I just got into a fun discussion about autonomous cars and the future of transportation (here), which lead me to thinking a lot, which lead to this
blog post rambling.
I like to say that one day owning a car will be a lot like owning a horse. That’s not the point of this post but I will discuss my rationale.
Compared to a car, a horse is not a very practical form of transportation. This is because they’re slow, require a lot of TLC, and can be very difficult to ride.
A car offers much more transportation utility versus a horse. It’s infinitely more useful in transporting you from point A to point B.
And that’s what transportation is. Getting you from Point A to Point B whether it be by land, air, sea or one day space.
The form or method of transportation we choose to get from A to B is all based on utility.
For example if I want to get from Austin to New Orleans I have a few different options like driving, flying or taking a bus. I hate wasting time in a car all day so flying offers me the most utility and that’s what I would choose 99 times out of 100.
But if I want to get from Austin to San Antonio, I would probably drive because Uber would be too expensive and flying too much of a hassle. For transportation over a short distance, driving often offers the most utility.
That’s why we own cars.
We used to own landlines too, but eventually cell phones and then smart phones came and offered infinitely more utility versus the landline. Communication has never been the same!
And that same thing is going to change when the autonomous electric cars start rolling out…
So here’s my prediction:
“Autonomous vehicles will disrupt transportation like the cell phone disrupted communication.”
Wait… but that’s not alll…
This is taken from Elon Musk’s Master Plan, Part Deux (must read):
When true self-driving is approved by regulators, it will mean that you will be able to summon your Tesla from pretty much anywhere. Once it picks you up, you will be able to sleep, read or do anything else enroute to your destination.
You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you’re at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost.
This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla. Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.
In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are.
So not only will you be able to relax on your commute to work, but autonomous electric cars will also be able to:
- Pick you up from any location
- Transport you from Point A to Point B without any input
- Drive other people around and make $$$ when you’re not using it
and TESLA WILL OPERATE ITS OWN FLEET.
This is great… but what does it really mean?
In the near future (less than 15 years), car ownership will decrease due to the increased utility offered by the fleets of autonomous electric cars.
Why would anyone take out a loan, pay for maintenance, insurance, gas, parking, tickets and tolls for vehicle ownership when you can summon a vehicle from anywhere and get from Point A to Point B?
The technology that TESLA and probably everyone else is building will “Expand to Cover the Major Forms of Terrestrial Transport” so virtually any situation will be accounted for.
And all of the big players know what’s at stake.
Whoever wins the autonomous car race will be the next $500 billion business.
Uber’s chief product officer:
“That is not a situation where the tech is going to be evenly distributed,” he said Tuesday at a technology conference in San Francisco hosted by Bloomberg.
Whichever company can build driverless cars will have a unique edge over competitors, he added. It is a means of achieving the “lowest possible price, and highest possible reliability,” Holden explained.
And that is why…
- Apple is building a car called “Project Titan”
- Google is building a self driving car
- Uber is opened a robotics lab and is building a… driverless car
So what does this mean for business?
Eventually we’ll all go onto monthly or pay-per-use contracts with Uber, Tesla or whoever wins the autonomous car war. These companies will compete for your business much like the way Sprint and Verizon do today.
So instead of:
College debt -> Car debt -> Mortgage debt
There will be this empty space in the middle that represents a huge opportunity to sell to millennial / gen-z consumers with more expendable income.
What fills the gap?
I’m not sure, so please tell me in the comments.
I realized that I did another one of these on bitcoin a while ago.