Coming Soon—Your World, Disrupted

Google's self-driving car...

Google’s self-driving car, a possible forerunner to “Transportation as a Service”, or “TaaS”.

Imagine this—fully autonomous cars, legal in all fifty states by 2021. And shortly after that—no more car dealerships. Cars that last for half a million miles, but that very few people own. Radical disruption of the oil industry. No more gas stations. An extra trillion dollars a year in US consumers’ pockets. People paying to have their used gas cars towed away and disposed of. Unused pipelines.

These and more are the stunning predictions in a new report from a noted technology research group, whose authors see an approaching “perfect storm” of economic disruption, driven by self-reinforcing feedback loops that revolve around the combination of dropping prices and increased capabilities of electric vehicles, renewable power, and self-driving control systems.

Basically, they envision an entire transportation system that is akin to today’s Uber, but one that is coupled with electric vehicles and autonomous driving in ways that result in plummeting costs, and they predict that this unbalancing of costs will have ramifications that will upend much of life as we know it. Perhaps more importantly, they also conclude that this shift will happen much, much sooner than nearly anyone thinks it will. In fact, they predict that sales of new gas-powered vehicles to consumers will cease as soon as seven years from now. The authors call this new paradigm “TaaS”, or “Transportation as a Service”. And, they point out that though this change will be extremely disruptive, that it will also have long-term benefits such as higher productivity, more wealth, and much less carbon pollution.

A short video about California-based Tesloop, a transportation provider that already uses semi-autonomous EV’s for point-to-point service:

So, here are some of the study’s points, in a little more detail. First, the paper is entitled “Rethinking Transportation 2020-2030”, and was written by a team led by James Arbib, a London-based investor, founder of the Tellus Mater Foundation, and promoter of sustainable capitalism, and by Tony Seba, a graduate of MIT, instructor at Stanford, and the author of a number of books about the future impacts of technology.

Their research is largely centered around the rapidly expanding capabilities of autonomous driving technology; vehicles with these capabilities are becoming more advanced every day, and will soon be practical and legal in most countries. These cars will be many times safer than cars driven by humans, and when this self-driving technology is coupled with electric vehicle platforms, many efficiencies will combine, which will result in dramatic cost reductions.

For instance, electric vehicles have dramatically lower maintenance and fueling costs, and autonomous driving will result in lower insurance costs and the virtual elimination of labor costs for driving. Market incentives will shift toward vehicle longevity and away from planned obsolescence, which will result in much longer vehicle lifetimes and lower capital equipment costs. With regard to powering these vehicles, marginal costs for solar electricity generation are likely to be near zero during the day, and cars powered by batteries are well-positioned to take advantage of time-of-use pricing.

Fully electric bus charging station in the Netherlands. In the future, autonomous EV's will be programmed to charge themselves.

Fully electric buses charging in the Netherlands. In the future, autonomous EVs will be programmed to seek out chargers and charge themselves.

When these and other factors are combined, overall costs for transportation-on-demand will drop to mere pennies a mile, at which point where it will no longer make economic sense for people to own their own vehicles; they will simply summon a ride from a service, via smart phones. This change is the key one, and it will engender many others that will ripple through the economy.

One key aspect of this change is that there won’t be as many vehicles required in these service fleets, because the fleet vehicles will be in near-continuous use, as opposed to the current model of individual car ownership where the average vehicle is idle more than 95% of the time. This will cause the number of new vehicles demanded to drop. As the switch to autonomous EV transportation provided by service companies accelerates, a tipping point will quickly be reached where market forces work rapidly against the use of cars powered by internal combustion engines. According the the authors, used gasoline-powered car prices will then plummet to near-zero, and vehicle dealerships will cease to have customers. Our houses will no longer need garages, and businesses will no longer need parking lots, and the entire petroleum infrastructure, worldwide, will be disrupted. Carbon emissions will drop, and gas stations will go out of business (or be forced to change their business models).

According to the authors, these TaaS cars will have more in common with computers than with today’s cars, and companies like Apple and Google will have the advantage in their design and manufacture. Traditional car companies will soon lose their “name recognition”; in the future people will be more likely to recognize the name of transportation service providers. The cost of vehicle insurance will plummet. The use of petroleum for transportation will nearly cease by 2030, and people will only drive gas-powered cars, where they are allowed to drive them at all, “for nostalgia”.  Oil companies will see large percentages of their assets become stranded, and the drop in oil demand will completely disrupt the economies of many countries.

Arbib and Seba predict that these changes will not be limited to light vehicles—the same economic forces will transform the entire transportation sector, such as trucking and buses, as well as related sectors such as agriculture.

The Case IH fully autonomous tractor.

The Case IH fully autonomous tractor. This is a working prototype, but the tractor is not yet in full production.

Many people, including myself, have discussed and written about much of what the authors of this report do. What is different here, though, is that they go a step further, and focus on the system-wide synergy of these changes, and were forced by their research to abandon older models of incremental rates of change and technology adoption. In their place—models where feedback loops are mutually reinforcing, and change becomes exponential.

Upon reflection, I think they could well be right. I see more news about these topics every single day; change seems to be accelerating. Nothing is stopping this vision from playing out—nearly all the pieces have been invented and are on the market, and in many ways the snowball is already rolling. Our family already drives EVs powered with solar, and I have seen many of the efficiencies and advantages of these vehicles first-hand. I won’t ever go back to owning a gas-powered car, and I suspect that tens of millions of others will soon feel this way, too.

So, it is likely that our lives are about to change.  Change can be disruptive, but hidden in this particular disruption are many positive outcomes. When the dust settles, these changes will be good for the planet, and they will be good for our pocketbooks. Remember my mantra from post after post—efficiency leads to productivity, and productivity leads to wealth, and efficiency is the opposite of wastefulness. As it comes to pass, this new vehicle fleet will use dramatically fewer resources, because dramatically fewer vehicles will be needed. The vehicles will operate more efficiently, taking advantage of regenerative braking and more efficient drivetrains, and dramatically higher efficiencies of energy distribution via transmission lines, vs. tanker trucks powered by fossil fuel. There will be more riders per car, more often. Automated vehicles will be able to “platoon” at high speeds, reducing energy consumption still further, and greatly expanding the passenger capacity of existing highways. There will be fewer vehicle accident deaths, lower aggregate health care bills as a result, and many people will be able to afford transportation who can’t afford it today. As cars get safer, much of the metal in them will be removed, which will make them lighter and yet more efficient. The car driven by electric motors will last longer, perhaps up to a million miles. Drive time will be reclaimed for work or leisure. Houses and businesses will be cheaper to construct without garages and parking lots. Consumers will have more money in their pockets, due to savings from not having to buy and maintain and insure and store their own vehicles. This list goes on.

The other optimistic side of this is that I see see a similar paradigm shift happening in other fields, notable building efficiency. Currently 50% of US energy use is for buildings, but that is poised to shift dramatically, as a wide variety of technologies are suddenly making net-zero houses both possible and, more and more often, the best economic choice.

Four years ago I wrote about how moving the world toward sustainability was like “pushing on the Titanic“. Well, we’ve been pushing, and there’s no doubt now that the ship is moving. Challenges remain—notably the problems of worldwide wealth inequality, and widespread soil and habitat destruction caused by farming. But, just perhaps, in the race between the forces that will destroy us and our efforts to change, we might have a fighting chance.

Top image credit: Sndrv, “Google self driving car taxi”, Flickr Creative Commons.
EV Buses: Misanthropic One, “VDL Evolans Electric Bus Charging at Hermes”. Flickr Creative Commons. Image has been cropped.
Autonomous tractor: Case International Harvester.