Will Autonomy Reduce Car Sales?

If you could click a few buttons on an app and order a car to take you to your destination while you worked or napped in the back seat, would you want your own car?This is the question car manufacturers are grappling with as they keep upgrading their advanced driver assistance systems to get closer to autonomous driving.

In fact, motorization – the proportion of cars to people – in the United States may have already peaked. Michael Sivak of the University of Michigan Transportation Research Institute analyzed motorization from 1984 through 2012, looking at the number of registered light-duty vehicles, plus changes in distance driven and fuel consumed. His most recent report, issued in April 2014, confirms his earlier finding that all of these metrics peaked around 2004. 

The actual number of registered light-duty vehicles reached its maximum in 2008, when there were 236,448,000 in the United States, according to Sivak's April 2014 report for UMTRI.
In 2012, that number had fallen to 233,761,000. Sivak thinks this is due to increased telecommuting and use of public transportation, fueled by moves back to urban centers and a greater amount of older (registered drivers? Why does this matter, because retirees or older folks owning fewer cars) drivers.

He thinks that these factors will continue to reduce the number of cars longer-term.Are automakers heading toward a tipping point, where fleets of autonomous vehicles, perhaps run by services like Uber, will make personal cars obsolete? Okay, no way. But it's clear that the availability of self-driving cars combined with technology infrastructure to get them to passengers just in time could continue that downward motorization trend.

The 2020 vision

The year 2020 is when many automakers have said they'll get so-called level-four (self-driving) cars into the market and on the roads. Once that happens, according to Jonathan Walker, senior associate at the Rocky Mountain Institute (RMI), they'll quickly become popular. RMI aims to drive the efficient use of resources. Walker says, "The safety records of autonomous vehicles will be excellent, and their costs will come down.

By 2030 you'll start to see places become autonomous-only. Then, you can start implementing those little Google jellybean cars. That's when I think the vision of the autonomous Uber starts to dominate."
It's important to note a few things: Most autonomous driving is expected to take place in dedicated lanes on the highway or designated areas within cities, until at least 2050, according to Walker. And autonomy won't reduce car ownership unless it's combined with infrastructure and services that not only enable but also encourage strangers to share vehicles.

Daniel Fagnant, an assistant professor at the University of Utah, calculated that autonomous vehicles could save the U.S. economy up to $37.7 billion from safety, mobility and parking improvements with only 10 percent market penetration, in terms of system-wide vehicle-miles traveled.

He performed computer-modeling analysis of the effect of shared autonomous vehicles (SAVs) plus on-demand services within the city of Austin. It showed that each SAV could replace 10 conventionally-owned household vehicles, while dynamic ride sharing could reduce overall vehicle miles traveled, providing lower overall waiting times for rides.
Notes Walker, "Better, cheaper and more convenient commuting is a great way to get cars off the road."

Peer-to-peer taxi services Uber and Lyft have already launched prototypes of such services. Taxi alternative Lyft has launched Lyft Line, a way for people to find shared rides, and Driver Destinations, a similar service that helps commuters find riders along their daily routes. It also offers Lyft for Work, enabling employers to subsidize Lyft rides to and from the workplace during specific hours. On its blog, Lyft says that increasing the average number of passengers in Los Angeles vehicles from 1.1. to 1.3, it could eliminate traffic in that city.

Meanwhile, last summer, Uber launched UberPool, a service that lets more than one rider traveling along the same route share the use of a privately owned Uber vehicle. Uber called it a "social experiment," but executives boasted to journalists that its impending launch in London could remove 1 million cars from the road. Lyft didn't respond to questions about its math.

While the taxi-like services provided by Lyft, Uber and Sidecar merely shift trips to different vehicles without reducing the total number of trips, making it easier for folks to casually carpool could keep cars off the road.
A fair proportion of those cars might simply remain garaged, but the availability of such services could influence the car-buying decision.

Citified

However, creating efficiencies by enabling people to share rides only works well in urban centers, according to Walker of RMI. But urbanization continues to grow: RMI calculates that today, 50 percent of US driving is to, from or within urban areas. Globally, by 2040, 70 percent of driving will be to, from and within urban areas.

A big hurdle to mass adoption of ride sharing will be balancing the need for vehicles during commute hours and off-peak hours, according to James Sayer, Research Scientist at University of Michigan Transportation Research Institute. "In the busiest times for traffic, like 7:30 to 9 a.m. and again from 4:30 to 6 p.m., there's going to be this huge demand. And unless they change the way we live dramatically, for example, setting work hours according to the availability of transportation, there won't be enough vehicles out there to satisfy everyone's needs. And in the meantime, not during rush hour, loads of those vehicles are just going to sit idle."

$1 trillion on the table

There will always be rural dwellers and suburbanites who need their own vehicles, as well as people who just like to drive. But if the year 2030 does bring city fleets of autonomous vehicle with dynamic ride-sharing services, "It will put a huge dent in car sales for OEMs," Walker says. "The model will either be sell one car at ten times the cost of one now or … there aren't going to be as many OEMs."

Some auto companies have seen the writing on the wall and are exploring "mobility," that is, how they could better fit into a world where transportation is multimodal. They're partnering with car-sharing services or, like BMW i Ventures, investing in startups that are building services to support more flexible models of car transportation.

Walker and RMI see huge potential for entrepreneurs who apply solutions including big data, autonomous driving and electrification to reducing total miles driven and car ownership. They peg this opportunity at $1 trillion. Because automobiles are typically the second largest-expense for Americans, he says, "There's a lot of money on the table for entrepreneurs to attack the high cost of mobility."

If you're interested in the future of automotive technology, you may want to take a look at TU-Automotive Detroit. TU-Automotive Detroit is the unparalleled event for the evolving automotive technology market as it converges with consumer electronics, mobile and IoT to re-define the telematics, auto-mobility and autonomous use-cases.

For the latest telematics trends, check out Consumer Telematics Show 2015 on January 5 in Las Vegas, Connected Fleets Europe 2015 on March 10-11 in Amsterdam, Telematics India and South Asia 2015 on April 13-14 in India, Insurance Telematics Europe 2015 on April 14-15 in London, Insurance Telematics Canada 2015 on April 23-24 in Toronto, Telematics Berlin 2015 on May 11-12 in Berlin, and TU-Automotive @ Detroit 2015 on June 3-4 in Novi, MI.


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