The big question about the evolution of car transportation is whether in the future, we will continue to buy and own vehicles, or simply hire them as and when we need them?
The answer pits the ideas of some traditional automakers, such as GM and others, against companies such as Waymo, Didi or AutoX. As the autonomous driving sector takes shape, we see Tesla and its increasingly sophisticated driving aids, which Elon Musk has claimed will soon allow him to operate a fleet of robotaxis and justify his company’s valuation, and on the other hand, companies like Waymo, Didi or AutoX that already operate fleets of fully autonomous cabs that are part of the landscape of several cities in the US, China and Russia. Some traditional companies such as Volvo are also aiming to operate fleets of this type or to supply autonomous vehicles for other competitors.
In contrast, companies like GM aim to market autonomous vehicles directly to the public by around 2030. This ignores the reality that cars underutilized outlays that, as a general rule, are in use by their owners around 3% of the time, while the remaining 97% they’re parked in a garage or on the street. But as we know, people like to own stuff, even if they don’t use it much, private swimming pools, for example.
If people are going to buy vehicles with autonomous driving technology then the cost the sensors and the technology they use will have to continue falling: LiDAR sensors, for example, have experienced very steep reductions in price and size from 2015’s “spinning KFC bucket” that cost about $75,000 to today’s $100 the size of a soda can or even smaller.
Meanwhile, Volkswagen is looking into subscriptions, at a cost that the company estimates at about $8.5 per hour. From the second quarter of 2022, Volkswagen estimates that it would be ready to offer owners of its ID.3 and ID.4 electric vehicles certain subscriptions, such as more range, more features or entertainment systems for charging times, which would be available by the hour at a given cost. The idea is complex, because it involves the company from which you purchased your vehicle turning certain features on or off in your vehicle, which implies, in the analysis many users might make, not that they allow you to access them when you pay, but that they deprive you of them when you don’t pay, something car users are not used to.
In any event, Volkswagen sees a future where we continue to own vehicles. The problem with that scenario, however, is not so much about the availability of technology, cost or a business model, but urban design: simply replacing the cars on our roads with autonomous vehicles would’t solve the problem of traffic jams. Many people would use their vehicles to run errands, to take the kids to school or avoid paying parking charges by simply leaving their cars on the road to drive around, which would lead to not less, but more road occupancy. Instead, we should be getting cars off the road and making our cities places for pedestrians, public transport and micro-mobility, thus improving our quality of life. This model would see autonomous transportation as a service rather than the current model of individual ownership.
In the eyes of most traditional car companies, any model that departs from individual ownership is a threat to sales. A service model based on fleets a different business, one they have no experience of. At stake is not just the future of carmakers, but the type of city we want to live in. It’s not just the traditional car manufacturers who have to be dragged screaming and kicking into the future, we as consumers have come to love our cars, often as status symbols. Moving away from the model of individual ownership to one of transport as a service would require very wide availability, competitive pricing and flexibility beyond the traditional oversizing (we use our vehicle to commute to and from work alone every day, but as we make a couple of trips a year, we acquire a large vehicle that is way more than we need for day-to-day use. We need to factor in efficiency and sustainability.
Will we be able to move towards a transport-as-a-service model, or will we still be buying vehicles decades from now, only using them a scant 3% of the time? Will the traditional car companies win, or will common sense prevail?