Will self driving cars really replace human driven cars?

Yes.

Completely.

And faster than anyone expects.

Self Driving Vehicles ("SDVs") will be among the most disruptive technologies introduced in the last 100 years. It will happen because:
[1] The economics are beyond compelling.
[2] There are specific businesses & population groups that will immediately benefit and will drive the broader than usual early adoption curve.
[3] There are significant non economic benefits that will appeal to an array of specific constituencies that will help drive adoption.
[4] Economic opportunities for new entrants will overwhelm defenders of the 'status quo'.

[1] The economics are beyond compelling.

We have seen this story before. It is the story of the mechanization of the farm displacing 90%+ of traditional farm labor. It is the story of the industrial revolution where mechanization/automation eclipses 'artisan' productivity by thousands of times. It is the story of the computer revolution that emptied white collar paperwork factories.

SDVs is an application of Artificial Intelligence ("AI") combined with perfect location awareness ("PLA"), autonomous mobility ("AM") and specialized equipment/computers designed to execute specific tasks. Only some of which are on public roads and highways.

Except that the SDV revolution will impact more segments of society in it's first 40 years than any of the prior 'revolutions'. Let's describe just a few of the end point applications of SDVs:
[] Farm machinery that toils day and night (24/7) without human intervention.
[] Trucks running 24/7 without human intervention.
[] Last mile delivery services running 24/7 without human intervention. Food, groceries, product deliveries, postal services, etc.
[] Inside warehouse activities, loading dock to shelves to loading dock, 24/7
[] Inside big box retail shelf stocking.
[] Police, military and security patrols.
[] Point to point transport of individual or small groups of humans. Commuting, vacation travel, leisure activities, work related (sales reps and service techs are examples), etc. Via personally owned SDVs or 'rented' SDVs.

This answer is not the right forum for detailed economic analysis for each of the above examples but there are some common economic benefits to them all that will give a feel for the substantial economic benefit:
[] Near total elimination of human labor.
[] Ability to perform services 24/7 including holidays, weekends, and inclement weather.
[] The automation brought about by SDVs will 'deskill' most transport and movement tasks. No 'specialized' labor will be needed (commercial licenses, neighborhood knowledge, literacy, hygiene, etc.).

As an endpoint, SDV's can replace any activity that today involves movement as part of the 'task' being performed.

The realization that compelling economics exist for both simple substitution and for creating services that could not economically exist without SDVs will drive existing transport providers and suppliers to modify business behavior and adapt. It will also serve as a big invitation to bring in well funded new participants/providers.

This response isn't intended to pick an end date for 100% adoption but rather point out that compelling economics combined with Moore's Law (Computer / technology costs go down a lot every couple of years and capability goes up a lot every couple of years). In 2015, we likely have a million plus miles of on road SDV experience. We can reasonably expect capability to double every 5 years or less and costs to go down 50% in the same time frame. Or even faster. Today's really smart iPhone couldn't have been built 50 years ago and if it could have, the technology of the time would have resulted in something the size of an office building costing hundreds of millions of dollars! We are already 10 years into the SDV exponential curve.

Eliminate humans, work 24/7, deskill and do stuff that couldn't be done before. Lower costs and new value add mean more profit and / or more market share. Higher costs than competitors means you go out of business. This alone will make SDVs happen.

[2] There are specific businesses & population groups that will immediately benefit and will drive the broader than usual early adoption curve.

The compelling economics of the SDV end stage capability will make SDVs happen. The widespread adoption of SDVs will be accelerated because there are large number of groups that will use the earliest forms of not fully capable SDV technology because these less capable forms will still be compelling.

This early use will drive / accelerate later adoption because it will:
[] Help drive down the cost of technology.
[] Create visible successful experiences that will give adoption confidence to later entrants.
[] Provide confidence to 'gatekeepers' like legislators, insurance entities, the legal system, etc that SDVs might be disruptive but that they are societal safe and have constituencies that will help offset the delay tactics of the incumbents that are being impacted.

Some examples of the early adopters that will help accelerate SDV adoption:
[] The ability to transport 2 to 4 20' equivalent units ("TEUs") 1200 miles per day without human involvement will disrupt existing long haul transport. The companies that can raise the capital and create the support infrastructure will have a compelling first mover advantage. Driver costs might be 25% of the trip cost. If a carrier (or other alternative provider) could do the same for 15% less, the business will quickly shift. Trucking is all about cost and reliability.

Please note that all these early adoptions and cases not described here will have large and small non SDV infrastructure adjustments to make them happen. This response is not the place to go into detail. An example is the long haul highway SDV movement of tractor trailers. This activity will require changes in fueling services/capacity, engine/transmission characteristics, breakdown repair/recovery services, off ramp transfer services to human 'last mile', transport security, etc.

[] Large scale farming involves very expensive equipment that is only used for short periods. Much activity today occurs in moving plowing/planting/harvesting equipment & services along the path of the annual cycles to maximize utilization. SDVs could work 24/7. A huge increase in utilization that would drive crewed/daylight only services out of business. And no laws need to be modified to have this happen.

[] Special purpose SDV districts allowing unrestricted SDV use. Elder residential communities like the Sun Cities and resort districts (islands, ski areas, etc.) are examples of well defined slower speed areas that will have significant competitive advantages offering unrestricted SDV use. These areas would be safer. The economics of on demand SDVs displacing rental cars would be clear allowing more spending in the resort areas or making the resort areas more competitive. Because of housing and other local costs, there is often not enough human labor involved to provide these services today and thus unlikely to be an interest that would block adoption in these areas. SDVs will provide trip costs in these environments for $1 or $2 fully loaded!

[] In the first world and certainly in the second world countries, there will be some city centers that will be early adopters of geo fenced unrestricted SDV use. For every city like Chicago that will ban SDV use in the city center, there will be 5 to 10 smaller cities with immature and small taxi services that will allow unrestricted SDV taxi services to improve the overall business environment. Convention cities like Las Vegas and Atlanta could be early adopters...SDVs could meet peak convention demands and provide a more 'comfortable' experience for visitors (including non English speakers).

Even more so in countries that have uncommon native languages that want to improve visitor experiences. Maybe not Paris and only a maybe for Rome but highly likely for Jakarta, Shanghai, Tokyo, Budapest and dozens of other business / tourist destinations.

Same for some city centers that want to create work/live environments. Maybe not for New York City but maybe for emerging cities like Jacksonville or Charlotte. The ability to eliminate auto ownership makes these areas more affordable and improves density with the elimination of garages in the core. A near perfect example might be isolated but large university towns like Athens, GA.

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Most of these examples and many more will show a broader and more skeptical public (and officialdom) the benefits, popularity and safety of SDVs. These early adoption cases will create millions of miles and millions of hours of real world experiences that will very publicly 'prove' the SDV case. Opposition, especially that based on fear/uncertainty/doubt ("FUD") will be crushed by visible real world examples in volume.

And this will accelerate SDV adoption.

[3] There are significant non economic benefits that will appeal to an array of specific constituencies that will help drive adoption.

Safety and convenience will act as additional drivers to SDV adoption.

SDV accident, injury and death rates will be materially lower that current on a miles driven basis. Always on, perfect awareness and lightning fast reflexes combined with preplanned actions for 99.99999% of situations will make the SDV experience a very much safer one.

And certain constituencies will use this for their benefit. Mothers Against Drunk Driving ("MADD") will gravitate to strong SDV support both as a good thing to do and as a survival mechanism for their organization.

Elder organizations like AARP will naturally gravitate to SDV support.

Safety has many constituencies and an obviously lower vehicle injury and death rate will empower organizations to respond with SDV advocacy that reaches religious fervor.

Convenience is similar. SDV commuting won't really save money but will greatly enhance the lives of those who can do it early. Look at any morning rush in the south and imagine how the drivers would feel if they could read a paper, surf the web or even do some work instead of stop and go driving for 20+ miles! And every person who gets the chance to do so will become an evangelist for SDV commutes.

Anyone who uses and SDV taxi or gets an SDV fast food delivery in an early adoption zone will want the same 'back home'. Another evangelist will be born with each new trip. Ditto when someone visits a senior Sun City and sees what elder travel might be like.

And ditto again, when the hundredth SDV truck goes by on the highway without incident. If 'they' allow a truck, why not let me!?

Every good experience will create demand and the absence of 'problems' will create confidence. Both are the touch points of demand creation. Many of the broadest uses of SDVs will not be 'cost effective' in the strictest sense. Many individuals will want SDVs for safety and convenience. And this growth in fervor will increase the rate of adoption of SDVs.

[4] Economic opportunities for new entrants will overwhelm defenders of the 'status quo'.

WalMart and similar companies destroyed mom and pop main street retail. Amazon and similar companies destroyed physical retailing. The internet is destroying formerly rich and stable industries everyday. Media, distribution, office work, leisure activities, etc.

SDV's are likely to be even more disruptive. Physical retail, internet retail, office configuration & location, residence configuration & location, etc will all be impacted by SDVs. And of course the entire transportation industry...passenger, freight, local and long distance, cars and trucks...everything.

As we can see from internet experiences of the last 25 years, the opportunity to disrupt will attract massive investment from new entrants in each impacted industry/market. And these new entrants will create disruptive networks and success that will further attract additional new entrants.

This response is not the place to describe these new entrants in length but rather to say this will be a force for change and acceleration of SDV adoption.

But one example might help. With the simple assumption of $100 or less cost per kilowatt hour for automobile batteries (which will happen soon), the SDV change will be accompanied by a major platform change ... simple electric vehicles ("EV").

EV SDVs will create a climate for low cost automobile manufacturer ... any one will be able to be a manufacturer for only a couple of billion dollars. Between the late 1800's and 1929 there were over 1,000 USA automobile manufacturers and even more suppliers of sub components. We are heading back to this type of environment...from just a few huge manufacturers to many many small ones.

With mass produced batteries, motors and generally available SDV hardware/software packages, it will be easy to raise the funds to be a "manufacturer". With many manufacturers will come changes to the franchise agency selling model (which is already occurring). This set of changes will create big and small entrants to the automobile market. New sellers could be Berkshire Hathaway, Apple, Amazon and WalMart. New manufacturers could be FoxConn, Dell, or a group of guys that previously make electric bikes. The big component guys could easily be Google, GE, Honeywell, Boeing, as well as the usual suspects of Lear or Delphi. Against some of the new entrants, the existing auto manufacturers and dealers are going to look financially puny. Against some of the smaller, new nimble entrants; these same companies will look like expensive slow moving dinosaurs.

There will be disruption with the introduction of SDVs and this will attract many new entrants large and small. And these companies will create incentives to adopt SDVs as well as 'buzz' that promotes SDV based change in general terms.

In the next 20 to 40 years, SDVs will be so widely adopted that traditional vehicles will mostly be on scrap heaps and in museums. Like standard shift automobiles in the world of automatics. (According to Edmunds.com, manual or stick shift transmissions comprised roughly seven percent of new car sales in the first quarter of 2012. By August 2013, the new cars sold in the U.S. with manual transmissions had dropped to 3.9 percent). SDVs will be as dominant.

The question did not ask for a specific adoption date and one won't be given here. I do believe that, broadly, SDVs will be very dominant in 20 to 40 years with my bias to the lower number. The exact time line is unknown. There was little discussion 10 years ago with forecasts of something happening either around 2050 or the turn of the next century. Most major manufacturers have announced initial (highway only) SDV implementations that will go live between 2016 and 2020. Progress has been faster than expected and there is no reason to assume that conventional wisdom will ever be right. Technology progress always happens and is always faster than expected.

There has been no discussion of negatives here. There are negatives but they just won't have traction. Tesla and Uber are two examples of disruption in the automobile/transportation industry. While they both have uneven progress, they both show that new and tiny companies can be very disruptive to entrenched interests. If these tiny entities can disrupt, what are the odds of stopping a hundred other companies that are a hundred times (or more) larger. Very low to non existent.