Empty driveway
Will car ownership fall out of fashion?
Is car ownership going the way of the dodo?
That’s hard to imagine after a year in which North American auto sales soared to a record high. But a future in which more people share fewer self-driving cars was hard to miss at this week’s Consumer Electronics Show in Las Vegas.
From General Motors Corp. to Waterloo-based BlackBerry Ltd., there were plenty of high-profile announcements aimed at making cars more autonomous.
Cities are growing more congested, regulators are demanding fewer emissions and technology is driving solutions. That could all add up to a dramatically different future for a century-old business.
“Instead of owning a car outright, we might start consuming mobility services,” Stefan Burgstaller, head of European automotive equity research for Goldman Sachs, said in a December presentation to investors.
Self-driving cars could cut North American demand for new vehicles by 40 per cent within 25 years, Barclays Capital predicted in a May 2015 report, in part by making it easier for more family members to share fewer cars.
How? Imagine that the same car could take you and your spouse to two different workplaces — at two different times — and also drop your kids off at school, all while you checked your phone for news, weather, sports and work-related emails while sitting in traffic.
Who needs a second car in that scenario? Or even a first one, if you opt to use a ride-sharing app — such as Uber or Lyft — to hail a self-driving vehicle whenever you need to go anywhere.
Such a model would also be cheaper than the current one, the report, called Disruptive Mobility, pre- dicts. It says the average cost of owning and operating a car now works out to 66 cents (U.S.) per mile.
In Canada, the average cost per kilometre ranges from 46 cents to 65 cents Canadian, depending on whether you’re driving a compact such as the Honda Civic or an SUV such as the Chevrolet Equinox, according to a Canadian Automobile Association online calculator.
In comparison, the future cost of hailing a selfdriving vehicle would be just 29 cents (U.S.) per mile, the report by Barclays predicts. And if you’re willing to pool that ride with others, the cost falls to just 12 cents a mile.
That’s far lower than the current cost of taxi and ride-hailing services, the report explained, in large part because it eliminates the most expensive element — the driver.
“The vehicle market is set to be disrupted,” the Barclay’s report concluded.
That might be hard to picture at the close of a year that saw record-high auto sales in Canada and the U.S., at 1.89 million and at 17.5 million vehicles, respectively. Not everyone buys the report’s vision of the future. “This is the 20th or 30th one of these where a craze happens and, in retrospect, it turns out to be not that big a deal,” Canadian auto industry consultant Dennis DesRosiers said in an interview. “The best example right now is hybrid electric vehicles. Their sales are down, not up.”
Indeed, personal car ownership is rising, DesRosiers said, noting that 85 per cent of Canadians now own a vehicle, up from 70 per cent in 2000.
DesRosiers predicts it could take another century before even half the vehicles on the road are replaced by self-driving vehicles. It’s been 17 years since the first hybrid electric car hit the pavement, and they make up just one-tenth of 1-per cent of all vehicle sales, he noted.
Lower gas prices, low interest rates and pent-up demand drove North American buyers into auto showrooms in record numbers in 2015.
But that equation could look quite different in future due to demographic trends, concerns over climate change and the emergence of technology giants as major auto industry players.
The global automobile industry is on the brink of a major transformation, investment bank Goldman Sachs said in a recent report called Cars: 2025.
“Technology is driving this shift, shaped by demographic, regulatory and environmental pressures,” the report predicts. “By 2025, the car and the world around it will look quite different.”
Barclays calculates a single Uberstyle self-driving vehicle could take the place of seven traditional owneroperated vehicles.
Furthermore, pooled autonomous vehicles — where a group of riders share a single self-driving van — could take the place of 17 traditional cars, the report said. (Think Uber Hop, the new ride-booking service that supplements Toronto’s congested King St. W. transit route, except without a driver.)
No wonder the world’s biggest automakers are scrambling to join forces with the major technology companies and ride-booking upstarts who are driving much of the change.
Automakers announced a slew of new initiatives during the Consumer Electronics Show in Las Vegas this week. Indeed, it’s a sign of the times that automakers are becoming an ever-bigger presence at the electronics show, which runs a week ahead of the auto industry’s most important annual event, the Detroit Auto Show.
“The announcements are getting bigger and bigger every year at the Consumer Electronics Show,” DesRosiers acknowledged.
“Within five years, you can envision we’ll all flock to Las Vegas the first week of January instead of Detroit.”