Old-fashioned ownership of petrol-powered cars will soon enter a death spiral, unable to compete, write James Arbib and Tony Seba
Transportation disruption will dramatically redraw the urban landscape. What will your city become?
We’re on the cusp of the deepest, fastest and most consequential disruption of transportation in history. The convergence of on demand, autonomous and electric vehicles will end more than a century of individual ownership of the petrol-powered car and reshape the urban landscape and economy.
We examine this disruption in Rethinking Transportation 2020-2030, the first report from independent think tank, RethinkX. Our key finding suggest that within ten years of widespread regulatory approval of driverless vehicles, which we anticipate in 2021, 95 per cent of US passenger miles travelled will be served by on-demand autonomous electric vehicles owned by companies providing transport as a service. By 2030, fleets of driverless autonomous and electric vehicles will take us wherever we need to go – and it will be vastly more affordable than how we get around today. Mainstream analysts have failed to see how cheap transport as a service can be, and therefore, how fast it will be adopted.
Cost-per-mile will become the key business metric in the transportation industry.
Transport as a service will be up to 10 times cheaper per mile than buying a new car, and four times cheaper than operating an existing vehicle. Autonomous electric vehicles will cost 70 per cent less to refuel and 80 per cent less to maintain than petrol-powered ones. Eliminating driver error will slash insurance costs by 90 per cent. Old-fashioned ownership of petrol-powered cars will enter a death spiral, unable to compete.
In addition, each on-demand autonomous and electric vehicle will travel more than 100,000 miles per year and drastically reduce the number of passenger vehicles on US roads, from 247 million in 2020 to 44 million in 2030. This will free up enormous space in cities and greatly reduce traffic. Vacant car parks and spaces will open up a third of the landmass of many cities, ushering in a once-in-a-lifetime opportunity to rebuild the urban landscape. Los Angeles alone will reclaim the equivalent of three cities the size of San Francisco. What portion of this new urban space should be allocated to green parks, walkable space, affordable housing or new businesses?
The advantages of this model will also reshape the economy. The average American household will save a minimum of $5,600 (Dh20,500 per year) – adding $1 trillion to the annual disposable income of US households, the single largest economic boost in American history. We foresee another $1 trillion in productivity gains, as people work, study or shop instead of wasting time behind the wheel. This evolution will also enable new businesses and revenue sources: picture coffee houses on wheels, mobile entertainment and mobile workspaces. And those who are not well served by our current car-ownership model, including the disabled, the elderly, the young and low-income people, will enjoy unprecedented levels of mobility, increasing their economic opportunities.
Economics will drive this disruption, but how these changes play out is dependent in large part upon the decisions we make today. City planners, community leaders and citizens should begin to plan for the cities they want in ten years time.
Policies that protect incumbent industries and ignore this disruption will make the whole population poorer and their economies much less competitive. Thus it is vital that we redirect investments away from infrastructure that assumes “business as usual.” Planners should stop spending taxpayer money building new parking infrastructure and eliminate minimum parking requirements for residential and commercial developments. Investments in new highways or parking infrastructure will be stranded and taxpayers will be left holding the bill.
An important first step policymakers can take is to reduce barriers to transport as a service. This includes enabling autonomous pilot programmes, requiring transport companies to provide open data about traffic and safety, and educating the public about the financial, social and health advantages that will benefit every resident, including underserved communities such as the elderly, disabled, youth and the struggling middle class.
Job loss due to automation has fuelled powerful populist anger throughout history. Incumbent industries can redirect this anger to pressure policymakers into creating barriers to new technologies and market entrants. Policymakers can work quickly to mitigate the fallout from job losses by providing safety nets, including income, health care insurance support, and job-retraining programmes.
It may seem improbable that these vast changes will occur in a decade – but technology disruptions can happen very quickly, especially when the scale of the cost savings to both individuals and society are so overwhelmingly large. With proper planning, we can harness the enormous potential of this disruption in a manner that creates wealth, health and stability for society. The future is upon us, and the time to choose is now.
James Arbib is a technology investor and philanthropist based in London. Tony Seba is a Silicon Valley entrepreneur, speaker and author of Clean Disruption of Energy and Transportation and other books. He was a keynote speaker during Abu Dhabi Sustainability Week. They are co-founders of RethinkX, an independent think tank.