Why My Son Will Never Get a Driver’s License

driverless-car-header

Yea, you heard me.

My son, due to be born any day now (goodbye sleep!), will never have to sit through grueling summer driver’s education classes or feign the ability to parallel park while a stranger gripping a greasy clipboard and making weird wheezing noises glances warily from the passenger seat.

Yes, there will be cars on the road. No, humans won’t be driving them.

Better yet, the majority of humans will cease to own cars in the next ten years. That means no more leases, car loans, car insurance, two, three, and four-car households, shoveling remnants of the latest snowstorm off the roof, waiting in line at Jiffy Lube for the 5,000-mile oil change, haggling with the car salesman for a below invoice quote, or getting towed after parking in the handicap spot. How can this be possible?

Artificial Intelligence, Robotics, and Networks

Two separate but conjoined movements are in a collision course to change transportation forever: 1) Autonomous Vehicle Technologies and 2) Distributed Networks of On-Demand Transportation Services.

If you don’t think autonomous car technology isn’t going to control all transportation in the future, take a look at what Audi, Tesla, BMW, Waymo, Uber, Otto, Swift Navigation, and hundreds of other startups and established players are building. Recently, Tesla released a software update that allows owners to summon their parked cars to them and cruise unassisted on the highway at 80 MPH. Our self-driving overlords are on the doorstep.

The rush to achieve Level 5 automobile autonomy is the heart-pounding, bated-breath, trucks-full-of-cash type of fun, but in a few short years this technology will be ubiquitous. The true winner in the transportation industry will be the company that can merge autonomous vehicle technology with the largest network of available vehicles and consumers. Currently, Uber and Lyft have a stronghold on the networked cars market, and their value will increase substantially in the next decade.  Lyft’s recently-announced partnership with Waymo is a potentially lethal combination, and you might expect Tesla and Uber to join forces soon. Long-term competition in this space won’t likely come from upstarts like Fasten; they will come from the auto giants who will soon put their entire market value on the line to preserve their suffocating businesses.

Preparing for the Future, Today

Why is Tesla hitting the gas to launch the Model 3 mass-market car as quickly as possible? Because Tesla is subversively asking consumers to finance its autonomous vehicle fleet. Some Tesla owners are already making $1,000+ per month renting to others on car-sharing sites like Turo. In a few years, Tesla will send every customer an email giving them the ability to make extra money by allowing their vehicle to run autonomously on the Tesla network when they’re not using it. When these customers realize the on-demand option is better for their needs and their wallet, they will let their vehicle run on the network almost 100% of the time and subsequently refrain from buying another car ever again.

The New York Times just published an article on the lack of customer adoption of car-sharing models, but the reasons it cites, insurance nightmares, driver negligence, and accidents, can be at least partially solved through vehicle autonomy. Assuming driver-less vehicles become safer than cars with human drivers, the driver negligence and accident risks are minimized.

Reforming Urban Areas

A car sitting idle in a parking lot or garage is inefficient and wasteful. In fact, Fortune reported last year that today’s cars are parked 95% of the time. If all vehicles were operating at near 100% utility, all transportation needs in the United States would be satisfied with 5-10% of cars currently in operation. The death of many large automakers is nigh unless consumers use 5-10x more transportation than they do today, which is unlikely.

If you look at a satellite image of downtown Atlanta, you can just about make out every one of its 93,000 parking spaces, most of which sit unoccupied most of the time. A car is not useful while sitting idle in a parking lot or garage. Optimizing transportation and reducing the number of total cars produced allows cities to reclaim many of their parking lots and garages and redesign downtown.

New Revenue Models

Get ready to start paying for transportation like we currently do mobile phone plans. Instead of choosing between the 4GB, 8GB, or 16GB plans at Verizon, you will choose between the 250, 500, or 1,000 miles per month transportation plans, with a specified number of built-in “rush hour” miles. Just as adding additional lines drives the marginal added cost lower, so does adding additional family members to your transportation plan.

Unused miles will rollover, and you can accumulate mileage for that cross-country trip you were planning with dad.

Auto Industry Upheaval

In 2016, automotive manufactures produced over 250 vehicle models, up from 210 in 2000. Choosing a vehicle to purchase or lease is akin to walking down a cereal aisle and choosing the type of cereal you’re going to eat for the next 5 years. It’s a big commitment, with big dollars attached. When life circumstances change, such as a move to a big city where a car isn’t needed or the birth of a child, so do transportation and space requirements. Networks of autonomous vehicles can immediately react to each family’s evolving transportation needs.

There are over 2 billion smartphones in use worldwide, and over 90% run on Android or iOS. While there are hundreds of different models, the Top 10 smartphones dominate market share. The future of transportation will sport no greater than ten vehicle models. Just as originality in the age of smartphones has evaporated (I don’t care that over half my colleagues have the same iPhone 7 as me), so will the need to have hundreds of car models. A quick poll of my friends reveals none of them care which make and model UberX they hop into — they simply want the fastest, cheapest method of getting from Point A to Point B. Many automobile manufacturers will go out of business, and the remaining few will struggle to find profit as a mere commodity.

Always Watching

Wouldn’t it be great if Uber knew exactly when you needed a car? That future isn’t far off, as your Google Calendar will sync to the transportation network so it can anticipate when you’ll need transportation and where you intend to go. If your Google calendar shows a 30-minute gap between meetings and Uber’s network detects a crash on the normal travel route, it may send a text message suggesting you leave 10 minutes early to arrive at the second meeting on-time. The network will automatically recognize you moving to the elevators and make sure a car is waiting for you on the curb. No more opening an app to request transportation. No more waiting. Brace yourself for real-time, reactive transportation that thinks so you don’t have to.

The Auto Insurance Industry Expires

Differentiated data is key to finding success in the auto insurance industry. Vehicle telematics plug-ins have been a relatively easy way for insurance companies to better track your driving behavior, but they have exponentially less data than the automobile manufacturers. The elimination of human error (fewer accidents) from autonomous vehicle technology and an increase in the number and quality of sensors will decrease the cost of insurance and likely cause manufacturers or technology providers to bear the insurance costs themselves.

Autonomous driving will become a major platform that will spawn a new generation of innovators with ideas that will impact the world. Incumbents and disruptors alike need to position themselves as close to the consumer as possible, collecting data points that anticipate movement, behavior, and preferences. Is your company girding for the new world?
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Why My Son Will Never Get a Driver’s License

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