Chart of the Day: Projected Decline of Individual Car Ownership

Here’s an eye-opening chart for your Thursday. It comes from a RethinkX (a think tank) report released earlier this Spring. The report is titled “Rethinking Transportation 2020-2030: the disruption of transportation and the collapse of the internal-combustion vehicle and oil industries.”

The chart shows a projected shift away from individual car ownership and to something the report titles TaaS, or “transport-as-a-service.” (Think Uber/Lyft/Hourcar…)

It’s a classic phase transition:

 

The report is thick and full of fascinating guesses about the future. The projected shift in car ownership comes from technological shifts around the automobile, where “network effects”, competition, and upfront investments in new transportation technology will create disincentives for individual car ownership within ten or fifteen years. Longer car lifetimes from electric cars, for example, will minimize the use of regular combustion engines.

According to the analysis, which you should read through, far lower costs for not owning a personal car will be the big motivator for social change. The authors argue that cost will be the most important factor in consumer choice, and many of the technological trends support the transportation-as-a-service model.

Here’s another chart which shows how that might play out, taken from Chapter One, “The End of Individual Car Ownership.”

The analysis argues that “the cost differential between car ownership and TaaS will override all other factors that affect consumer choice and ensure that TaaS will be adopted wherever and whenever it is available.”

Here’s a quote explaining the cost trends:

Our demand hypothesis for consumer adoption of new technology is comprised of three elements:

  • The greater the improvement in cost or utility, the more likely people will adopt a new technology, as long as other factors do not outweigh cost (see below);
  • The greater the difference in cost or utility, the more weight that factor plays in the decision relative to other factors; and
  • The scale of the cost savings in relation to disposable income is important. The option of spending about $3,4007 a year on driverless TaaS journeys (or $1,700 on TaaS Pool), rather than an average of approximately $9,0008 a year on a personally owned ICE or EV produces a very significant increase in disposable income. This $5,600 cost difference will widen as TaaS adoption increases and the IO ICE [ed. “individually owned internal combustion engine”] industry faces a death spiral.

Whether you believe the findings or not — and the authors do suggest that “behavioral issues such as the love of driving, fear of new technology, and habit” will be barriers to change — it’s worth thinking about this possible future as we plan our transportation investments that will last for decades.

Personally,

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10 Responses to Chart of the Day: Projected Decline of Individual Car Ownership

  1. Andrew Andrusko September 14, 2017 at 1:34 pm #

    I think it would be interesting to revisit this topic in thirteen years to see if their forecast of the auto industry is accurate. One of the hardest things to predict in technology has always been significant jumps in inventions. As we think about this let’s also ponder the results of open/dockless bicycle share companies in China whereby human behavior is actively undermining the business premise of bicycles as a (rental) service. As an aside it looks like there is an extra form space currently on this article.

    • Bill Lindeke
      Bill Lindeke September 14, 2017 at 2:01 pm #

      if streets.mn is still around, we will do that!

  2. Shawn September 14, 2017 at 3:15 pm #

    The report is thick and full of fascinating guesses about the future.”

    Nice turn of phrase. However, I’d go with “unashamedly optimistic”. Convenience is a significant driving factor of accepting non-car modes of transportation, I apologize for the pun. Cars provide comfortable, timely, convenient transportation. Anything that requires a reduction in any of that will take longer than a decade to transition to.

    (Specifically, I think about the “waiting time” when ordering your automated uber out in the suburbs. Who wants to wait 20 minutes for a 10 minute trip to the store? And no, moving to high density isn’t what folks are going to do. Let’s be somewhat practical.)

    • Shawn September 14, 2017 at 3:17 pm #

      I think it far more likely that people will own their own self-driving car. When that’s been in place for some time, say 50% of cars are Level 4+ self driving, then TaaS will take off, earlier in higher residential densities, of course.

    • Lou Miranda September 18, 2017 at 6:16 am #

      Just as with mass transit, with TaaS people will plan (or their phones will plan/call for them) their daily activities that need transportation. With surge pricing, non-time-essential transportation (stay-at-home parent going to the store) will be planned for non-surge pricing times, and be more on a schedule (every Tuesday and Thursday at 10 am, for example), so the car will be ready when you are.

  3. Dan September 14, 2017 at 3:36 pm #

    You can color me pretty skeptical about the predictions you have re-posted here. Here are some doubt points, just on the math alone, not accounting for cultural resistance to change and robots:

    -The $9000 dollar a year sum for maintaining a vehicle is great for an average, but the authors are apparently ignoring variation. I went and investigated my expenses. I have a 10 year old Toyota Tacoma (a known very reliable car) that can take me to work for two weeks on one tank of gas (I live ~4 miles from work). Assuming gas prices of $3 for the immediate future, I pay about $100 a month for gas. The $15,000 purchase price spread among 10 past years and 5 expected future years of the trucks lifespan (it only has 86k miles, might make it longer). My insurance is $1300 for two cars; I probably pay more than my wife so lets say $700 of that is mine. My lifetime shop bill is a $1000 deductible from one crash (divided by 10 years), and changing the oil and filters myself is less than $100 per year. Perhaps I can be considered lucky that my so far shop work has only been drive train work covered under warranty, and a crash mostly covered by insurance. That means my cost of car is about $1000 + $700 + $100 * 12 + $100 + $100 = $3100 per annum. Anyone who is frugal on their car, who doesn’t buy a Lexus or drive 40 miles to work, is not going to be seeing anywhere near that $9000 dollar per year total.

    -Which brings up another point: this is basically an elite confirmation bias report all the way. I am a software engineer in the suburbs, which means I’m sure I could afford said Lexus or house in Rice county with a 40 mile commute. But most people probably don’t even have the luxury of being able to afford to spend $9000 a year on their car. If you can only pay $3000 a year on transport costs, chances are that is what you are paying.

    -Next up, on the cost of TaaS, how to they figure that the rides will be so cheap? If I go to work 240 days a year (out of ~26 workdays minus some holiday), then the $3400 TaaS means $14 dollars a day round trip. I don’t believe that is possible under Uber’s current pricing scheme.

    -Speaking of which, Uber lost 2.8 billion last year. They drove about 2 billion passengers an average of 6.4 miles each, according to Google searches. That means, they lost about $20 cents per mile driven. Looking at the chart, that is about the gap between TaaS and using your existing car.

    -Last point, not math but probably the most important one. I have two girls age 0 and 2. How do I get them around places with TaaS? What if I had 4 kids that need to be in various iterations of booster/car seats? Do I provide the seats and install them every time I get in the car? If I get to the baseball game with my kids, where do I put my car seats till the game is over? Does the driver install the seats for me before he picks me up? How is a robot autonomous car driver going to install those seats?

    -TaaS DOES NOT WORK AT ALL for families with multiple kids. And, hey, newsflash, a lot of kids come from families with multiple kids!! So these kids are going to grow up with their parents owning cars, and what do you think they are going to want to buy when they are grownups?

    • Lou Miranda September 18, 2017 at 6:22 am #

      Car seats (and seatbelts) were invented for safety—which is mostly required because humans are terrible drivers (drunk, tired, speeding, etc.). There will be a tipping point at which it will be much safer to be in a self-driving car (which can “see” in all directions at the same time, and even see one or two cars ahead/behind you) than a human-driven car; so much so, that could seatbelts and car seats no longer be necessary? Or will insurance for human-driven cars get so expensive that we will transition to self-driving rather suddenly?

  4. Monte Castleman
    Monte Castleman September 14, 2017 at 9:41 pm #

    How much money did they spend putting together baloney like this? They seem to put all the benefits of self-driving cars into the column for TAS and all the drawbacks for manual cars in the column for IO, without the thought that people might own self-driving cars. Some of the purported benefits: speed of travel, convenience, free time, safety. Wouldn’t these be even more so if you owned a self-driving car rather than step into one that drives 20 blocks out of the way to pick up another passenger who might not have showered in a week or even worse has a knife?

    I get that having to sit next to someone would be cheaper, but you can save money by buses, Uber, and taxis and whatnot now, and look at how few people do that. If transportation costs were really the most important factor in how people choose transportation, don’t you think we’d see a lot more Nissan Versas and a lot fewer Cadillac Escalades on the road? Isn’t it pretty labor intensive to install and adjust a car seat for your kid? Or how many of you leave stuff in your trunk when at work.

    I also don’t think they’re fleet utilization predictions are as rosy as they hope. Once everyone is at work for the day how many cars do you need to take a few people on errands during the day? Most of the cars will drive to some far-flung storage lot (since we’re redeveloping the parking ramps in the city, right?) and just sit idle for 6 hours. Then after the evening rush hour how many people go out again to the bars or shopping. What’s more unless we start building affordable houses closer in, people are going to start buying them in Faribault or St. Peter since you can now sleep or write for streets.mn in your car. What do you do with a thousands of self-driving cars once they’re in St. Peter at 7:00 at night?

    I can see the attraction with specialty vehicles, hitch a ride in something like a 6 person minibus or a one person private “city car” to work, rent something like an RV with bunks for an overnight road trip to Chicago, or an F-1050 to haul the boat to the lake. But how often will the minibuses sit idle on weekends, and the “weekenders” and big trucks sit idle during the week?

    • Lou Miranda September 18, 2017 at 6:31 am #

      With cities closing off their downtowns to cars, and with cycling, light rail, and buses becoming a larger proportion of urban travel, I wonder if the self-driving car thing will be mainly a suburban phenomenon?

      And, even then, will self-driving cars be a more local phenomenon: rather than taking one or two riders from 40 miles out to downtown, will they take riders to the nearest transit station? That would keep cars within a community, still allow people to live in single family homes, and still make transit worthwhile.

      But then I’m an optimist!

      Of course, self-driving cars will be different to different people. The rich will certainly still own their self-driving cars and be more likely to make the entire commute in a car. The less well-to-do in the suburbs could take a hybrid approach (car-to-transit or bike-to-transit or walk-to-transit in, say, Hopkins & St. Louis Park with housing along transit).

      These “studies” always show transportation as a uniform thing, and we know that that isn’t the case. Income, location, etc., all affect transit options.

  5. GlowBoy September 18, 2017 at 2:46 pm #

    I can see self-driving cars taking over, but I’m more skeptical that that automatically means people giving up their private automobiles.

    Driving and car ownership are so deeply ingrained in our culture, in our psyches both collectively and individually. If people were rational about car ownership (even assuming people don’t ditch their cars in favor of alternatives, because for many people it would be rational to ditch their car) they would drive cheaper, more practical and more economical vehicles than they typically do. That $9k/year figure is probably accurate, and probably twice what people really need to spend for reliable transportation that gets the job done.

    People see their car as part of their identity – heck, as their clothing. The way they present themselves to the world. Automakers have spent a century convincing us this is Important. We spend staggering sums of money and time purchasing, shopping for, maintaining, customizing and just plain talking about our automobiles.

    Does anyone really think the ability to summon a self-driving car is going to change all that, even assuming it doesn’t cost any more in terms of money or convenience? Yes, self-driving cars are coming. And SOON. Insurance companies will give us strong incentives to stop driving and let the car do the work. But do we really think everyone is going to stop buying cars to express their specialness and identity to the world just because the car is now doing the driving? Yes, some will. But I would be very surprised if the decline in private car ownership exceeds 50%. It will be far less than the 90% projected in this report.

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