We've seen the future, and it's autonomous. Self-driving cars are on the way, with the promise of safer roads, less traffic, and increased mobility.

Companies have already invested more than $80 billion in autonomous vehicle (AV) technology. Morgan Stanley predicts that autonomous vehicles could save us up to $1.3 trillion annually in the U.S. Consumers willing to give up personal car ownership may see the greatest individual savings. Experts predict that far fewer people will actually own cars, cutting the cost of their daily commute in half.

And imagine the time savings: get work done during your commute. Take a nap. Summon your vehicle to pick you up from across town or have it drop your kids at school. If time is money, self-driving cars may be a windfall.

But will self-driving cars live up to their promises? We dug deeper to understand what life might look like with AVs on the road, and what kind of savings typical Americans may really see.

Time Is Money, and We’ll All Be Saving in a Self-Driving World

Today, some cars may be expensive to buy, maintain, and park, and we're barely using them. According to the U.S. Department of Transportation, we're only driving them 5 percent of the day. That means that for 95 percent of their lives, those two-ton paperweights just take up space and cost us money. It almost makes you feel bad for the cars, right?

It often seems like everyone uses their cars the same 5 percent of the time — clogging up the roads in the mornings and evenings as they make their way to and from work. But in a self-driving world, today's commutes could be ancient history:

  • Say goodbye to traffic congestion: A 2017 study by the University of Illinois suggests that a single AV in a group of 20 cars can ease congestion by 50 percent. Because one driver's harsh braking creates a ripple effect in traffic, cars that coordinate with each other through intersections can get us all through traffic jams faster.
  • Fewer accidents to slow us down: Without human error to consider, traffic accidents will plummet, making for fewer slowdowns. After all, self-driving cars don't rubberneck.
  • Skip the parking headache: According to Inrix, we spend 17 hours each year just looking for a place to park. The cars' ability to park themselves in designated spaces, out of the traffic flow, may be the No. 1 benefit for many AV owners.
  • Get more done: Whether you want to be more productive or just binge watch Netflix, the latest concept AVs feature everything from center-facing seating to gear for movies and gaming. You can also crack open your laptop, make video calls, or simply recline your seat and relax.
  • Take a deep breath: When your car can take over the commute, the morning's daily dose of traffic tension may melt away and improve your health.

If the predictions are true, what will you do with the time you save?

We spend nearly 300 hours driving each year. In a self-driving car, you could:

  • Watch every episode of Game of Thrones four times.
  • Read nearly 60 novels (at 240 pages a pop).
  • Play 880 matches of Fortnite, which would get you to level 100 of three seasons (if you're any good).
Time saved with self-driving cars

All About the Benjamins — How Much Money Can You Really Save?

Developing self-driving cars is of course, very expensive. Fully autonomous tech could add at least $100,000 to the price of a vehicle, while even semi-autonomous features like Tesla's Autopilot and Cadillac's Super Cruise already add $5,000 and $10,000, respectively, to the base vehicle cost.

These figures may put the tech out of reach of many Americans today. But the first self-driving cars won't be sold directly to consumers — the early adopters will be private companies and the ultra-wealthy. Once more AVs are on the road, mass adoption will lead to less expensive base models.

Tasha Keeney, a Self-Driving Car Analyst at ARK Invest, estimates that once it's widely available, the cost of fully autonomous technology will stay within $10,000 of the base sticker price. Think of it this way: the first cell phone on the market cost almost $4,000 in 1985, which adjusts to almost $10,000 today. You can buy the nicest iPhone on the market for a fraction of that price in 2018.

With self-driving cars, American culture's entire vehicle ownership model will dramatically shift. Michael Ramsey, the Research Director of Automotive and Smart Mobility at Gartner, says there's a good chance your first time in an AV will be in a ridesharing vehicle — in fact, Google's Waymo plans to roll out a robo-taxi service this year. "By 2025, [self-driving taxis] should be fairly common, though still concentrated in specific areas," says Ramsey. "By 2030, I anticipate the technology will be in regular use."

Once AV ridesharing is everywhere, it's easy to imagine two-car households going to just one car and urban one-car households dropping their cars entirely.

What your family’s transportation may look like in 20 years:

  • You own a self-driving car (and could even rent it out to ridesharers when you're not using it).
  • You don't own a car and rideshare exclusively in AVs.
  • You do a combination of both: Your once two-car family opts to own one self-driving car and supplements with ridesharing.

Depending on where you live and how willing you are to embrace ridesharing, you could end up saving substantial cash.

But not everyone buys into the fast adoption of ridesharing AVs — even in the long run. Craig Van Batenburg, founder of the Automotive Career Development Center, predicts that Europe will adopt the model long before America does, primarily because "there's a certain part of the American DNA that wants to own stuff."

Whether you own or rideshare, here's how the estimated numbers break down, both today and in 2025 and 2030 (excluding inflation):

The cost of getting around in 2018 in US Dollars

Cost of owning a car today Cost of owning a car today Cost of owning a car today

Estimated annual cost (13,000 miles)

The cost of getting around in the autonomous future in US Dollars

Cost of owning a self-driving car Cost of owning a self-driving car Cost of owning a self-driving car

Estimated annual cost (13,000 miles)

Today, the average per mile cost of owning a car in the U.S. is half that of ridesharing in Los Angeles. By 2030, think tank RethinkX says that autonomous taxi rates will be a quarter of today's ridesharing rates (25 cent per mile). More conservative estimates from ARK Invest put that number at 35 cents, which equates to an annual savings of almost $2,800. Similarly, Allstate has predicted a $3,000 savings based on just a 20 percent improvement in the efficiency of personal transportation. According to our analysis, in the best-case scenario, a family that gives up their car in favor of driverless ridesharing could save up to $4,100 in annual transportation costs.

If the predictions are true, what will you do with the money you save?

driverless ridesharing savings graphic

That money back in your wallet each year could get you:

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A daily Starbucks venti for you and four of your closest friends.

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Seven months' worth of groceries for your family.

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Nearly 15 extra student loan payments a year. (You could shave two years off a 10-year loan of $25,000!)

other factors driving self-driving car costs down

Once self-driving cars become commonplace, drivers who want to own their vehicles — especially in big cities — will fork out even more to maintain their status quo. But the price of owning a self-driving vehicle, despite higher upfront costs, may be mitigated by factors like:

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Economies of scale:
Cars with autonomous technology become more affordable as they are produced at higher volumes.

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Lower maintenance costs:
Van Batenburg, who is also an EV technician, predicts that 30 years from now, a driverless car will need 90 percent less work to reach 300,000 miles, thanks to simpler electric motors and lighter auto bodies (plus fewer fender benders). However, repairs to sensors and cameras could be pricey.

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Sharing your car:
Owners can choose to make their autonomous cars available to ridesharing services when they're not using them.

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Data sharing:
Users may choose to share data on their personal riding habits back to manufacturers and advertisers (who can send you a coupon to your local coffee shop as you're driving by).

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Visual real estate:
Advertisers may also purchase space in AVs via placards or TV screens, transferring costs away from the user, like the free model on many apps today.

How self-driving car costs will decline over time

The Savings Are Real, if Self-Driving Cars Can Overcome Consumer Hesitance

Eric Adams, a tech journalist who covers autonomous vehicles for Wired, Popular Science, and The Drive, sees autonomy as a great equalizer, much like how the smartphone has brought access to information to all levels of society. "The technology may start appearing in luxury vehicles first," he explains. "They may have cushier seating — but once it becomes a requirement for urban commuting, all of us will be chauffeured about by the same technology."

But to receive the cost and time savings of a robot chauffer, we may be forced to sacrifice a way of life Americans have come to hold dear — a convenient, gas-powered car that belongs to you. In the next few years, unforeseen variables will likely change the landscape of driving in significant ways. If you're a full-time rideshare company driver, don't quit your job just yet, but you may want to think differently about your 10-year plan. Ridesharing became ubiquitous within five years, and big players are placing their bets that self-driving cars will be next (although business analysts IHS Markit estimate that AVs won't outnumber conventional cars until 2050).

"Having AVs and human drivers on the road at the same time will be an interesting dynamic in the insurance space," says Haden Kirkpatrick, Esurance's Head of Strategy and Innovation. But he emphasizes that the more human error is removed from the equation, the safer our roads and the better for everyone.

It may sound like a futuristic dream come true. The attraction of saving time and money while staying safer and avoiding traffic is an appealing combination. But...how ready are Americans for self-driving cars? Our next article delves into consumer perceptions about the developing technology to try to understand if the modern world is ready for the future world.

Calculation methodology

  • Average annual miles of 13,000
  • Today's insurance based on national average from National Association of Insurance Commissioners; Insurance for electric vehicles is 21% higher than gas vehicles per NerdWallet
  • Today's cost of vehicle amortized over eight years and based on Kelly Blue Book average new car price for gas vehicle
  • Today's maintenance of 6 cents per mile for gas vehicles per PluginCars.com
  • Today's average fuel and charging costs based on University of Michigan's Transportation Research Institute
  • Today's rideshare costs calculated from average Uber rates in LA
  • Future costs do not account for inflation in order to show apples to apples comparison
  • Future rideshare costs based on cost per mile estimates from Johnston & Walker for 2025 and RethinkX for 2030
  • Future cost of AV based on $10k premium in 2025 and $5k more in 2030 per IHS over today's electric vehicles (Chevy Volt MSRP 2018) amortized over eight years, plus insurance paid by automaker and built into sticker price (assumes 33% decrease from today's EV premiums per Deloitte Insuring the future of mobility)
  • Future maintenance savings of 5% by 2025 and 10% by 2030 from today's electric vehicles (at 3 cents per mile per PluginCars.com)
  • Future insurance assumes responsibility on part of automaker, not individual owner (thus $0)
  • Future charging assumes flat to today's estimates per University of Michigan's Transportation Research Institute

Is America’s Fear of Self-Driving Cars Justified?

Given self-driving car crash rates, our hesitance to give up the wheel may be warranted.

Read the article now.

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