An Economic and Political Analysis of Increasing Autonomy and Electrification in the Automotive Industry

By: Alexander Mervar


The current state of the American automotive industry is rapidly approaching increased technological progression and integration. Developments have led to an economic environment that Joseph Schumpeter, an American-Austrian economist who served as the financial minister of Austria in 1919 and as a professor at Harvard University, calls “creative destruction.” He uses this term to describe the commonality of a disruptive nature that many current and future businesses obtain due to the capitalist nature of the American economy. This economic destruction or disruption may be seen in major economic industries and undertakings in the American past and present. Industries such as oil, personal electronics, and automotives have been radically transformed by highly influential companies like Standard Oil, Apple, and Ford, which have innovated the shape of American progressive industries like gasoline, mobile cellular phones, as well as the look of the modern assembly line. Creative destruction is evident within the automotive industry in correlation to the recent undertaking and growing popularity of increased autonomy and electrification of vehicles. This electrification and autonomy is leading to an increasingly software-based and specialized system that is transforming the state of the automotive industry. Developing systems of increased technological integration drives an irreversible progression of automotives. This constant push and continuous progression toward full autonomy and electrification should not be ignored, due to its displacing and destructive effect within the economy and its innate political possibilities and incentives. Daniel Howard and Danielle Dai, members of the department of City and Regional Planning at the University of California, Berkeley, expand on this idea stating, “self-driving vehicles offer an alternative form of individualized transportation that can be adapted to reduce such rising carbon emissions, increasing traffic congestion, and high traffic accident rates negative impacts.” The economic effects and political incentives for the increased electrification and autonomy of automobiles has created a necessity for a cautious outlook on the future of automobile technological progression.

Political Analysis

Policymaker discussions have increased with particular interest around the ramifications of continuous development of vehicular technologies. Autonomous vehicles, also called “autos”, are increasing in popularity due to recent technological progression from private industries such as Tesla, Google, and others. This has led to an increase in popular mainstream media coverage, social opinion, and education on topics of climate change and vehicular autonomy. Development and understanding of this technology aided many different analyses of what the integration of electric and driverless vehicles could have on the American society. For instance, many constituents and policymakers are interested in the capabilities of driverless vehicles of reduce the amount of car-related fatalities. The amount of sensors that a driverless car would necessitate provides a system in which the vehicle is able to simulate superhuman driving capabilities. The increased operational capabilities that these vehicles provide will subsequently decrease the amount of car-related fatalities. This is achieved through continued public interest and adoption of driverless vehicles. Removing the human error in driving will cause less cases of distracted, drunk, and other forms of impaired driving, which ultimately attributed to around 35,000 fatalities in 2010. There is also a political incentive for reaching environmentalist constituents. The increased usage of the electric vehicle reduce the nation’s dependability on traditional fossil fuels, which are major catalysts of climate change. Climate change adds to the already heavy political incentive for policymakers to encourage the adoption and implementation of electric and autonomous vehicles.

Economic Analysis

The effects of these advancements hold value in political discussion, but their merit can not be ignored when observing the economic correlation within the American economy. Currently, the United States is highly dependent on the importation and development of fossil fuels. The American Energy Information Administration shares that the United States is the largest producer and importer of petroleum and natural gas, which are both vital in the continuous development of non-electric automobiles. For the sustainability of the American power and transportation infrastructure, converting a large portion of the automotive industry to electric vehicles decreases the dependence that the United States has on oil and other traditional fuel sources. A negative effect of increased electrification is observed through the lower-class nature and dependency on low-skill and non-academically required work that the automobile industry currently supports. Marc Andreessen, a technological analyst and founder of the venture capitalist firm Andreessen Horowitz, shares insight into this reality by stating, “The days when a car aficionado could repair his or her own car are long past, due primarily to the high software content. The trend toward hybrid and electric vehicles will only accelerate the software shift—electric cars are completely computer controlled.” The lack of technical skill will result in many displacing economic shifts that can be found within the American past. Like the Industrial Revolution, many people will lose their jobs to more educated and autonomous machinery. This will result in many qualified humans becoming unemployable due to no fault of their own. This dependency will cause a major displacement of workers if an educational solution is not provided to educate these workers as their job becomes victim to computerisation through advancements in autonomous software. Of course, these effects are long term. Thus, analysis of these problems and solutions must be created to solve these problems now. Todd Litman, a member of the Victoria Transport Policy Institute shares:

The analysis indicates that some benefits, such as independent mobility for affluent non-drivers, may begin in the 2020s or 2030s, but most impacts, including reduced traffic and parking congestion (and therefore road and parking facility supply requirements), independent mobility for low-income people (and therefore reduced need to subsidize transit), increased safety, energy conservation and pollution reductions, will only be significant when autonomous vehicles become common and affordable, probably in the 2040s to 2060s, and some benefits may require prohibiting human-driven vehicles on certain roadways, which could take longer.

The conversation in economic and political fields are essential to understanding the causes and effects of increased rates of electric and autonomous automobiles.


The American automobile industry could radically change due to the political incentive and economic benefits that electric and autonomous vehicles provide. By increasing the number of driverless vehicles on the road, the superhuman driving capabilities of the sensors will allow for safer transportation. The increased diversification of the American economy would also put the nation in a better economic position in this globalized economy. With an economy that is not solely dependent on the production of oil and gasoline for most of its power production, the United States can better prepare itself for a possible future without gasoline or oil production.


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