Does The Private Automobile Have A Future?

The current rise in the “sharing economy” has some predicting major shifts in the automobile industry. For example, if people simply want to go from Point A to Point B (and maybe back) a few times a week, why bother making a major financial decision to purchase a vehicle when you can use a cell phone to quickly summon a car and driver?

The thinking goes that the demand for purchasing personal vehicles likely could decline as a result of this shift. Others have predicted that there will be major impact to cities in this transition. For example, will as many parking lots and parking garages be needed since office workers will potentially rely less on the personal car to get to work, sit in a garage all day, and then be used to drive home?

Will air pollution increase with numerous vehicles idling in cities while waiting around for a call? Traffic and road conditions would undoubtedly be affected. Will cities need to instantiate “cell phone waiting areas” for all those on-call drivers, similar to those areas now in many airports? If hundreds or thousands of office workers all call for their rides at 5:00 p.m., how will cities respond? Gridlock is not an agreeable condition. Will cities need to implement designated “pick-up areas” for such a need? Will cities’ police forces need to adjust for the change to different driving patterns and behaviors?

There are many possible ways to look at this. Not everything will change. Some unexpected things will obviously change dramatically.

If some individuals determine not to purchase a vehicle and rely on the sharing economy, someone else will be the purchaser of the vehicles that picks them up. If this change happens, then potentially the number of miles driven per year by an average vehicle may increase. With an average vehicle carrying a larger number of people-trips in a year, albeit for short amounts of time, how will the vehicles need to change? What features will vehicle manufacturers need to include that are not now part of what you buy today? What features of cars will be removed? How will this all affect the many subcontractors that supply parts to the manufacturers?

Between 1894 and 1930, there were 1,800 automobile manufacturers in the U.S. alone. (Info courtesy Wikipedia.) That’s a lot of companies. One can easily postulate that not all the current set of manufacturers will survive. There obviously will be a shakeout, once more electric and self-driving vehicles hit their stride.

How will all this change affect the auto parts companies, the auto repair industry? Will the home mechanic be obsoleted or will they be emboldened?

Vehicle insurance will surely undergo a transformation as a result. How will it affect vehicle insurance companies?

But wait, there’s more.
On top of all these potential or impending changes, depending on your view, there several other major trends that will loom large in coming years.

First is the expected increase in electric vehicles and the expected decline in gasoline driven vehicles. See Is It Time to Sell Oil Stocks?

Cities already have charging stations. That trend will likely increase. At the current trend, there are nowhere enough changing stations available. More, many more will be needed. The environmental cost of an electric charging station is much less than that of a gasoline station, at least at the local level. I can assume that is debatable whether the environmental cost of producing and transporting the electric power for a charging station is larger or smaller than the environmental cost of producing, refining and transporting the gasoline for a filling station. This is especially true if the power generating station is run on a petroleum-based product.

Second is the rise in self-driving vehicles. All the potential changes that might stem from individuals using the sharing economy to summon a driver get up-ended when self-driving cars enter the picture. One can easily see a future where it is a self-driving car that is summoned when you want a vehicle.

Thirdly, changes in public transportation loom. Already it has been estimated that in some cases public transportation suffers when ride sharing gains traction. And some locales are pairing ride sharing with public transportation, or using ride sharing to reduce or even eliminate public transportation. All of this has its own major implications for cities and regional transportation authorities, labor, and companies that manufacture transit-related infrastructure. Another fallout from this trend is the already clear major loss of revenue at airports because of the decline in airport parking and the decline in use of rental cars.

Other trends to consider:

  • Major effects on employment patterns and education are clearly imminent, as the growth drives jobs, and decline sheds jobs. Legal and other battles between companies developing self-driving technology are already in the news.
  • I recently read a blog post (I wish I could remember where) where the writer predicted that in about thirty or forty years, all vehicles will be self-driving, and that human-driven cars will not only be obsolete, but will be outlawed. That’s a stretch. But you never know where things could go.
  • Some ride sharing companies have started to boast that their services has deterred some customers from buying vehicles. Expect more announcements of this kind.

What do you think about the future of the private automobile?

The post Does The Private Automobile Have A Future? first appeared in Smile If You Dare.