Israel Starts Preparing for Age of Driverless Cars, Just 20 Years Away

National Economic Council report takes a stab at assessing the impact of a transportation revolution on the economy, including the price of success

A Ford Argo AI test vehicle, being tested, drives through the downtown area in Detroit, Michgan on July 12, 2019.
JEFF KOWALSKY / AFP

“A baby born today will never need to learn how to drive because the cars of the future won’t need a human driver,” says Prof. Avi Simhon, the chairman of Prime Minister Benjamin Netanyahu’s National Economic Council.

That isn’t an off-the-cuff prediction but how policymakers see the future of transportation in Israel. And, in order for the country to get ready for it, the council has just completed a report, written by Roni Bar, on the steps Israel has to take for an era of smart transportation.

Although experts are now saying that the era of self-driving cars won’t arrive as soon as they had thought, because the technology is still grappling with the unpredictability of human behavior, the NEC report assumes that electric-powered, driverless cars will be plying Israeli roads in about 20 years’ time.

The report backs the widely held consensus that the turning point will be the year 2025, when the first commercial versions of such cars hit the market.

Simhon said that even though it’s a years-long process, Israel has to start preparing for it now because of its far-reaching impact.

There has to be enough electricity-generating capacity for all those cars. Planners have to figure out the implications of an auto sector where private car ownership gives way to public and shared vehicles. Fewer private cars will require fewer parking spaces since cars will be in use during much more of the day. That could give them extra leeway for more green spaces or bicycle paths.

Beyond energy and infrastructure development, the transportation revolution will almost certainly impact the cost of living, the labor market, public health and even where the government collects taxes (today, for instance, the taxes are focused on private car purchases and gasoline).

Simhon says that planners today haven’t been taking into account the big global changes expected in transportation, which is why the NEC gathered officials from across a broad range of ministries and agencies to draw up a picture of how things will look in two decades.

The fact is no one can be sure with any certainty how those changes will play out, especially the timing, so a large part of the discussions were devoted to managing risks. “We know where we will be in 2040. The question is what to do during the interim period,” said Simhon.

The NEC discussions tried to envision what residential areas and business centers will have to look like without the need to accommodate private cars. Whether they are self-driving or still driven by humans, cars used to commute to work or take day trips will probably be shared, run on batteries and be highly networked, i.e., communicate with other vehicles on the road.

“Tel Aviv is going to be one of the first five cities in the world where you can travel by automated taxis,” said Simhon. “A joint project by Mobileye and Volkswagen will be operating in Tel Aviv in another year and in another three years the taxis will start picking up passengers.”

In the most optimistic scenario, the use of private cars will decline as people opt for taxis and buses loaded up with sophisticated technology that enables them to offer better service. For that to work, however, the government has to ensure there’s an adequate supply at a competitive price. That in turn hinges on the private sector – the automobile and high-tech industries – to bring down the costs, said Simhon.

The worst-case scenario is that all these trends will lead to an increase in the number of vehicles on the road, especially in downtown areas. Automated cars may find themselves driving around city streets empty while they wait for a rider to call them. More people may choose an automated car over public transportation for intercity travel, taking away market shares from trains and buses. After all, they can take a nap using either option.

Betting on which of these two scenarios will play out is especially critical for Israel, which has limited available land for expansion of roads, making it difficult to cope with the severe traffic problems. A Finance Ministry study estimated that clogged roads cost the economy 35 billion shekels ($9.9 billion) annually; if nothing is done, the cost will double by the year 2040, it predicts.

The NEC report’s authors say Israel should focus on smart public and shared transportation as opposed to privately owned driverless cars and/or cars carrying just one person. They admit that the public will probably resist that and that policy makers will have to fight that by making a special effort to make smart public transportation convenient and accessible. Taxes that discourage private cars is another recommended tool.

As for power usage, the report doesn’t see any major impact of demand before 2030. The Energy Ministry sees only 5% of imported cars running on electricity in 2022, but by 2026 this will rise to 23% and by 2028 to 61%. By 2030, imports of gasoline-powered car are likely to be banned and demand for electricity to fuel the growing number of electric cars will start to become significant.

Electricity demand is expected to be particularly heavy at night when cars are not in use and need to be recharged. To meet the demand, Israel can’t rely only on building new power stations but must also develop better energy-storage technologies.

Charging stations will have to be widely available. The Energy Ministry recently called for a bid to develop 2,000 of them with government subsidies on intercity highways and city centers,

The cost of air pollution from conventional vehicles is estimated at 3.5 billion shekels annually. Much of that comes from buses, so the state is encouraging the use of electric buses. A pilot program using 62 of them is already underway and the plan is to expand the number to 300 shortly. To speed up the transition to electricity from gasoline, the NEC report says the government should offer subsidies and change regulations.

But the report warns that if the government is too successful, by making smart transportation or a shared car too easy and inexpensive, many people may stop walking or biking to work at a cost to public health.

On the other hand, automated cars will reduce the number of accidents, which costs the Israeli economy 15 billion shekels annually. In a report on automatization Morgan Stanley predicted that self-driving cars would reduce the accident rate globally by 90%.

However, the risk of accidents caused by technology failures or even cyberattacks is likely to remain. The latter may even one day become the leading cause of accidents.