To envision the potential impact of autonomous vehicles, think back to 1997 and the advent of the internet. At the time, it was unimaginable that well-established businesses such as video store chains and travel agencies would be almost completely wiped out within 20 years, and that everyday items such as CDs, printed photos, and landlines would be relics.
And if someone told you in 1997 that in 20 years, celebrities would use the internet to post pictures of their pregnant bellies, that you'd be able to watch hours and hours of cat videos, or that the president would be making controversial comments in 140 characters or less, you'd likely be skeptical.
Going forward, self-driving cars will cause similar disruptions as well as opportunities we can't even imagine.
That's the conclusion of a recent report by RethinkX, "an independent think tank that analyzes and forecasts the speed and scale of technology-driven disruption." It predicts that a power trio of autonomous, electric, and shared-use technology will have a huge impact on individual vehicle ownership and car companies and a "catastrophic" effect on related industries such as auto insurance, trucking, and oil refining, causing massive revenue and job losses.
The report forecasts that within 10 years of the regulatory approval of fully driverless vehicles, 95 percent of passenger miles traveled in the US will be via "on-demand Autonomous Electric Vehicles (A-EVs) owned by companies providing Transport as a Service (TaaS)." It also contends that on-demand A-EVs will be so ubiquitous and inexpensive that 70 percent fewer passenger cars and trucks will be produced each year.
The result will be "total disruption of the car value chain, with car dealers, maintenance, and insurance companies suffering almost complete destruction," the report says. Car companies, it adds, will survive "either as low-margin, high-volume assemblers of A-EVs or by transitioning to become TaaS providers."
"People simply won't own cars," one of the study's authors, Tony Seba, told USA Today. "The Ubers and GMs of the world will own the cars, and they'll be in use constantly, which will drive down the cost of each rides to a point where it will be economically irresistible to consumers."
Opportunities We Can Yet Imagine
While RethinkX believes car companies and related businesses will be decimated by self-driving technology, it also contends that consumers will benefit. As with the internet, this shift will create immense business opportunities.
As early 2021, TaaS options will be up to 10 times less expensive per mile than buying a new car and the average US household will save at least $5,600 a year by giving up gas-powered vehicles and traveling by A-EV.
With consumers saving cash normally spent on car payments, gas, insurance, parking, and other vehicle-ownership costs, the rise of TaaS will boost disposable income by $1 trillion by 2030. Since commuters will have more time available by not driving, the study also predicts that productivity gains will boost GDP by an additional $1 trillion.
James Arbib, the study's other co-author, noted that self-driving cars will also enable "a wide array of business opportunities, such as cafes on wheels, mobile entertainment, or workspaces. The ability to monetize TaaS platforms as companies have monetized the internet platform opens the road to free transportation in some areas."
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The report cites free rides subsidized by "advertising, data, entertainment and product sales," which sounds like popular services offered by Google, Facebook, Pandora, and other internet giants.
So it's not a stretch to imagine Google's self-driving cars giving free rides in exchange for data on passengers' travel and shopping patterns. Or a Starbucks-sponsored AV steering you towards one of the brand's store for a latte while running errands.
Arbib and Seba have a great track record of predicting tech disruptions, although we really have no idea where self-driving technology will lead us. But, as with the internet 20 years ago, we do know it will change everything, and in ways we can't even imagine.