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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 modehttp://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 [email protected]