“You’re going to take our cars away!?”
You might yell that, in disbelief, after reading the title of this article. And yet, in twenty to thirty years, people will voluntarily give their cars away, in favor of a radically different model of transport: mobility as a service.
Several key technologies have recently emerged, which industry analysts believe will transform how we think about and use vehicles.
To understand the future, though, let’s recap the math of the current system.
The most popular car in the US is the Honda Civic, which costs about $20,000 to buy new. The average person uses their car for 62 percent of trips, traveling an average of 7,900 miles each year. With an average speed of 25 mph across all that driving, that makes for a total drive time of 316 hours annually.
In other words, Americans pay $20,000 for a driving tool, yet use it just 3.6 percent of the time during a year. For the remaining, 96.4 percent of the year, it’s left idle. Not a very efficient deal.
What’s the alternative?
While there are a number of alternatives to outright ownership, let’s focus on one in particular — the hired ride. Or taxi.
Taxis allow somebody to maximize the usage of a vehicle. Instead of having the vehicle out on the road only 3.6 percent of the time, it can be operational up to 60 percent of the time. That’s a 17x increase in efficient utilization.
The Future: Electric Taxi Robots
Of course, the expense structure is different. Since taxis require paying someone’s salary and profit on the asset, taxi rides simply can’t compete with ownership on a mile-by-mile basis. Even inexpensive taxi services cost in excess of $2 per mile.
Enter technology. New innovations will eventually push the price down to a point where taxis will be much less expensive than outright car ownership.
First, driverless technology will eventually get rid of the expensive human driver. That knocks off more than half the cost. Waymo announced in October that it is taking their driverless taxi pilot program to the masses before the end of 2020.
Second, newer vehicles are built to run on electric power – making them far less expensive than a traditional internal combustion engine. An electric car costs just 3 cents per mile to drive, compared to 16 cents per mile in a gas-driven car. That’s an 80 percent savings in fuel costs.
At present, electric cars like Tesla are more expensive that internal combustion ones, eating into the fuel savings. Technology, and the adoption curve, will make costs plummet over the next five to ten years, as mass adoption kicks in.
In addition, electric motors last substantially longer than diesel or gas alternatives. While a gas engine will last approximately 200,000 miles, an electric motor should keep going for at least 500,000 miles.
Put it all together, and electric vehicles are cheaper to run, last longer and should be less expensive to buy in the future. Another chunk out of the cost of driving.
Adding all those savings together, a fully electric fleet of autonomous cars will deliver trips for less than 10 percent of what it costs today. That’s on top of the 17x increased efficiency that comes with non-personal ownership.
Mobility as a Service Follows The Pack
At that price, what’s called mobility as a service (MaaS) becomes hard to resist. In other words, on-demand transport moves to a subscription model. Want to go to the pub? Log in a request for a ride. Within minutes, your transport ferries you to your destination and moves onto its next job.
Mobility as a service is fast, efficient and, most importantly, radically cheaper than outright car ownership. Beyond the dollars and cents, though, there are a host of reasons to switch from ownership to subscription.
- Being able to productively use commuting time
- “Driving” back safely from the pub
- Simpler, streamlined car payments
The list goes on and on.
The switch won’t be unlike the way we’ve moved to monthly subscriptions for other items we used to purchase or own. Many of us used to invest in large CD and record collections, Today, music on demand apps allow us to hear any song, anytime. We used to own or even rent movies – but Netflix and several other services now let us stream movies from one of our several devices.
There’s other examples as well. Husqvarna, a 329-year-old tool manufacturer, now offers a monthly subscription to its tools. Customers simply return them when they finish their project. StitchFix’s model replaces shopping jaunts with a monthly wardrobe update where clothes are selected by personal stylists.
The digital economy has trained us to want the outcome – not ownership. And in the end, we’ll just want the ride – not the car.
But maybe you do? If you’ve read through this article and still don’t see the appeal, tell me why in the comments.
Article published on 11/5/2019
Tom Butcher is a freelance writer who recently escaped the world of print journalism. He covers a wide range of topics, including business, motoring and digital. He is currently working with LeaseFetcher to tell the world about car leasing.