Driverless Tech at South by Southwest 2017

By Motley Fool Staff Markets Fool.com

South by Southwest (SXSW) is a giant conference where some of the biggest minds in tech gather to talk about their most exciting new ideas.

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In this clip from Motley Fool's Industry Focus podcast, our Fools on the ground at this year's conference in Austin, Texas, share some of the most interesting presentations they've seen so far about self-driving cars and developments in the state of self-driving car technology -- including a city that already has a fleet of self-driving taxis running on the streets, how Alphabet'sGoogle (NASDAQ: GOOG) (NASDAQ: GOOGL) might cash in on its self-driving project a few years (or decades) down the line, and more.

A full transcript follows the video.

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This podcast was recorded on March 16, 2017.

Sean O'Reilly: So, while you're down there at South by Southwest, what did you learn about this possible use of the future?

Simon Erickson:It's, I think, the natural next step that we're going to have self-driving fleets instead of just self-driving cars. If you're driving to work and leaving your car in a parking garage all day, you're really not getting the benefits of it being able to navigate and drive itself. They're really meant to be used to be driving all day long. And when you do that, you get a higher utilization out of the vehicle, and that really brings the cost of them down. Andyou have powerful things behind the scenes. You have neural networks,and all the chips that aren't really cheap. This is reallythe way that these are meant to be used, to be in fleets. Uber andHertzand all the large fleets andself-driving taxis are really aiming to do this. As far asSouth by Southwest, you were asking some of the things we learned,we found out that about half the world's population is in cities today, and that's going to grow to about two-thirds by 2050. So, we're going to be moving from about 3.5 billion people in cities today to 7 billionwithin the next 30 years or so. And you can't just keep building out more and more suburbs and highways and parking garages as infrastructure to have this many people moving into the cities. It needs to be a better-designed city. And I think we're going to see self-driving cars play a key role in how cities are actuallydesigning themselves to accommodate for the population boom.

O'Reilly:Yeah, I remember another Fool, Armun Asgari, he had that piece back in October,The Race toAutonomy: AnInvestor's Guide to Self-Driving Cars. It'sa bit of a read, but it was awesome. And one of the things thatit's common sense that he points out is,the average American family owns 2.2 cars, and it's a $30,000-$50,000 asset that israpidly depreciating. Wouldn't it be nice to get some use out of that? Wouldn't it be nice if our cities weren't just thesemonoliths of concrete to park these things that aren't being used 95% of the time? Did you see anythinghard or tangible down at the conference there, on this trend?

Erickson:There were sessions. It was moreacademic,as far as what we had seen at South by Southwest. In terms of use cases, though,I think Singapore is one that we can keep an eye on,if you want to see this in action right now.Singapore, of course,is a city that likes to monitor everything. There's nolittering there. They're reallycracking down on only smoking in certain areas. It's a very oversight city, so, they'rereally ahead of the curve onmonitoring things. Even today, Sean, they have theiranalog for Uber.It's a company called Grab, who's teamed up with another company called NuTonomy that'salready got self-driving carsnavigating around the city, picking people up, basically a taxi service that is happening right now. There is anengineer in the passenger seatjust for the peace of mind for the riders. But they're planning to have 100 driverless cars within the next year. This issomething that's already happening out there -- you can actually get into a car that's navigating itself to the location for you.

O'Reilly:ThroughoutSingapore, yeah. Can I ask what kind of car is it?I know that Uber was testing driverless cars in Pittsburgh, and I believe they were Volvocrossover SUVs or something. Do you know any of that stuffoff the top of your head?

Erickson:Yeah, it is Volvo for the U.S. for Uber for self-driving cars. There's also a company called Otto for self-driving trucks, which could be for transport.

O'Reilly:Wow. I have togo to my local Volvo dealership and see if they have an engineer sitting around that can take me out on one of these things.

Erickson:I have a crazy futuristic idea for you, also.

O'Reilly:Is this better than the driverless luggage?

Erickson:It is. And you knew, when you invited me on the show, being an Explorer, futuristic kind of guy, that I was going to have to throw some ideas like this to you, right?

O'Reilly:I'm all ears.

Erickson:Theeconomics are such that the average taxi fare, in the U.S., is charging about $3.50 a mile. Prettyexpensive. And it's generally accepted thatby 2021, whenwe're expecting autonomous vehicles to reallystart going mainstream, that thecost of an autonomous car will cost in theneighborhood of $0.30 a mile. Less than a tenth of the cost today. Now,when you get to that kind of price point, Sean,that opens up a lot of options ofwho is actually paying $0.30 a mile per trip for customers. And the idea would be, this can besubsidized by advertising companies like Google,where you can get into an autonomous car. Yeah. Get in for a free ride. It'llbring you within a 10-mile radius,or whatever the distance would be. It'll cost Google maybe $3 for your trip, at $0.30 a mile. Butin exchange, they have your undivided attentionthat they can serve you ads in the car.

O'Reilly:Oh, my gosh. I mean,I would obviously just look at my phone or read a book. But that's awesome.

Erickson:Yeah,especially when you consider the numbers that you threw out earlier. The average American isspending a third of their household income every year on theserapidly depreciating assets that we call cars. Itdoesn't have to be that waywhen you start getting into the discussion of $0.30 a mile.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Simon Erickson has no position in any stocks mentioned. Sean O'Reillyhas no position in any stocks mentioned.The Motley Fool owns shares of and recommends Alphabet (A and C shares). The Motley Fool owns shares of Hertz Global Holdings. The Motley Fool has a disclosure policy.