I bought a new car last month and I was wondering if it would be the last car I ever buy. Or maybe the last car I ever drive?
I gave my old car which I had kept for 10 years to my son, Jon. He graduated college in three and a half years so we agreed that some of the savings from not having to pay for that last semester would be used to purchase him a car. Of course, he reminded me that the value of my old car is less than a third of what I would have paid for his last semester. Nonetheless, he was very grateful for the car and we both considered it a good deal for each of us.
I intend to keep my new car for at least 10 years. Let’s take a peek into the future to imagine what life, or at least transportation, could look like 10 years from now.
By now you’re at least familiar with the concept of driverless cars. What happens when driverless cars meet head on (pun intended) with the new sharing economy? Ride sharing companies like Uber and Lyft have already disrupted the taxi industry and will continue to disrupt the auto industry. When a friend and client asked me what I thought of Ford Motor Company as an investment, I had to ask myself “Is Ford a car company or is it a technology company?” If it’s a car company, it could have a limited future. If it becomes a technology company, it will benefit from the disruption taking place in the auto industry.
The disruption caused by driverless cars and ride sharing will not be limited to the auto industry. Old companies will become obsolete and new companies and whole new industries will pop up to meet new ownership demands and driving preferences. Imagine that towns and cities can repurpose acres of parking lots for commercial and residential use. If a self-driving car can drop you in front of your downtown office building, it won’t need to stay (be parked) in the city all day. Your driverless car can go out of city limits to an electric charging station and wait until you summon it back to the office to take you home. If you live in the city, your car doesn’t have to live there. It can be parked in a less expensive piece of real estate outside the city limits.
If you prefer not to have your car waiting for you at the charging station all day, how about earning income from your car by adding it to a ride sharing fleet? Several transportation studies conclude that the average car moves 5% of the time. The other 95%, they’re parked. This sounds like an incredible waste of time, money and space.
Since driverless cars are programmed to be more precise, not only will they be safer, but highway lanes wouldn’t have to be as wide. This means a four-lane highway could turn into a six-lane highway using the same amount of space. Speed limits can be increased to 80 or even 100 miles per hour. These changes would eliminate traffic jams, making travel easier, more convenient, more efficient and safer. We could eliminate drunk driving and texting while driving. What a benefit to eliminate 30,000 US highway deaths per year!
Of course, there are unintended consequences of every good intention. Fewer accidents would reduce hospital emergency rooms and related medical personnel. We would have fewer organ donations, and the gecko would need to find another job as auto insurers like Geico would suffer in a world with fewer (zero?) accidents. Body shops, cab companies, and trucking companies would be displaced.
Maybe this vision isn’t 10 years away. Maybe it will happen sooner. Artificial intelligence is here – today. If you don’t believe me, just ask Siri or Amazon’s Alexa. An IHS automotive study estimates global sales of 600,000 driverless cars in 2025, only eight years from now. The study further states an assumed annual growth rate of 43% between 2025 and 2035. This means 22 million driverless cars would be sold in 2035 and a total of 54 million driverless cars would be on the road by 2035.
Long range infrared thermal imaging radar (your driverless car will “see” that deer in the woods and be able to brake and avoid the deer before it crosses the road), vehicle to vehicle communication, software, semi-conductors, and advanced mapping are already being tested or used in cars today. The autonomous vehicles being tested today average 200 decisions PER SECOND!
Companies are preparing for these changes today. Intel recently paid $15 billion for Mobileye which makes software for autonomous vehicles. This shows me that big companies understand how significant this market will be.
Waymo is the driverless car unit of Google. Waymo reached an agreement last week with Avis where Avis will use its rental car lots as a depot for Waymo’s driverless car fleet. Avis, which owns Zipcars, will not only use its facilities to park the Waymo’s cars but it will service and clean the cars too. According to the Wall Street Journal, Waymo is ramping up a program it launched in April in Phoenix to eventually give hundreds of selected residents free rides in their self-driving cars.
Redwood City CA will be a test city for driverless cars for a geographic portion of the city. Most people never heard of Go-Mentum Station. Go-Mentum Station is a former military weapons depot located 30 miles north of San Francisco. It now contains 20 miles of paved city streets of varying terrains. The streets have buildings and urban infrastructures and are now a proving ground for autonomous vehicles and other high- tech transportation ideas.
If you’re telling yourself you’ll never give up your car, I’m sure there were many people who said the same thing about their horse when automobiles started to become popular. Of course, tomorrows individually owned, non-autonomous car might be the same thing a horse is today - a rare luxury.
Sources:
http://www.cfapubs.org/doi/pdf/10.2469/cfm.v27.n2.23
https://www.ihs.com/Info/1016/artifical-intelligence-automotives-whitepaper.html
https://thecapitalideas.com/artificial-intelligence-driverless-car/
https://www.wsj.com/articles/alphabets-waymo-hires-avis-to-service-its-driverless-cars-1498496915
https://www.wsj.com/articles/the-end-of-car-ownership-1498011001
