Why The End Is Near For Car Ownership
There is an increasing realization that human error accounts for roughly 90% of road accidents. This statistic, championed by far-reaching technological advances, foretell of an impending driverless car revolution. This discussion is not about replacing all owned cars completely but about a state where autonomous vehicles could become a prominent part of our transportation system.
Private Car Ownership a Thing of the Past
Lyft co-founder and president John Zimmer made a bold prediction that private car ownership in US cities will virtually disappear by 2025.
Zimmer's post on Medium titled "The Third Transportation Revolution" woke people up to the fact that autonomous vehicle fleets will soon be hitting our roads. But it's his long-term view that is currently dominating headlines.
Over the next 5-10 years, Zimmer foresees a hybrid road network. Once the subscription model reduces the increasing costs of fuel, maintenance, parking, and insurance, he believes Lyft will be able to offer a better service at a lower cost that will disincentivize private car ownership.
Lyft's subscription model prophecy differs from Tesla's predictions of the future. Tesla CEO Elon Musk claims that it will be the autonomous car owners who will be renting their vehicles to others, rather than a third party such as Lyft.
Lyft in the Now
Here in 2016, Lyft has immediate challenges to overcome. The ride-sharing app is still lagging behind Uber. Worth mention is the fact that Lyft's prophesy came a few days after Uber picked up passengers with self-driving test cars in Pittsburgh. Whether the post is a PR move or not, both companies appear to agree that a subscription-based self-driving future is on the horizon.
The Big Picture
Anyone who has test driven a Tesla will tell that it feels like the line between reality and sci-fi is blurred.
Once costs begin to drop, it isn't difficult to picture a pay-per-mile plan or unlimited miles option similar to the way you now choose your smartphone contract.
Plus, it seems that millennials simply do not care as much about owning a car.
Advertisers have long promoted the car as a symbol of freedom and personal identity. Just you and the open road, when the reality of life is you spend an average of $9,000 a year driving just 4% of the time (source: Morgan Stanley research) to be stuck in traffic and a weekly visit to the supermarket. Morgan Stanley's research also reveals that of the 1 billion or so worldwide cars driven about an hour a day i.e. 365 billion hours per year, it is fascinating to note that nearly 8.4 trillion hours worth of cars are never driven each year. They just sit gathering dust. Even adding the 4% of the time that they are driven, they are massively depreciating in value for the consumers to the order of Trillions of dollars of cumulated wasted value. After your house, your car(s) are usually your biggest expense and more importantly your second most expensive asset. Much research has been done to suggest that if you drive less than 10k miles per year it is usually more economical to use a ride service such as Uber.
Source: Morgan Stanley
The global new generation has different ideas of what freedom looks like. In fact CISCO did a study titled "Consumers Desire More Automated Automobiles" that revealed nearly 57 percent of people around the world especially in developing nations would prefer to ride in an autonomously controlled car than with a human driver. In the United States, the number of people trusting autonomous vehicles was even higher at 60%. In fact 40% of US consumers said that in due time, they would be comfortable putting their kids in autonomously controlled vehicles. Personally I will admit that the last part was quite surprising to me although it does go to show that our thinking has come a long way, and in some respects we trust technology more than we trust humans, especially when we are behind the wheels. Perhaps we have all seen far too many aggressive drivers exhibiting road rage, I can only surmise. This last sentence bears value for many developing nations where road rules and traffic policing are not as defined as the United States, and thus reckless driving is the norm. The top two bars on the list below speak to this speculation.
Source: Cisco Systems
Having a wealth of online connections scattered around the world, no debt, and the ability to get anywhere they want by just tapping a screen makes for a counter-intuitive set of decisions in the eyes of a generation obsessed with property and ownership. Nonetheless, it's those values that are shaping the market landscape.
Many Americans claims that car ownership is about freedom, autonomy, status and 'The American Way" and that "Heart" is the main factor in car purchase decisions compared to the mind. Heart may be a factor indeed but it is not the main one. Let me qualify this assertion by offering the results of the latest JD Power and Associates survey on the top factors in car purchase.
When shopping for a new car, truck, SUV, or van, the "Expected Reliability" of a new vehicle continues to be the most important factor in the decision-making process. In fact, among the 84,000+ vehicle owners surveyed for the JD Power Initial Quality Study, 50% cite "expected reliability" as their top purchase reason underlining the importance of long-term dependability. Then comes "previous experience with the brand or a particular model” at 42%. Fuel economy/driving range at 37%. The remaining reasons that factor into a car shopper's purchase decision are (in order of importance) "reputation and reviews" (40%); "ride and handling" (39%); "price or payment" (38%); "safety" (37%); "quality of workmanship" (34%); and "4-wheel-drive or all-wheel-drive capability" (30%).
While some of these may have “heart” associated with it, the top reasons do not. "Expected Reliability" from the JD Power study above is perhaps the same reason that 60% of Americans in the Cisco Systems study are attributing to their positive consensus on autonomously controlled vehicles.
Lastly, to those that think this bastion of The American Way will remain the way it is, may I humbly offer a thought to ponder upon? Which of these tenets of The American Way do we realistically still consider to be active now or might we all be harboring some unsustainable delusions if we do?
"Upward mobility, privacy, abundant energy, efficient and abundant markets, safety of persistent organic pollutants, that we continue to be in peace, that we value education, and that we can ignore global warming"
Here is the bottom line: Surveys suggest that consumers are willing to trust driverless or automated vehicles more than we think. The skeptics are the smaller piece of the pie at around 40%.
So I ask you, are you ready to admit that your life might be simpler and more affordable without the hassle that comes with car ownership? Or will you be clinging to a floundering symbol of freedom and of the American dream?