KPMG researchers forecast that, thanks to transport-as-a-service, individual car ownership will see a “precipitous decline” in the coming decade. “As costs for ride hailing drop, KPMG predicts that by 2030 many families will no longer need to own a sedan to get to work or do errands, but will hail a ride instead. The result will be a “precipitous decline” to 2.1 million sedan sales annually in the United States by 2030 from 5.4 million sales currently, the study predicts, as families dump smaller sedans and keep larger vehicles for longer trips.
Bloomberg New Energy Finance predicts that the automotive sector will change more in the next 10 years than it has in the last 50. “The combination of supportive policy and improvements in lithium-ion battery technology have enabled electric vehicles to gain a toehold in a market that has been dominated by the internal combustion engine for over a hundred years. Meanwhile, tightening fuel efficiency regulations and urban air quality concerns are putting increased pressure on automakers to improve the rest of their fleet… An average vehicle is on the road for 12-15 years, creating significant lock-in to our current transport system…Drops in battery prices (and the native efficiency of electric vehicles) put them on a path to be cost-competitive with combustion vehicles. In response, automakers around the world are ramping up the number of electric models they offer – there are 150 different plug-in hybrids and pure electrics available today, and this is set to rise to over 240 by 2021. Groups like VW, Daimler, Volvo and Nissan have made aggressive plans to electrify their vehicles over the next 10 years. China’s 2025 auto plan calls for internal combustion sales to flatline and EVs to make up all vehicle sales growth over the next 7 years. Its recently introduced ‘New Energy Vehicle’ quota requires automakers to sell a set percentage of electric or fuel cell vehicles, which it will ratchet up over time. China is doing this not just to reduce oil imports and improve urban air quality, but also for industrial policy reasons. As the vehicle mix shifts, China wants to position its domestic automakers to leapfrog established international brands. A thriving, globally competitive auto sector is a major source of employment, investment and innovation. BNEF’s Electric Vehicle Outlook concluded that 54% of the world’s vehicle sales would be electric by 2040, with Europe, China and the U.S. the largest EV markets. Some countries will get there much sooner. In Norway – the leader on EV adoption – sales are already above 40% and the government is aiming fully to phase out traditional vehicle sales by 2025. Global passenger electric vehicle sales will hit about 1 million in 2017, up from one hundred thousand just a few years earlier. There are now almost 3 million electric vehicles on the world’s roads. BNEF analysis is based on economics and current technology trajectories, (but there are other factors that could accelerate these trends) a step-change in battery density or an improvement in charging technology options would hasten the transition. National governments in the UK, France, the Netherlands and even India have indicated that they want to phase out internal combustion engine sales altogether. While these targets typically lack specific measures, they show just how quickly the landscape is changing. In the world’s largest cities, urban dwellers are becoming increasingly concerned with poor air quality and could force municipal governments to move even faster than their national counterparts. Policy has a big role to play here.
On top of all this, new mobility business models such as ride hailing and car sharing are gaining traction around the world. Some customers are opting to buy kilometers of mobility rather than a vehicle of their own. Autonomous vehicles are set to debut in the 2020s and would accelerate this trend. At high utilization rates, electric vehicles have much lower costs per kilometer and could be ideal for these types of applications.
The automotive sector will change more in the next 10 years than it has in the last 50. And the former GM vice chairman said we are “approaching the end of the automotive era.” Industry is keeping pace to meet these predictions. GM’s Cruise Automation – which says it’s ready to start mass-producing self-driving cars – plans to launch a TaaS platform by 2019. GM said at the end of Nov 2017 that it intends commercially launch “at scale in dense urban environments” self-driving cars for a ride-sharing service by 2019. GM also remarked that it was on its way to producing autonomous, ride-sharing vehicles at a cost “well under” $1 per mile by 2025. On Sept. 12, Cruise Automation, which is owned by General Motors, announced it’s ready to start mass-producing the first production model self-driving car, the Cruise Generation 3. CEO Kyle Vogt said in a blog post, Generation 3 is the first car that’s not only ready to be mass produced, but also fulfills both the redundancy and safety requirements necessary to operate without a driver. “This isn’t just a concept design — it has airbags, crumple zones, and comfortable seats,” Vogt wrote in a Medium blog post. “It’s assembled in a high-volume assembly plant capable of producing 100,000’s of vehicles per year, and we’d like to keep that plant busy.” GM and Cruise are viewing the Generation 3, which resembles the Chevy Bolt, less as a potential car for consumer ownership and more as a business tool for areas like ridesharing (GM and ridesharing service Lyft have agreed on a long-term strategic alliance), according to Car and Driver.
Ford and Lyft aim to have their self-driving TaaS ready by 2019. At first human-driven cars from Ford will carry Lyft passengers. The automaker plans to connect its self-driving test cars to Lyft’s network. Lyft also has partnerships with Google’s Waymo autonomous car unit and General Motors. And more companies are teaming up – like Waymo and Intel, Uber and Volvo, BlackBerry and Qualcomm, and other startups – a trend that will likely continue as tech and car companies strive to corner market share.
Cities, on your mark: two years ago, few cities were preparing for autonomous vehicles. Now 38% of America’s largest cities are preparing for AEVs in their long-range transportation plans. The urban transformation will fundamentally change our city culture, writes the New York Times, and leaves many wondering what we’ll do with our parking infrastructure. Cities and states, like Tampa, Las Vegas, Denver, California and Minnesota, began testing autonomous vehicles on their streets. And China now has 290 cities that have initiated “smart-city” pilot projects to prepare for AEVs, which will help further speed the transition.
Once fully autonomous cars begin operating en masse, co-founder Jamie Arbib told the Washington Post, the pace will only accelerate. “These cars learn by doing,” he said. “The more miles they’re covering, the more experience companies will have adapting to different cityscapes, atmospheric conditions and regulations.”
Considering these trends, experts are trying to figure out how this disruption will impact our cities, housing costs, and infrastructure, while state and national policymakers are considering how they should approach the transition. (See our policy primer for more considerations.) There are approximately 2.5 times as many parking spaces as people in the U.S. That space could be used for homes or green space once cars aren’t left sitting idle — which, today, they are about 95% of the time. (Source: ACCESS magazine Note: Only counting passenger vehicles. Vehicle and parking estimates as of 2011. Population is estimated at 326 million)
China is poised to lead the world in electric vehicle adoption. With its dramatic increase in investments in batteries and EVs, the largest car market in the world is gearing up to phase out the internal combustion engine entirely. Because of its ambitious goals, China is witnessing a wave of electric vehicle start-ups. On the heels of these recent developments, RethinkX co-founder Tony Seba was invited to China to deliver the keynote presentation to an audience of 1,500 at the 2017 Global Future Mobility Forum, hosted by China EV100, where he met with electric vehicle industry leaders and policymakers to discuss the coming transition. “If you look at Detroit in the early 20th century, there were 250 carmakers, and that is pretty much what China has in electric vehicles now,” Seba told the New York Times in an interview. “They are far ahead.”
TaaS will save lives. As the Financial Times put it, one invention has killed many, many times more people than the nuclear bomb and guns put together: the motor car, with a human behind the wheel. AEVs may also improve lives, increasing mobility for our most vulnerable populations: the elderly, poor and disabled.
The coming disruption will happen quickly because AEVs will be cheaper and better. The cost of operating an AEV will be as little as one-quarter that of even a paid-off gasoline car, and the engine can outperform ICE vehicles. “Whenever the market delivers an electric competitor to the F-150, it will disrupt that market,” RethinkX co-founder Tony Seba told MarketWatch. By 2030, 60% of light-duty vehicles are expected to be owned by fleets that provide transport-as-a-service—think electric, autonomous versions of Uber, Lyft or Didi—and only 40% to be individually owned. However, since fleet vehicles will drive 100,000 miles a year apiece, they will contribute 95% of the total miles driven in the U.S., while individuals will only contribute 5% of the miles. Also, the total number of vehicles in the U.S. will shrink by 80%, because individuals will stop buying cars for themselves and opt for these services instead. The day autonomous vehicles are approved, the per-mile cost of autonomous electric vehicles will be one-tenth that of a new car, because electric vehicles last 500,000 miles and are being designed to last at least 1 million miles. The cost of operating autonomous electric vehicles will be as little as one-quarter that of even a paid-off gasoline car.
Ahead of his visit, RethinkX’s groundbreaking report, Rethinking Transportation was translated into Mandarin and shared with important decision makers
See more recent coverage of RethinkX from Forbes, The New York Times, Bloomberg, Quartz, The Wall Street Journal, and The Washington Post
WSJ article https://www.wsj.com/articles/will-electric-vehicles-replace-gas-powered-ones-1510628461
Tony Seba, an author and entrepreneur; Kate Gordon, senior adviser at the Paulson Institute, a think tank focused on U.S.-China relations and sustainable economic growth; and Nawar Alsaadi, an author and principal at investment-advisory firm Semper Augustus Capital.
Gordon: I am all in favor of electric vehicles, and I do believe that their market is going to grow exponentially, especially with China and India putting in new electric-vehicle mandates and incentives, and driving down the costs dramatically as a result.
However, replacing the current vehicle fleet with an electric-vehicle fleet—even if fewer people are driving, as Tony notes—is in large part a matter of individual owner economics. The majority of Americans drive the cars they can afford, and “affordability” is about upfront cost, not cost over the period of ownership.
Americans are actually holding on to their cars longer since the 2008 recession; in fact, the share of cars 11 to 20 years old in the U.S. vehicle fleet increased by 33% between 2008 and 2012. Those with older cars often just let them run down, and then buy from a neighbor or friend.
The secondhand market will increasingly include hybrids and more-efficient cars, thanks to fuel-economy standards, and we’ll see the fleet slowly become more efficient and more electric. But this won’t be a sea change—especially in low-income rural areas, where people are most dependent on their vehicles today.
WSJ: Kate, how soon do you think before we see electric vehicles replacing gas and diesel vehicles?
Gordon: I think electric vehicles will replace internal-combustion vehicles as new-vehicle sales by maybe 2030. I think the entire turnover of the fleet won’t happen for at least another 10 years. Both will take significant policy action, including regulation, which will be subject to political whims.
Seba: Analysts today make the same mistake that experts and mainstream analysts made when the first iPhone came out in 2007: Why would anyone want to buy a $600 smartphone when they can buy the $100 Nokia? The smartphone was a superior product with a lot of functionality beyond making a phone call. Electric vehicles are similarly a superior product to internal-combustion vehicles.
The electric drive train is superior in acceleration, power, etc. The Tesla TSLA, -0.09%Model S was named the Motor Trend Car of the Year as far back as 2013. Consumer Reports named it the best car ever made. One-tenth the cost of charging per mile, one-tenth the cost of maintenance, 500,000-mile life vs. 140,000 to 200,000 for an internal-combustion vehicle. Some electric-vehicle companies are making the million-mile electric vehicle. You can charge anywhere. You can charge your house with your car or your car with your house.
There are two ways in which electric vehicles can/will disrupt the market. No. 1: The replacement of the internal-combustion vehicle by the electric vehicle. By 2020, consumers will be able to buy an electric vehicle with the performance of today’s Porsche for 10% to 20% less than the median new car in America. So the electric vehicles will be cheaper to buy, more powerful, 80% to 90% cheaper to fuel, and 90% cheaper to maintain. Electric vehicles will continue to drop in cost so that by 2025 all new vehicles will be electric. This is a slower disruption because it’s a 1 to 1 substitution of the existing car fleet.
No. 2: The replacement of car ownership by transport as a service—individuals stop buying new cars altogether, both electric vehicles and internal combustion. In cost and value, transport as a service is dramatically better, leading to a much faster disruption. There are much more powerful feedback loops here, and much greater gains for individuals and society that will accelerate it. All these will cause policy makers to enact new legislation that will accelerate the disruption.
Alsaadi: I have certainly seen pro-electric-vehicle analysts mention smartphones as a template for electric-vehicle growth, yet I don’t see how this is applicable to electric vehicles. Smartphones delivered a superior product with more functionality at a higher price point to existing Nokia phones at the time. Electric cars are offering an inferior product at a superior price point. This is a surefire formula for failure once subsidies are removed. If there is any disruption in the market, it’s disruption by pro-electric-vehicle regulation, since regulation is forcing electric vehicles on consumers at a great cost to taxpayers. I am not sure why it’s assumed that a transport-as-a-service fleet will be electric. Car 2 Go, one of the most successful car-sharing services in North America, eliminated many electric cars from its fleet in 2016 due to a number of issues, including lack of infrastructure. Regulation in countries such as China will have a meaningful impact on electric-vehicle adoption. Chinese electric-vehicle incentives have been subject to widespread abuse, thus forcing the country to cut electric-vehicle subsidies, which have had a notable impact on the electric-vehicle sales growth rate in 2017.
WSJ: Nawar, We’ve seen steady improvement in battery costs and electric-vehicle range. Does your timeline depend on those improvements slowing or coming to an end?
Alsaadi: I am taking into account the potential decline in battery cost. I am also assuming this will be offset to a large extent by subsidy elimination. As for electric-vehicle range, I do see improvement. However, internal-combustion cars’ efficiency will also improve during the same time frame, thus undermining to some extent cheaper electricity refueling cost. Finally, I think we need to be cautious about the gospel of forever-lower battery prices. Potential bottlenecks are also appearing in regards to battery components, such as Volkswagen’s failure to secure sufficient cobalt supply for their electric-vehicle plans. These issues may be resolved or addressed at some point, but they could slow or reverse low battery-price trajectory for some time.
Seba: Battery costs have been dropping faster than most analysts expected. Lithium costs have more than doubled, but lithium-ion battery costs have still dropped by about 20% a year since 2010, an even faster rate than before. Cobalt may become a bottleneck for those whose batteries use cobalt. But 80% of China’s EV batteries use no cobalt. And those who do use cobalt are learning to use it more efficiently. The increase in investments, R&D, learning curve, economies of scale, and so on will bring the cost of batteries dramatically down.
Gordon: Tony, how do you deal with culture? The best-selling vehicle in the world is the Ford F-150 truck; it has been the best-selling in America for years.
Seba: Electric vehicles are far more powerful than internal-combustion-engine vehicles (while being far cheaper to maintain and fuel). Whenever the market delivers an electric competitor to the F-150, it will disrupt that market. Trucking will likely undergo a faster disruption than cars. While many people associate trucking with long distance, more than half the freight in the U.S. is driven less than 100 miles, and 71% travels less than 250 miles.
Electric trucks with 100-mile range are approaching the upfront purchase price of their internal-combustion-engine peers. Given the order-of-magnitude savings in energy (and maintenance) of electric trucks vs. internal-combustion-engine trucks, these savings alone would justify a wholesale conversion of fleets. The electric-truck disruption of internal-combustion-engine trucks will start sooner and have a faster adoption curve than the mainstream anticipates.
Gordon: The point isn’t that electric vehicles are/can be stronger and more effective. It’s that there’s a cultural bias that plays into car ownership. People don’t always make ownership decisions rationally.
I agree partially about larger vehicles. Fleet vehicles will transition sooner because they’re under the control of a single owner, usually turned over quickly and go short distances. I’m less confident about heavy-duty trucks, which may go to hydrogen or another technology rather than electric because of battery size/weight issues.
Michael Totty, a former news editor for The Journal Report in San Francisco, can be reached at firstname.lastname@example.org.
As technologists imagine the driverless world, they seem to be doing so with a distinct lack of imagination.
Brown is a creator of the Driverless City Project, an interdisciplinary research initiative at I.I.T. that takes a playful, rigorous approach to envisioning the fully autonomous future. The project helps participants generate various situations for a city in order to determine how autonomous cars will fit into the picture. Central to the project is a “mind map” representing the group’s research, organized into four areas of impact: street space, parking space, commuter space and delivery space. The map, as well as other tools — including a set of large tokens for scenario building, like a tarot deck for urbanists — is meant to encourage others to be ambitious and creative about the world in which they want to live. “We should write the future,” Brown says, “rather than trying to predict it.”
Brown has found two prevalent attitudes when it comes to self-driving vehicles: either an active but unimaginative approach, rushing to build robots to accommodate the world as it is now, or a totally passive approach, a sort of “wait and see.” The first, he says, is characteristic of the tech industry; the second, of the public sector. “I hear too much surrendering in the question about our future right now,” he adds. “Just surrendering to Google or Amazon, or surrendering to your phone, or surrendering to a driverless car. We should not surrender.”
One way to stave off surrender, Brown believes, is to invite more diverse thinkers, like architects and urban planners, into the process of imagining and designing the autonomous future. (He also listed sociologists, fiction writers, Buddhist monks, poets and rabbis as useful stakeholders.) The current discourse around the future of autonomous vehicles is centered on “technologically deterministic fantasies,” Brown says. He’s concerned that technological values — like logic, predictability and efficiency — will be erroneously imposed upon the built environment, leading to urban spaces that fail to take into account delight, pleasure or human connection. “A society is cultural, and political, and aesthetic, and about desires — it’s not just how you solve problems,” he says. “They’re going to need more than just software engineers working on it.”
I love my car… but not that much
By James Arbib | October 31, 2017
Like it or not, autonomous cars are coming right around the corner, and even the most committed motorheads will soon see the (electric) light.
The reason is pretty simple – we may love our cars, but we love money more. And the massive financial disparity between individually owning a car and using an autonomous, electric vehicle (A-EV) means there can only be one winner.
Indeed our research shows the average American family would save more than $5,500 a year by switching to transport-as-a-service (TaaS), where you hail an A-EV wherever and whenever you need it. That equates to an almost 10% pay rise for the average earner.
And once widespread adoption makes A-EVs even more efficient and gasoline cars harder to maintain, TaaS could be up to 10 times cheaper.
Of course owning a car has, from a purely financial point of view, always been a pretty stupid idea. As soon as you drive a new car off the lot, it’s lost on average 10% of its value. One year down the road it’s lost another 10%, while after three years you’ll be lucky to get back much more than half what you paid for it.
Not only that, but you have to pay handsomely just to keep it running, through safety inspections, registration fees and insurance, not to mention parking and the cost of gas itself.
And this for an asset that sits idle, literally parked up gathering dust, on average 96% of the time! If your financial adviser came to you suggesting such a major outlay on such a poorly-performing asset, you’d tell them where to jump.
The reason we do it, of course, is because there is no cost-effective alternative. But in TaaS, there soon will be.
Early adopters will recognize the benefits from day one. The cost savings are clear, but there are other advantages.
Most Americans drive alone to work, with the average commute almost half an hour one way. That’s nearly one hour freed up, each and every day. Should you choose to work in that time, TaaS becomes not just a cost saving, but a revenue generator.
You could of course instead choose to watch the latest series or movie, make some calls, read or even sleep. The point is the time is yours to do with as you please, free from the endless stresses of driving in traffic jams, stresses that have been shown to affect adversely heart rate, blood pressure and anxiety levels.
Not everyone will be convinced. Many of us have a strong emotional connection to our cars. They represent a coming of age, a freedom to escape at any time, an expression of our individuality. But even these sentimental bonds will soon be broken.
Just imagine how the move to A-EVs plays out. As early adopters spread the word and media coverage grows, more and more people give TaaS a go – there’s no commitment, it’s cheap and a car can be hailed via an app just as it is now with Uber or Lyft.
Soon enough, some people decide there really is no need to own a car anymore, so they sell theirs. Meanwhile, TaaS just gets better and better – more cars, cheaper rides, shorter waiting times – attracting more and more new customers.
Before long, used cars begin to flood the market as people rush to ditch their expensive gas-guzzlers. At the same time, demand for these cars falls dramatically as more people realize the economics of car ownership no longer stack up against TaaS. Increasing supply and falling demand deliver a double whammy to used car prices. Buying a new car simply makes no sense at all.
Carmakers stop investing in R&D for gasoline cars and concentrate instead on A-EVs. Gas cars get more expensive and stop improving, making them even less attractive, pushing sales ever lower. Used car dealerships begin to struggle, while garages, whose sole purpose is to maintain these unfashionable cars, start to close as the whole supply chain begins to break down. Spare parts become ever harder to find. Inevitably gas stations start to disappear as demand for fuel dwindles – range anxiety suddenly flips from electric vehicles to gasoline cars.
All the while more people are switching to TaaS as city planners and regulators encourage more A-EVs as they prove to be faster and safer than cars driven by humans. Indeed public opinion moves from being skeptical of autonomous vehicles to being nervous about human drivers.
This is soon reflected in insurance premiums, which become prohibitively high for the majority of drivers, sounding the death knell for the widespread use of gasoline-powered cars driven by humans.
A bold vision of the future perhaps, but we believe an inevitable one.
That the internal combustion engine will soon be a thing of the past is unquestionable. Individually-owned cars driven by humans will quickly follow suit.
Neither will be missed as much as many now believe. The future of transport is simply too enticing.