Self-driving hire cars: how far away is the future?

Self driving cars have hit the headlines for the wrong reasons in recent months, as the media inevitably focuses on tests that have gone badly awry. But the tech firms behind them have been learning fast from both their errors and successes, and are already scrambling for footholds in the market.

One market that is ripe for autonomous vehicles to enter is the car rental space: and with the car hire majors already signing deals with self-driving vehicle pioneers, the day when your holiday ride drives you to your destination may only be a few years away.

Some of the reasons why self-driving tech is targeting the rental industry are clear: Not only are the large rental companies capable of investing in the expensive new vehicles and suitably maximising their use, they can also look forward to major savings on insurance and perhaps maintenance – autonomous vehicles will have to meet safety standards well in excess of the average rental car driver in order to be allowed on the road, and will likely handle themselves a little more gently as well!

On the flip side, the rental companies themselves are also concerned that self-driving cars from the likes of Uber threaten their business models. Uber and others see the immediate future of autonomous vehicles lying in the short-term rental space: effectively, these never-tiring vehicles would be 24-hour taxis, maximising the return on investment for those who have developed and built them by making as many journeys as possible over their serviceable life.

This approach sees the traditional single-owner model as wasteful, given that a car can simply drive itself to pick up the next person who needs transportation rather than remaining idle when not in use. This is a big challenge to the foundations on which both the auto manufacturing and sales industries have been based for over a century: it would mean far fewer vehicles are needed to service a given population, with each car instead working harder. And they would no longer be owned by the consumer.

It is also a challenge to rental firms: if a car can be summoned at ease when needed, there would no longer be any need to hire a vehicle when on holiday only for it to sit idle most of the week while the family is on the beach. Soon consumers may no longer expect to have their own vehicle permanently at their disposal, while in the longer term a new generation of ‘drivers’ may no longer know how to handle a vehicle by themselves.

The rental car industry therefore sits at an interesting crossroads of this developing market: on the one hand, its traditional business model is threatened; on the other, it can use its clout, infrastructure and fleet expertise to play a major role in the new model many envisage.

To this end, car-hire companies have been dipping their toes into the self-driving industry. Initial agreements have centred on using their fleet management and maintenance capabilities to offer reliable base models for autonomous vehicle research firms. This summer, Enterprise made its first foray into self-driving cars with an agreement to supply and maintain 12 vehicles that form an experimental ride-hailing fleet designed by start-up Voyage. https://skift.com/2018/06/15/enterprise-takes-a-small-step-toward-driverless-rental-cars/

Enterprise’s rivals Avis Budget Group and Hertz also see autonomous fleet management as an interesting new business and have already cut deals with tech companies to manage self-driving fleets if and when they roll out. All these deals could be described as tentative steps for the car hire giants. But it is notable that all have sought close co-operation with developers of a technology which ultimately threatens them.

In his statement following Avis’ 2017 deal with autonomous vehicle developer Waymo, Avis chief executive Larry De Shon said: “Not only does this partnership enable us to leverage our current capabilities and assets, but it also allows us to accelerate our knowledge and hands-on experience in an emerging area as Waymo-enabled self-driving cars become available in the marketplace.”

With the help of rental firms, the software and sensors that will soon allow fully-autonomous vehicles are being developed at a rapid pace. Regulatory barriers are also being cleared, with deals allowing testing of self-driving cars on public roads now in place on both sides of the Atlantic.

Prototypes of vehicles suitable for the open road are currently described as being at an ‘advanced testing stage’, while within permitted test areas such as Boston self-diving cars are already picking up members of the public.

While the companies involved have been shy to put a timescale on when they will start to offer fully autonomous vehicles on a large scale, it seems only a matter of a very few years before the tech is ready. The biggest obstacle to rollout is probably commercial, as autonomous vehicles are likely to be very expensive and require a radical adjustment in consumers’ attitudes to car ownership.

With self-drive developers and traditional auto-manufacturers investing heavily in what they see as the eventual future of road travel, they will soon be searching for ways to accustom the public to this entirely new model of transportation. Hire fleets will be a perfect outlet for this, as they offer ordinary consumers a chance to test the new tech – and manufacturers a chance to impress them. Don’t be surprised, therefore, if in a few year’s time you are offered an upgrade on your holiday rental car – and the chance to be driven around without a care in the world.