Society and industry is on the cusp of a revolution of moving people around – not in the next 50 years, but the next 15 years. While technological, regulatory, and societal challenges still exist, there are tremendous benefits to claim in cost, safety, energy, environment, and accessibility.
Before we look to the future, let’s look to the past: “In 50 years, every street in London will be buried under nine feet of manure” – Times of London, 1894. While it may sound odd now, at the time, this was a real concern, much like some of the challenges we face today around oil consumption and climate change.
Today we’re fortunate to have undreamed of levels of mobility and freedom, without the horse manure, but it is not without serious side effects:
- Safety: 1.2 million roadway fatalities worldwide, ~33,000 in the US each year
- Energy: 95% of transportation energy comes from a single source – nearly 20 million barrels per day in the US
- Environment: transportation is responsible for about 1/3 of US GHG emissions, the vast majority of which comes from vehicle use.
- Parking: significant costs in land use – up to 30% in some cities, delays, and costs; see Donald Shoup aka Shoup Dogg’s “High cost of free parking”
- Traffic: delays due to traffic are estimated to cost $100B+ per year
- Infrastructure: aging and costly at about $250M per day in the US
Fortunately revolutionary market trends, driven by technology and business for profit, are beginning to emerge and preparing to strike quickly. Within the next 15 years there will be abrupt disruption from Autonomous, Connectivity, Electrification, and shared/service-based business models – the automotive A.C.E.S.
Autonomous
Ready or not, here they come. Every day their are headlines about autonomous vehicles and technologies. The question is “when?”, not “if?”. This is beyond trendy names like Tesla and Alphabet (Google); a recent report from CB Insights showed 44 major corporations are investing heavily in autonomous research and development. But speaking of Tesla and Alphabet – all production Teslas have full self-driving hardware and Waymo (subsidiary of Alphabet working on autonomous vehicles) recently reached 3 million miles of self-driving on public roads.
Connectivity
The generic term of ‘connectivity’ encompasses V2X where X = other vehicles, infrastructure, pedestrians, and the electric grid. This interconnected system enables optimization and the otherwise isolated vehicle to enter a connected world.
Electrification
“People don’t want [battery] electric vehicles” – wrong, as evidenced by 350,000+ pre-orders with $1000 deposit for Tesla’s Model 3, a car most people haven’t even seen in-person. Yes, I know it’s refundable but the demand and hype has only been growing as Tesla delivers the first vehicle.
Battery electric vehicles (BEVs) offer several compelling value props that the internal combustion can’t compete with: improved drivability and instant torque (check out this Tesla reaction video), three times the per mile efficiency (100+ MPG-equivalent), less volatile fuel prices, zero tailpipe emissions, at-home, work, and retail charging options, improved noise, vibration, and harshness (NVH) characteristics, and essentially zero maintenance.
“What about range anxiety?” – ‘range anxiety anxiety’ is a more appropriate term as ~80% of people drive less than 40 miles per day. For longer trips, DC fast charging, even though it’s in its infancy, can almost already compete with gasoline, especially when meal and bathroom breaks are planned with recharging. The technology will only improve with time.
I forgot to mention the other desirable BEVs already in or on their way to the market from major manufacturers – Chevy Bolt EV, BMW i3, Hyundai Ioniq, Kia Soul EV, Nissan Leaf, VW e-Golf, etc.
Shared/Service-based business models
Combining these three technologies with on-demand ride-hailing (ie Uber and Lyft) enables a business model innovation – Transportation as a Service (TaaS). Rather than owning an expensive and depreciating vehicle you use less than 5% of the time, you have a more affordable, on-demand, fully autonomous, pure electric vehicle at your beck and call.
This TaaS model will accelerate BEV adoption. No need to wait for the 250+ million vehicle fleet to turn over – vehicle sales in the US are about 15M per year, meaning we’d have to wait over 16 years if every vehicle was BEV starting tomorrow, which it’s not. TaaS, however, turns over the vehicle fleet much faster given a higher utilization and vehicle miles travelled (VMT) per vehicle. Any fleet operator choosing the significantly less efficient internal combustion engine will quickly either switch to BEV or go out of business with a more costly and less competitive technology.
So what we have is the convergence of multiple, synergistic, and disruptive trends with the promise to accelerate BEV adoption and dramatically reduce horse manure, I mean GHG emissions, as well as other value propositions with tremendous societal and environmental benefits. I will end this concise preview of transportation disruption with one of my favorite quotes; pay attention to who said it too.
“The stone age came to an end not for lack of stones, and the oil age will come to an end not for lack of oil”
– Sheikh Yamani, former Saudi Oil Minister