Massive opportunities in urban transportation are emerging as the industry transitions from per-vehicle to per-mile economics Growing up, I dreamed of owning..
Massive opportunities in urban transportation are emerging as the industry transitions from per-vehicle to per-mile economics
Growing up, I dreamed of owning cars I would be proud to wax, polish, and cruise around my neighborhood. Today, I dread the prospect of being weighed down by a rapidly depreciating hunk of plastic and metal. Now all I want is a pleasant transportation experience.
Millennials share my sentiment toward vehicle ownership, and many of them are embracing the convenience of ride sharing.
The trillion-dollar auto industry is being turned on its head. Automotive companies are getting squeezed as car sales drop and newcomers eat their margins.
As part of this shift, the industry is transitioning from per-vehicle to per-mile economics. Historically, the automotive industry has been measured by how quickly it assembles cars, pushes them to customers, lends money against them, and collects money to maintain and upgrade them.
Tomorrow, the industry will be measured by how many miles it moves passengers, and how much margin it generates on every mile traveled.
Vehicles will travel 3.17 trillion miles in 2017 — a 7.8% increase from five years ago. The trend will continue: The rise of electric vehicles and automated driving mean we can expect a lower environmental and labor impact, as well as lower prices.
Automakers should not worry about being put out of business. Some will not survive the evolution. A but a number of them will be key players in tomorrow’s per-mile realm. Some will become white-label, commodity producers of vehicles for Uber, Lyft, or Zoox fleets. Others, such as GM, Audi, and BMW, may choose to compete with the ride-sharing giants and operate their own fleets.
Which businesses are positioned to capture the majority of the dollars for the many billions of miles driven? A few possibilities:
Trillions of dollars worth of new opportunities abound in the coming era of autonomous travel. If history has taught me anything, it’s that this new paradigm will spur entirely new ways of living that we haven’t yet considered. As for myself?
As a gearhead, I’m most looking forward to getting from A to B by robot, and manually pushing performance cars to their limits on racetracks.
