Twenty-five to thirty years ago, when I was still in high school, compact disks had just started gaining traction in the marketplace. As that was happening we consumers were being told that CDs were so much more expensive than tapes because of industry scale dynamics and the associated production costs. And that once more CDs were being sold, they would actually be cheaper than tapes to make and the prices would fall. In case you didn’t notice CDs are still much more expensive than tapes ever were (though as MP3 players and digital music players have started dominating the market, CDs may finally get less expensive).
Sean Kilcarr has an article up at FleetOwner.com discussing the ROI (return on investment) for autonomous trucks. He writes, “…in the opinion several experts, insurance savings will be the key to making [autonomous vehicles] acceptable in trucking.”
Much like CDs however, I have a hard time believing insurance companies will hand back the profits to the extent that Kilcarr infers. We may see insurance rates fall but I think in context of retail capitalism, people charge whatever the market will bear. If people are willing to spend $100 on a widget, don’t charge $80. You’re just throwing away profits. And even though insurance calculations will predict fewer accidents companies will also recognize that customers are accustomed to paying a certain amount so those same customers will appreciate any reduction even if the autonomous technology allows insurance companies to keep more profits. Insurance companies will be able to increase their profits while simultaneously lowering their rates.
I believe autonomous trucking will be a virtual government requirement and as such rates will rise (because of the acquisition expenses). And, unfortunately, we’ll see the big guys get bigger and smaller companies pushed further out.
How’s that for a return on investment?
Thanks for reading.