Peak Car is Coming — Faster Than You Think

 In TRANSPORTATION

“Transportation Network Companies” have the potential to reduce consumer costs by $1 trillion, reduce a gigatonne of carbon emissions and save thousands of lives in the U.S. alone

Using autonomous vehicles as a taxi will be cheaper than owning a car … in less than two years

Personal vehicles on roads will decrease by 40% by 2035

Automated mobility services will be a $120 billion opportunity as soon as 2025

As we planned the very first CityAge conference in in 2012, we met the team setting up Car2Go in Vancouver. They told us that Daimler (Car2Go’s parent company) knew that selling cars wasn’t the future of their business. Instead, it would be car sharing services.

Fast forward to 2016, and the future is here. An important new report by the Rocky Mountain Institute (RMI) puts some numbers behind the radical transformation about to hit the personal transportation market.

The cost of buying and operating your car today is about $0.85 a mile. Using Uber all the time would cost you roughly $2 per mile. But more than half of that cost is paying the driver. So automation is going to cut the cost of ride sharing services like Uber, Didi and Lyft (and soon probably Apple, and Tesla’s ride sharing service, and others) in half.

At the same time, the cost of electric vehicles is dropping fast. The RMI forecasts that electric cars should be cheaper than gas vehicles by 2018.

This will transform business models. Car companies won’t just sell cars, they will run networked automobile fleets, allowing consumers to pay for on-demand use of cars and, probably also rent out those they purchase. Instead of a car being parked 95 per cent of the time, it will be used a lot more, thanks to the cloud technology that allows us to follow and rent our cars with a smart phone.

Suddenly, the entry economics of the electric car — which will increasingly fit in the climate change imperative of reducing fossil fuel emissions — are much more competitive. Network transportation companies will operate large electric fleets, increasing turnover.

Some electric car visionaires predict that by 2025 we could see a majority of electric vehicles on the roads. If you own a gas car, there’s a good chance it’s the last one you’re ever going to buy.

And all of this is happening in a market that is worth $600 billion in the U.S. alone (which is why Uber is a $60 billion dollar copmany).

The RMI forecasts revenues in automated, shared, mobility services in the U.S. of $100 billion by 2025. This will come at significant expense for auto companies who don’t transition their services quickly.

The new business models will be bad news for oil companies, but good news for utilities, who should see a 10% increase in national demand by 2040. Whether that increase comes from renewables or fossil fuels will be a critical question.

All of this relies n the technology curve for automated vehicles continuing its rapid progression. Regulatory hurdles and a slower take up of autonomous vehicles could slow the revolution. Many people we know enjoy driving, after all, and won’t give that over to a robot. But the trend lines are real, and they’re happening fast.

It will have major impact on more than how we drive. Cities collect hundreds of millions from parking fees and traffic fines, but those will be reduced. Gas tax revenues pay for public transit, but will we consume as much gas? What happens to the real estate now occupied by gas stations and parking lots? And how are we going to deploy enough electric charging stations, quickly enough? And how will that electricity be generated? How prone will self-driving cars be to hackers?

CityAge aims to gather the leaders who will shape this transition. Email or join us at an upcoming event to take part in this important conversation.

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