Autonomous and connected vehicles will transform the industry.
You really can’t go to any automotive conference or symposium of any consequence without a speaker — or many speakers — discussing the impact of automated and connected vehicles on the automotive industry, on city planning, on human behavior, on privacy, on cyber security, insurance, liability and the list goes on.
The real question is, does anyone really know the collective impact of both of these related but different technologies? I think that the answer to that question is “No”.
While there are some things about connected and automated vehicles and the future that they promise that seem to be reasonable, there are many other things — like the ubiquitous use on roadways of fully autonomous (self-driving cars) by the early 2020’s that are not.
There remains a tremendous amount of work to be done before we ever get to that point and it is likely going to be several decades before we see fully automated vehicles all around us.
Nonetheless the fully automated vehicle is held out as the panacea for another burgeoning field in the automotive industry — transportation as a service (TAAS).
While Uber and Lyft rides are very convenient, comfortable and relatively inexpensive, the most significant expense in those business models is the human behind the wheel.
Nonetheless the fully automated vehicle is held out as the panacea for another burgeoning field in the automotive industry — transportation as a service (TAAS).
If that cost can be eliminated from the equation then the cost of such services will drop dramatically. Getting rid of the driver will also have cost and efficiency savings for industries like heavy duty long-haul trucking to name one.
That said, related employment losses associated with automated vehicles represent another societal impact arising from their large-scale adoption that many have not turned their attention to.
One of the concerns for the automotive industry related to the automated vehicle is the issue of whether sales of vehicles will drop as people opt not to own a car and simply purchase the service of a vehicle when they need it, whether that be ride sharing, car sharing or some kind of subscription model for vehicles or some other variant.
The implicit assumption seems to be, however, that families would go from two or more cars per family down to owning no cars, which I personally see as a stretch. It is likely more reasonable that a multi-car household (even in today’s context with some of the efficient ride and car sharing services offered) would keep one car and use a myriad of other services to get around.
On that basis, some believe that manufacturers would be selling fewer vehicles because people would no longer be purchasing as many personal vehicles but rather would use other transportation options — where they exist.
However, consider that the average vehicle sits parked with no one driving it for about 96 per cent of its life. That is a lot of wasted potential and a highly underutilized asset that consumers are paying a lot of money for.
Therefore, I think it stands to reason that if you take that same vehicle and put it on the road for 96 per cent of the time and park it for four per cent of the time a couple of things are going to happen, your vehicle will wear out faster and it will require more maintenance.
If the vehicle wears out faster then that may actually spur vehicles sales and also related vehicle maintenance at local dealers and garages.
So far we’ve explored this issue through the lens of urban settings — more or less — where Uber and Lyft are available, where there are public transit options, where there are various car sharing services available.
However, we all know that this is not the case outside of major urban centres — public transit is spotty, there may be a local taxi company or two and there likely are not any vehicle sharing options.
This dynamic raises the issue of transportation equity where urban dwellers benefit from many more transportation options, some heavily sponsored/subsidized by different levels of government and those in rural areas do not.
Moreover, rural citizens are much more likely to have limited options — other than driving — to get to where they want to go. Rural Canadians will always need to own vehicles, and perhaps a number of them. This fact should provide some solace to dealers who believe that transportation options are going to change quickly for them
As someone who has earned my living for the past 35 years in the automotive industry in some shape or form I can say with some confidence that automation, connection and digitization are going to profoundly re-cast the automotive industry.
The other reality associated with that statement is that what constitutes the “automotive industry” has already and is going to change significantly.
Software developers, hardware providers, systems integrators, etc bring not only different skill sets to the automotive industry but also a set of different players — different high tech companies that were not part of the automotive supplier or vehicle OEM community in the not too distant past will now be an integral component of the industry for legacy vehicle manufacturers, or in some cases a competitor to those legacy vehicle manufacturers.
While there are many aspects of automated and connected vehicles that I have only mentioned in passing in this article, one issue that has not been given much consideration in the industry — mostly because we don’t want to look at it — is the financial and economic impact of individuals either eliminating or reducing their consumption of personal automobiles.
A personal vehicle is a very expensive proposition and it represents the second highest drain on our personal budgets next to housing. So if that expense were not a factor anymore nor all of the other costs associated with vehicle ownership, what would be the economic impact?
Presumably people would have a lot more money to save, invest, or spend in the broader economy. While the automotive industry would likely suffer, the broader economy and individuals could benefit tremendously from having the extra liquidity.
As I indicated at the outset of this article, the scenario in which people do not own cars anymore and simply rely on automated vehicles to pick them up and take them anywhere they want to go is a long way off.
So it will be sometime before the industry is faced with the situation of consumers telling their dealers to take the old vehicle off of their hands and no, actually, they are not interested in looking at the new models.
Earlier this year, Transport Canada and Innovation, Science and Economic Development Canada convened a series of meetings and established working groups to try to assess the impact of automated and connected vehicles and develop a readiness plan for Canada to ensure we don’t get left behind as a nation with the development of these new technologies and their uses and applications on Canadians roadways.
A final report of the “Working Group on the Vehicle of the Future” should be forthcoming in a matter of months and I would commend it to all readers who are interested in these issues.
