Brief description of the opportunity

Bringing driverless cars to market can help to increase the mobility of older people who tend to travel less frequenty. Older people will benefit predominantly from advances in self-driving vehicle technology as it will enhance social inclusion and mobility. It also has various other benefits for road safety (older drivers cause and are injured in a disproportionate number of traffic accidents), emissions and congestion if incorporated appropriately into the legal and regulatory frameworks of society. It is thus essential to design the technology and the European standards in an inclusive fashion to ensure that older people's needs will be considered at the earliest stages. Such standards and design options should also take into account the needs of older adults with early onset of dementia.

Numerous commentators are predicting rapid progress with driverless cars (and intelligent driver systems) over the next 10 years, with several arguing that this cutting edge technology may be the first where older people will be the ‘lifestyle’ leaders: “younger people may have been the first to embrace smart phones, but it's the 50+ consumers who will be first with smart cars.” Research at the Hartford and MIT AgeLab found that more than 70% of over 50s would like to test drive a self-driving car and over 30% said they would buy such a vehicle if the price was similar to that for a regular car. Initial market development exists around the introduction of driverless taxis and driverless public transportation such as buses.

Consumer trust in driverless cars is low at the moment and technical solutions are not mature yet.  The private sector is investing heavily in these technologies (e.g. Ford, Google, Toyota, Uber and many others), with a growing number of large-scale demonstrators, many of which are supported by the public sector through city-wide initiatives.  There is substantial public research too (e.g. Horizon 2020 projects on safe and connected automation in road transport), particularly around the development of individual systems and driving aids.

In order to make driverless care more accessible to older people it will be necessary to work harder at explaining and showcasing the technology to this age group and to look creatively at different financial support models to help with affordability, whether that is the kind of purchase grants or infrastructure support available for all-electric vehicles or needs-based financial mechanisms like the UK motability scheme. As the industrial segment matures, gerontologists as well as older people should be involved in the co-design. Fehr & Peers, a transportation consultancy, predicts that between 2040/2050 half of all traffic in the US will be autonomous.

Driverless public transport would also benefit the older adult. Older people tend to use the public bus system relatively more. There are may be options for specialised driverless busses for the more frail.

Barriers and market failures

There are a number of misconceptions and lack of trust around driverless cars. Potential consumers may not be aware of the rapid developments in the sector and that driverless cars are coming to the market within the next few years. There exists a level of distrust around the technology level and there is some scepticism towards the (improved) safety of driverless technology. There are a number of open questions, just to name a few: how to avoid accidents, who is liable in case of accidents, what is the acceptable level reliability, what training will be provided, what licence 'drivers' will need and public opinion remains sceptical around this issues. Overall, increased public awareness can help overcome these barriers to a greater uptake of driverless cars.

The preferences of the older consumer should also be taken into account in the design of driverless cars as this will be critical in driving the adoption of autonomous vehicles.

There are some technical hurdles that are yet to be overcome before driverless vehicles will be able to operate anytime and anywhere, specifically in relation to (global) maps and weather conditions. In relation to these challenges, (local) taxi services - or fleets of cars - are able to be scaled up at a faster rate. There also are (ethical) questions around safety/accident avoidance standards and cyber security – safety on entertainment systems or GPS navigation systems.

There are some barriers around insurance too. It is generally expected that self-driving cars will be safer and as a result of the improved safety, the insurance premiums could be lower. However, insurance providers first need to calculated the economic risk reduction of driverless transport and fur this reasons there will be a market delay.

Public transportation/bus systems will need to buy into the potential of driverless transport, to the benefit of the community. Law and legislation around autonomous driving is in development under different speeds, allowing certain countries able to seize a bigger piece of this upcoming market, eg the UK government permitted testing autonomous cars on roads since 2013 and Switzerland allowed such testing since 2015.

Across the EU there is fragmentation amongst players, leading to unease about the legislative gridlock on unlocking the potential of driverless vehicles. The United Nations Vienna convention limits the speed of self-driving cars to 10 km per hour (the UK has not signed this convention). The EU has to make new legislation, to be transposed fit for purpose.

Market prospects – size, growth trends and scalability

Driverless cars are a developing market, with many car companies preparing to launch cars in the next few years. Since 2015, the Google Driverless Car Project already operates more than 20 autonomous vehicles. NuTonomy is expected to launch driverless cars in 2018. Delphi and MobilEye and Baidu are expected to launch driverless cars in 2019 (see link). GM, Volkswagen and Toyota are expected to launch driverless cars in 2020 and Ford and BMW in the year thereafter.

It is expected that driverless technology will first be introduced at a larger scale as part of taxi services. The CEO of Uber expects that the Uber taxi fleet will be driverless by 2030 and by that time the taxi service will be inexpensive making car ownership effectively obsolete. The cost for an autonomous taxi is estimated at €0.32 ($0.35) per mile, versus the €2.62 ($2.86) per mile a passenger currently pays in San Francisco. The average taxi in the U.S. costs €3.17 ($3.46) per mile.

The introduction of driverless cars in the automotive and IT industry would profit from sales of such cars. Following one estimate, a driverless electric vehicle will cost €13,750 ($15,000) in 2020. BCG estimates that “partially autonomous features are likely to start at or above €3,670 ($4,000) per feature, while fully autonomous vehicles should hit the road in 2025 at around a €9,160 ($10,000) increase over sticker price” Buses or vehicles tailored to the needs of the older and more frail adults are likely to cost more. It is estimated that a car that would cost €27,490 ($30,000) and, if implemented for taxi purposes, would be able to pay itself off in about five years (assuming rides are priced at €0.32 per mile).

In addition to taxi services, older people rely on public transport services and bus shuttle services. The introduction of driverless technology in public bus systems can increase the transport for older people and contribute to additional positive spillover effects around the improved mobility and enhanced activities of older people.

An in-depth study of the trends driving the development and adoption of autonomous vehicles concludes the following:

• “Mass adoption of self-driving technology will result in tremendous economic and societal benefits”
• By 2035, more than 12 million fully autonomous vehicles and 18 million partially autonomous vehicles are expected to be sold per year globally.
• The market for fully and partially autonomous vehicles is expected to leap from about €38.5b ($42b) in 2025 to nearly €70.5b ($77b) in 2035.
• By 2025, autos with autonomous vehicle features are expected to capture around 12%-13% of the new car market and by 2035, autos with autonomous vehicle features are expected to capture 25% of the new car market.

In the EU, the motorization rate ranges from 672 cars per 1,000 inhabitants in Luxembourg to 235 cars per inhabitants in Romania. Autonomous vehicles could positively impact the use of car sharing, reducing traffic, congestion and pollution, especially in cities.

Economic opportunities also exist around public transportation/bus systems. Driverless buses have already been implemented. Daimler introduced a driverless in 2016 providing a shuttle service to Schiphol airport (the bus route included various tips and traffic lights – the bus can communicate with traffic lights). Similar developments are taking place in the city of London (Transport for London, TfL). Opportunities may also exist around the introduction of driverless trucks.

Challenges - identified need for action

The mobility of the older adult is sometimes impaired, leading to isolation and deprivation. Much of existing transport services for older and disabled people are highly dependent on volunteers. As a result of the ageing population, these voluntary services will become ever more under pressure and there is a danger that older people, especially older people living in more remote areas, will become more isolated.

It is possible to encourage mobility, of residents by increasing the offer of the public transport system via the introduction of driverless cars/ buses. A driverless transport scheme would facilitate access to town centres, medical appointments, leisure and tourism activities. The scheme may also contribute to enhance accessibility to employment, thereby allowing the older adult to contribute to the job market for a longer period of time.

Added value of EU action

The EC is already part of the discussion on wide scale implementation of driverless vehicles – Informatics, DIGIT, Mobility and Transport (MOVE) and Internal Market, Industry, Entrepreneurship and SMEs (GROW). Discussions will have to be integrated, and could include a focus on the needs of the older consumer. There are some legal aspects as well, ie the Vienna convention and the EU plays a role in this discussion.

Development in the driverless car business are currently uneven and differences in the legislation enhances the discrepancy in developments across the internal market. There is a question around whether the EU is ‘in time’ to compete with other global players and around what the EU can do to support market readiness.

Existing or planned initiatives to build on

The UK Department of Transport has published a Pathway to Driverless Cars Summary and Action Plan, a document setting out the UK Government’s plans to facilitate the testing and production of driverless cars. The Future of Transport in an Ageing Society: project report from ILC-UK and Age UK setting out the key transport challenges that arise from the UK’s ageing population. Advances in technology, including driverless cars are seen as opportunities to further expand older people’s transport options.

Recommended EU policy actions

• Technology is still in its early stages and there are challenges to gain the trust of the consumer, especially older people as a key target group. The EU can play a role in generating greater public awareness and about the safety of driverless cars
• The EC can contribute to accelerate the discussion around standards, support pilots, emphasising the safety and benefit profile for older people
• The EC should form a more integrated discussion on legislative issues
• The EC can help tackle (financial) issues around the introduction of driverless public transport schemes
• An EU wide scheme could be endorsed by best practices and the design of new and creative solutions to support the mobility of older people

Key stakeholders

Key stakeholders include car manufacturers, public transport authorities, design teams, insurance companies, and many other players in the value chain. Key players include the Google Driverless car project, the Uber Advanced Technologies Center, the GM-Carnegie Mellon Autonomous Driving Collaborative Research Lab. In Europe, key players are the Autonomos car team at the University of Berlin, Germany, the Technical University of Braunschweig, Germany, the Karlsruhe Institute of Technology, Germany, the Universität der Bundeswehr, Munich, Germany, Newcastle University, UK, VisLab, University of Parma, Italy, Oxford Mobile Robotics Group, UK, INRIA IMARA, Paris, France, Easymile, France, NavyaTechnology, France.

Industries that will experience a negative effect on jobs and growth will be the taxi drivers and the traditional car manufacturing industry.