The Driverless Future: An Omission

I recently published an article in TechCrunch called “Driving the new American Century” In which I lay out my vision for the future of transportation. The tl;dr version is that we will transition to a driverless future much sooner than most people realize and this transition will have far reaching effects, well beyond the transportation sector. In the rather lengthy article I intentionally based part of my argument on the rather large assumption that a driverless future would also be a future where cars are owned not by individuals but by major fleet services. I left this assumption implicit and unsupported because it wasn’t central to the article’s point and because I wanted to edit the article down to size. I will briefly address the gap here for those of you who want to go further down the rabbit hole with me.

The basis for the assumption is actually very simple. While the initial roll out of self-driving cars will take a two track approach (1) individual ownership and (2) ownership by ride sharing groups like UBER, ultimatlely individual ownership will very nearly disappear due to the increased efficiency and lower cost of shared ownership systems.

In a world where someone like UBER controls say 20% of the cars in the country, the maintenance on those cars is routinized, the parts are standardized, the work is done at cost (cutting out retail parts channels and service stations), the cars are stored in extremely efficient locations, they are charged by cheap renewable sources during non-peak hours, etc. These fleets are soooo much more efficient it is hard to imagine individual car ownership competing except in the case of the extremely wealthy.

Deloitte did an interesting analysis of all in cost per mile that helps quantify what sort of savings we are talking about:

Some may object that the car culture in the U.S. will never allow such a transition but the data doesn’t bear that out. Car culture has been dying in this country for decades and the death is accelerating. Teens no longer rush to get their driver’s licenses as soon as possible and an increasing percentage express no interest in ever doing so. The mobile phone has replaced the car as the modern path to teenager independence.

What makes the transition truly inevitable though is simple economies of scale. Once 20/30/40 percent of people make the most economic decision and opt for the ease and savings of a subscription driverless car the marginal cost of producing non fleet cars for individuals sky rockets. Ford can afford to sell a Taurus for $28,000 because it is manufacturing thousands of them. Ford has sold about 200,000 Tauru(i)(es)? since 2013 alone. When UBER can give you the option of riding in a 5 Series BMW equivalent on a subscription basis for 50% the cost of owning your own Taurus, the transition will only accelerate.

If I were you, I’d start thinking about what I want to convert my garage into once I can free up all that space. I’m thinking a conversation pit :-)