is a technology and finance professional based in Singapore. He has worked with tech companies in the Silicon Valley, Europe and Asia.

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