Smart Driving Cars: The Rudimentary Business Case What Is In It For Whom? Alain L. Kornhauser Professor, 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. – 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

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 : AAA

What is in it for whom? Consumers – Main Values: Increased Safety, Comfort and Convenience. – AAA : AAA

What is in it for whom? Consumers – Main Values: Increased Safety, Comfort and Convenience. – AAA : AAA

What is in it for whom? Consumers – Main Values: Increased Safety, Comfort and Convenience. DOT HS Pre-Crash Scenario Typology for Crash Avoidance Research

What is in it for whom? Consumers – Main Values: Increased Safety, Comfort and Convenience. DOT HS Pre-Crash Scenario Typology for Crash Avoidance Research

What is in it for whom? Consumer – Main Values: Increased Safety, Comfort and Convenience. DOT HS 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” Finance Mercedes 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 You