Mass market car makers are doomed by autonomous vehicles

US auto sales may drop about 40% in the next 25 years because of shared driverless cars, forcing mass-market producers such as General Motors and Ford to slash output.

Bloomberg reports that vehicle ownership will plunge as families move to having just one car, according to a report by the analyst, Brian Johnson.

He claims driverless cars will travel twice as many miles as traditional vehicles because they will transport each family member during the day on multiple journeys, he wrote.

Volume car makers “would need to shrink dramatically to survive,” Johnson wrote. “GM and Ford would need to reduce North American production by up to 68% and 58%, respectively.

The market for autonomous technology will grow to $42Bn by 2025 and self-driving cars may account for a quarter of global auto sales by 2035, according to Boston Consulting Group. By 2017, partially autonomous vehicles will become available in “large numbers,” the firm said in a report in April.

Johnson’s report, Disruptive Mobility, asserts the move to autonomy will turn the auto industry on its head.

GM and Ford didn’t immediately respond to requests to comment on Johnson’s report.

When most vehicles are driverless, annual US auto sales will fall about 9.5M, while the number of cars on American roads declines by 60% to fewer than 100M, he estimated.

Johnson sees the move as history repeating itself in the same way that the numbers of horses rapidly declined with the advent of the automobile.

He predicts the creation of four vehicle categories: traditional cars and trucks driven by individuals for work or in rural areas; “family autonomous vehicles,” owned by individuals and shared by a single family; “shared autonomous vehicles” that would be “robot taxis” summoned by smartphone; and “pooled shared autonomous vehicles” that accommodate multiple riders, like a bus or a van.

Every shared vehicle on the road would displace nine traditional autos, and each pooled shared vehicle would take the place of as many as 18, according to Johnson’s report.

He also predicts the cost of mobility dropping dramatically as robot drivers replace humans.

“By removing the driver from the equation (the largest cost in a taxi ride), the average cost per mile to the consumer could be 44 cents for a private ride in a standard sedan and 8 cents for a shared ride in a two-seater,” Johnson wrote, noting that would be “well below” the $3 to $3.50 a mile consumers now pay to ride in an UberX car or the $1 to $1.50 a mile for an UberPool vehicle.

The shift to driverless vehicles would benefit transportation network companies such as Uber Technologies Inc., autonomous technology providers such as Mobileye NV and makers of low-cost vehicles, according to the report.

“We see this as a further lid on the prospects for” traditional, mass-market automakers.


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