Death spiral for cars. By 2030, you probably won’t own one
Death spiral for cars. By 2030, you probably won’t own
one
By Giles Parkinson on 9 May 2017
By 2030, you probably won’t own a car, but you may get a
free trip with your morning coffee. Transport-As-A-Service will use only
electric vehicles and will upend two trillion-dollar industries. It’s the death
spiral for cars.
A major new report predicts that by 2030, the
overwhelming majority of consumers will no longer own a car – instead they will
use on-demand electric autonomous vehicles.
By 2030, within 10 years of regulatory approval of
autonomous electric vehicles (A-EVs), the report says, 95 per cent of all US
passenger miles traveled will be served by on-demand, autonomous, electric
vehicles that will be owned by fleets rather than individuals.
The provision of this service may come virtually free as
part of another offering, or a corporate sponsorship. Imagine, for instance,
paying a token sum for a ride into town after buying a latte for $4.50. Or
getting a free ride because the local government has decided to make transport
easier.
The report, by RethinkX, an independent think tank that
focuses on technology-driven disruption and its implications across society,
says this stunning and radical change will be driven entirely by economics, and
will overcome the current desire for individual car ownership, starting first
in the big cities and then spreading to the suburbs and regional areas.
This disruption will have enormous implications across
the transportation and oil industries, decimating entire portions of their
value chains, causing oil demand and prices to plummet, and destroying
trillions of dollars in investor value, not to mention the value of used cars.
At the same time it will create trillions of dollars in
new business opportunities, consumer surplus and GDP growth.
Lead consultant and co-author Tony Seba, who specialises
in disruptive technologies. His early forecasts for the enormous uptake of
solar where considered crazy, but were proved right, and he has since said that
new technologies will make coal, oil and gas all but redundant by 2030).
He says while the report focuses on the US, the forecasts
are valid for Australia too, because the transportation industry is global. And
he warns that the next car you buy now may well be your last.
“This is a global technology disruption. So yes, this
applies to Australia,” Seba tells RenewEconomy. “And this is going to happen
despite governments, not because of governments.
“Furthermore, the disruption will start in cities with
high population density and high real estate prices – think Sydney and
Melbourne then Perth, Brisbane and Adelaide – and quickly radiate out to the
suburbs, the smaller cities, and then rural areas.”
Indeed, there are some people who are starting to
anticipate this change, considering Australian-based business models and even
local manufacturing, such as those revealed on Monday by Michael Molitor, the
head of a new company called A2EmCo.
Seba does not say that individual car ownership will
completely disappear. By 2030, 40 per cent of cars will still be privately
owned, but they will only account for 5 per cent of kilometres traveled.
Autonomous cars will be used 10 times more than internal
combustion vehicles were, they will last longer – maybe one million miles (1.6
million km) – and the savings will inject an additional $1US trillion into the
pockets of Americans by 2030.
Seba admits that his forecasts are hard to digest. But
what he sees in the transition to autonomous EVs from privately owned petrol
cars is the same he has seen for all other major transitions: what he calls the
10x opportunity cost.
It happened with the printing press, it happened with the
first Model T – it cost the same as a carriage and two horses, but offered 10x
the horsepower.
“Every time we have had a ten x change in technology, we
had a disruption. This is going to be no different.”
And that change, he says, will happen on day one of level
5 autonomous EVs obtaining regulatory approval. “Basically, the day that
autonomous vehicles are regulatory accepted, transport-as-a-service will be 10
cheaper than cost of new vehicles,” he says. And four times cheaper than the
cost of already owned vehicles.
Why is this? Because everything will be cheaper.
Like his predictions on the rise of solar, and the sudden
decline of fossil fuels, Seba’s calculations are driven by simple economics.
Within few years, the upfront costs of AEVs will match those of petrol cars.
But the depreciation costs will be minimal, because the cars, owned by fleets,
will “last a lifetime”.
Maintenance costs will be significantly lower – thanks to
20 moving parts in the powertrain compared to 2,000 for petrol cars – and the
miles travelled significantly higher; they will be doing 1.6 million km by
2030, more than five times more than petrol cars.
Moreover, battery technology will improve, needing to be
replaced only once, and old batteries will be able to used elsewhere (in the
power grid). The cost of maintenance will be one-fifth the cost of current
cars, the cost of finance one tenth, and the cost of insurance also one tenth.
“The survival of car manufacturers will depend on
building cars with long lifetimes and low operating costs. This means that they
will optimise for minimum waste of resources in building and operating
vehicles, including designing vehicle platforms with parts that are
interchangeable and recyclable.”
The report outlines the huge benefits from this
transformation. Unclogging city roads, removing the pollution that is choking
major cities, savings millions of lives from accidents and trillions of dollars
in health impacts, and freeing up parking space.
We often forget about the health impacts of fuel cars. In
2015 in the OECD alone, outdoor air pollution lead to $US1.7 trillion annual
economic cost from premature deaths. According to the World Health
Organisation, 1.25 million people died from road traffic accidents around the
world in that year, and another 50 million were severely injured.
“Autonomous vehicles will be safer than human drivers,
leading to a decrease in road traffic accidents,” the report says. Although, to
be sure, any such accidents caused by faulty software rather than humans will
create huge controversy.
The nature of the vehicles may also change – with a range
of two-person, four-person, eight-person and even bigger vehicles in heavy
population areas.
It will also have an impact on geopolitics – with the
world no longer dependent on oil reserves for the bulk of its transportation
needs. This will benefit big transport fuel importers like Australia.
The “politics of lithium,” meanwhile, are completely
different to the politics of oil. Lithium is plentiful, although it needs
planning to ensure that the mines are in place to extract it, and its demand
can be reduced by recycling. Alternatives can be found for cobalt, currently
found mostly in countries such as Democratic republic of Congo.
Seba recognises that most people assume that the biggest
impediments to this scenario are behavioral issues such as love of driving,
fear of new technology, or just habit. The cost savings, the speed, the
increased safety and the extra free time will be key factors.
But he says that what he calls “pre-TaaS” companies such
as Uber, Lyft and Didi have also invested billions of dollars developing
technologies and services to overcome these issues. In 2016, these companies
drove 500,000 passengers per day in New York City alone.
“That was triple the number of passengers driven the
previous year. The combination of TaaS’s dramatically lower costs compared with
car ownership and exposure to successful peer experience will drive more
widespread usage of the service.
“Adopting TaaS requires no investment or lock-in.
Consumers can try it with ease and increase usage as their comfort level
increases. Even in suburban and rural areas, where wait times and cost might be
slightly higher, adoption is likely to be more extensive than generally
forecast because of the greater impact of cost savings on lower incomes.
“As with any technology disruption, adoption will grow
along an exponential S-curve.”
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