How Self-Driving Cars Work

Updated: November 1, 2024

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Self-driving cars use advanced systems that enable them to move and make decisions independently. The technology behind self-driving cars includes light detection and ranging (LiDAR), advanced cameras and machine learning algorithms that sense their environment, process data and respond instantly. These tools help the cars plan routes, avoid obstacles and ensure safe driving.

These vehicles offer benefits such as enhanced safety, improved fuel efficiency and increased accessibility for those unable to drive. However, they also face challenges like technological limitations and ethical dilemmas. Financially, owning a self-driving car involves costs like purchase price, maintenance and insurance, but can ultimately lead to long-term savings.

What Is a Self-Driving Car?

A self-driving car, also known as an autonomous vehicle, can navigate and operate without human input. It uses sensors, cameras, radar and artificial intelligence (AI) to perceive its surroundings and make driving decisions. These vehicles use advanced algorithms to interpret data, detect objects, follow traffic rules and make real-time decisions. By automating the driving process, self-driving cars aim to enhance safety, reduce human error and improve transportation efficiency.

SAE’s 6 Levels of Automation

The Society of Automotive Engineers (SAE) defines six levels of driving automation, from Level 0 to Level 5. These levels range from no automation — where the driver controls the vehicle — to full automation — where the car operates independently without human intervention. Each level marks a step toward complete vehicle autonomy, highlighting increased automation capabilities and decreased need for human involvement.

SAE Level
Description
Human Involvement

Level 0

No Automation: The driver controls all aspects of driving.

Full-time human driver

Level 1

Driver Assistance: Features like adaptive cruise control assist but do not replace the driver.

Human driver with assistance

Level 2

Partial Automation: The car can control steering and acceleration, but the driver must remain engaged.

Human driver must monitor and intervene

Level 3

Conditional Automation: The car can handle most tasks, but the driver must be ready to take over when prompted.

Human driver needed for occasional control

Level 4

High Automation: The car can perform all driving tasks in certain conditions without human intervention.

No human intervention in specific conditions

Currently, most self-driving cars fall within Levels 2 to 4 of the automation scale. For example, Tesla's Autopilot — a Level 2 system — can manage steering, acceleration and braking. However, it still requires drivers to keep their eyes on the road and be prepared to take control at any time. In contrast, Audi's A8 represents Level 3 automation, where the car can perform many driving tasks like lane-keeping, speed adjustments and emergency braking. However, it still relies on the driver to intervene in complex scenarios or when the system requests help.

Moving to Level 4, vehicles like those being tested by Waymo can operate autonomously within specific conditions, such as predefined geofenced areas or during favorable weather. These cars do not need human input under these controlled conditions but aren't entirely autonomous in all situations.

Level 5 automation — where cars can handle all driving tasks without any human intervention — remains a goal for the future and is still under development.

Key Technologies Behind Self-Driving Cars

Self-driving cars rely on advanced technologies like radar, LiDAR and cameras to detect objects, create 3D maps and recognize traffic signs. These systems, along with ultrasonic sensors and machine learning algorithms, ensure safe and efficient vehicle operation.

Radar

Radar detects objects and measures their distance, speed and direction. By emitting radio waves and analyzing their reflections, radar systems provide real-time information about nearby vehicles, pedestrians and obstacles. This detailed data helps autonomous vehicles maintain safe distances, avoid collisions and navigate complex traffic situations more accurately.

LiDAR

LiDAR (Light Detection and Ranging) uses laser pulses to create high-resolution 3D maps of the environment. This allows driverless cars to detect and identify objects with precision, even in low-light conditions. By measuring the time it takes for laser pulses to bounce back from surfaces, LiDAR enables precise obstacle detection and safe navigation.

Cameras

Cameras capture visual data to recognize traffic signs, lane markings and other vehicles. Advanced image processing algorithms help the car interpret complex driving environments and respond appropriately to dynamic road conditions, making cameras indispensable for safe autonomous driving.

Ultrasonic Sensors

Ultrasonic sensors recognize objects at close range, which is especially useful for parking assistance and low-speed maneuvering. These sensors emit sound waves and measure their reflections to determine the proximity of obstacles. This enhances the vehicle's ability to prevent accidents and navigate tight spaces safely and efficiently.

Machine Learning

Machine learning processes input from various sensors to predict scenarios and make real-time decisions. By learning from vast amounts of data, these algorithms enable self-driving cars to adapt to new situations, improve safety and continuously refine their driving capabilities. Over time, machine learning can make autonomous vehicles progressively smarter and more dependable by letting them navigate a wide range of driving conditions with greater proficiency.

How Self-Driving Cars Operate

Self-driving cars collect and process data from multiple sensors, making real-time driving decisions and using actuators to control the vehicle's movements. This process enables the car to navigate accurately, respond to road conditions and effectively manage steering, braking and acceleration.

1
Data Collection and Processing

Self-driving cars gather information from multiple sensors to understand their surroundings. These sensors include cameras that capture images to identify lane markings, traffic signs and other vehicles; radar that measures the distance and speed of objects; LiDAR that uses laser beams to create 3D maps of the environment; and ultrasonic sensors that detect nearby obstacles (especially at low speeds).

The collected sensor data is processed and integrated to form a comprehensive view of the car's environment. This process, known as data fusion, combines information from all sensors to create a detailed and accurate representation of the surroundings. Data fusion allows the car to detect and track objects, understand road conditions and anticipate potential hazards.

2
Decision-Making Capability

After gathering and processing data, the car needs to make decisions about how to drive. Path planning is one of the main tasks that involves the car figuring out the best route to its destination. This includes deciding when to change lanes, turn or adjust speed to ensure a smooth and safe journey. The system updates these decisions in real time, responding to changing road conditions and traffic.

Obstacle detection and avoidance is another critical aspect. The car constantly scans for obstacles like pedestrians, other vehicles and road debris. When it identifies an obstacle, it calculates the best way to avoid it, whether that means slowing down, stopping or steering around it. Additionally, the car follows traffic rules by recognizing signs, signals and road markings, ensuring it drives legally and safely.

3
Vehicle Control

Self-driving cars use actuators to put decisions into action, which control the steering, acceleration and brakes. For example, if the car's system decides to avoid an obstacle, the actuators will adjust the steering and apply the brakes as needed. These actions must be precise to help the car move smoothly.

Self-driving cars also have backup systems to enhance safety. If the primary system fails, these redundant systems can take over, allowing the vehicle to continue operating safely. Emergency protocols are in place to handle unexpected situations, providing an extra layer of security. These measures contribute to the overall reliability of self-driving cars for all passengers.

Pros and Cons of Self-Driving Cars

Self-driving cars promise improved safety, environmental benefits and greater accessibility. However, they also encounter obstacles like technological limitations, ethical concerns and the need to gain public trust.

Pros and Cons of Self-Driving Cars

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PROS
  • Safety: Reduce accidents caused by human error. Advanced sensors and AI improve response to road conditions, helping avoid the dangers of distracted driving. As safety technologies proliferate, auto insurance premiums may decrease due to fewer accidents, leading to potential savings for drivers.

  • Environmental Impact: Optimize driving patterns, reduce traffic congestion and improve fuel efficiency, leading to lower emissions and contributing to a cleaner environment.

  • Accessibility: Provide mobility for individuals unable to drive, such as older adults and people with disabilities, and enhance their independence.

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CONS
  • Technological Limitations: Challenges in navigating adverse weather conditions and complex urban environments. Despite its advancements, this technology can still struggle in situations like heavy rain or snow, which obscures sensors.

  • Ethical Considerations: Programming self-driving cars to make ethical decisions in unavoidable accident scenarios raises questions about responsibility and morality. Developers must decide how cars should react in critical situations, such as choosing between hitting a pedestrian or swerving to protect passengers.

  • Public Perception: Concerns about safety, privacy and job displacement need to be addressed. Educating the public and demonstrating the reliability of self-driving cars is essential for their acceptance.

Costs of Owning a Self-Driving Car

Due to its advanced driving technology, owning a self-driving car involves higher initial costs but can offer savings in maintenance, insurance and fuel efficiency. On the flip side, be prepared for potential additional expenses related to repairs and specialized insurance coverage.

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    Initial Purchase Price

    The upfront cost of self-driving cars is higher than that of traditional vehicles due to advanced technology, including sensors, LiDAR, radar, cameras and sophisticated software. For instance, subscribing to Tesla's Full Self-Driving package costs $99 per month for vehicles with Basic Autopilot and Enhanced Autopilot. This subscription cost is an additional expense on top of the already high price of the vehicle. For example, a Tesla Model 3 starts at $38,990, depending on the configuration.

    Additionally, high manufacturing and extensive research and development expenses further elevate the price of autonomous vehicles. Developing and integrating these technologies requires significant investment, which is reflected in the higher cost of buying a car for consumers.

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    Maintenance and Repairs

    One advantage of autonomous vehicles is the reduction in routine maintenance, especially for electric models with fewer moving parts. This can save owners around $50 to $100 per oil change, typically done multiple times a year. For those considering an electric vehicle on a budget, the savings can be significant.

    However, repairing or replacing advanced technology and sensors like LiDAR, cameras and radar can be costly, with some components costing several thousand dollars each. Software updates can also add to maintenance expenses, highlighting the need for specialized service centers.

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    Insurance Costs

    Pennsylvania State University research found that autonomous vehicles have fewer and less severe crashes compared to conventional vehicles. They have the potential to lower insurance premiums due to their advanced safety features and AI, which can reduce accidents caused by human error. Companies like General Motors are already offering insurance policies through General Motors Insurance, specifically tailored to their vehicles to reflect these safety benefits.

    Despite these potential savings, self-driving cars also introduce new risks that may require special insurance policies. Coverage for software malfunctions, cyber threats and autonomous system issues might be necessary to address concerns like hacking, software glitches and liability in accidents caused by the vehicle's decisions.

    Thus, while overall insurance costs might decrease, the specifics of coverage could become more complex and varied, which one can see when breaking down the costs of electric vehicle insurance. For those buying car insurance for the first time, being aware of these possible benefits and risks can provide valuable insights.

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    Fuel Efficiency and Savings

    Self-driving cars optimize driving patterns by maintaining consistent speeds, choosing efficient routes and reducing unnecessary acceleration and braking. A recent study found that in human-driven mode, fuel consumption increased by roughly 6% and 15% at average speeds of 20 km/h and 40 km/h, respectively, compared to autonomous mode. Under aggressive driving, fuel consumption was up to 60% higher for human-driven vehicles.

    These efficiencies translate to significant cost savings. For example, if a driver spends $1,500 annually on fuel, a 15% reduction could save approximately $225 annually. Over the vehicle's lifetime, these savings make autonomous cars a cost-effective choice.

FAQ About Self-Driving Cars

How do self-driving cars handle adverse weather conditions, like snow or heavy rain?
How well do self-driving cars work currently?
Are self-driving cars safe for kids?
Are there any government incentives for purchasing self-driving cars?

About Nathan Paulus


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Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.

Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.


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