Weekly Brief: Reinvention Key to Automotive Revolution in 2020s
With the end of the decade comes the end of an era for electric vehicles.
That’s what Tesla found out last week when the US government announced it will not extend its $7,500 tax credit for new vehicle purchases. As a result, new Tesla models will cost the full sticker price at the start of 2020. Electric vehicles manufactured by General Motors will suffer the same fate soon after because GM has nearly hit the 200,000 vehicle threshold that phases out the federal tax credit. Some state tax credits may still apply. Both Tesla and GM mounted a last-second plea to extend the federal tax credit in Washington, D.C. but it failed to garner support among a Republican-controlled Senate and a White House that remain staunchly against solutions that limit greenhouse gas emissions.
The phase-out is expected to deal a blow to EV sales in the coming years. Add that to the list of momentum killers facing the transportation revolution as we shift into a new decade. Ride-hailing companies like Uber and Lyft went public in 2019 amid much fanfare, only for their stocks to tank in the subsequent months. As of last week, Lyft was down more than 40% since its IPO, and Uber was down 25%. Much of the skepticism among investors stems from the fact that, despite impressive market share and growth rates, neither company is anywhere close to profitability. Looking ahead to the 2020s, it’s unclear if they will get there any time soon, if ever, unless self-driving cars come along and eliminate the cost of drivers.
As for self-driving cars, they are stuck in their own rut as we move forward into the next decade. Ever since a self-driving Uber struck and killed a pedestrian in March 2018, the whole dynamic of the industry has changed. What once seemed poised to take the world by storm now seems destined to a slow drip of pilots and cautious deployments. Waymo has rolled out its first commercial service, Waymo One, at a glacially slow pace. Other central players like GM and Ford have pushed back their deployments or gone dark on their plans altogether.
A decade that started with a bang for the transportation revolution thus ended with a dud, begging the question of what the 2020s hold for the automotive industry. I will spare myself the embarrassment of making bold predictions that don’t come true. What I do feel confident predicting, however, is that the 2020s will be a decade of radical transformation. Change will happen at a faster rate than ever before. The digital revolution and artificial intelligence will open up whole new possibilities for work, connectivity and communication. Global warming will force governments, businesses and individuals to consider their carbon footprints and planetary impact in both profound and mundane ways. Resources will be exhausted. International alliances will shift and be strained.
In this world, business as usual will be unsustainable and every industry will be forced to reimagine itself, again and again. Reinvention rather than iterative improvement will be key. The transportation revolution that is already underway thus has the momentum behind it, even if it feels like it’s stuck in a rut right now. No doubt there is a lot of trial and error to come. No doubt some of the solutions that seem most likely to succeed will, five years from now, have fallen flat on their faces. That’s just the way it goes in a world where start-ups go from seed funding to billion-dollar unicorns in the span of a decade and where established businesses can collapse overnight.
On the whole, I remain optimistic that we are advancing toward a world where automobiles move more efficiently, get into fewer accidents, do less harm to the planet and improve their ability to transport human beings from place to place. Precisely how we reach that destination is unclear. Just remember to enjoy the drive along the way.
