Deployment

Perhaps the most fascinating and significant question with regard to driverless cars is around deployment. How will we consume this technology? Will we buy driverless cars like we buy cars today or will car ownership give way to a taxi-like system that many are calling transportation as a service (TaaS)?

As of the last census survey, over three-quarters of Americans drive alone to work and nearly 10% of Americans carpooled. Most of the rest of Americans walked or took transit. And most households, regardless of their commute preference, owned at least one car. But we may be on the cusp of a sea change. Most thinkers and industry leaders in this arena are arguing that car ownership will be a trend of the past. Instead, we’ll order the vehicle we need when we need it to satisfy a specific trip, similar to the services that Lyft and Uber provide today, but on a far broader scale and without a person behind the wheel.

So why? Why would we give up car ownership in the face of driverless cars? Alternatively, why is car ownership so prevalent?

There is no easy answer to these questions and the answers vary by person. What’s more, public policies and politics will invariably influence the outcome.  All that said, there are some inherent qualities of driverless car technology that point toward a more likely outcome.

One of the reasons for such broad based car ownership is cultural preference. For decades, getting a driver’s license has been a rite of passage and cars have been status symbols. Perhaps among certain demographics they still are. But, generally speaking, cars no longer carry the allure that they once did, especially among millennials and today’s teens. If anything, driving represents a distraction from the latest adolescent obsession: smart phones. Ego simply plays a less prominent role in car buying decisions than it once did. This is borne out by research as well. A report by the Frontier Group found that the percentage of 19-year olds with a driver’s license dropped 20% between 1983 and 2010. Further, the rate of car ownership is lower among millennials than for previous generations. As Jeff Kenworthy, a professor at Curtin University in Australia, notes: “The dominance of the car is on the wane in many places.”

Of course, not everyone has the luxury of forgoing car ownership today. For some it is a virtual necessity. For others it offers, quite simply, the most effective transportation option. Decades of car-centric urban planning have translated into built environments that prioritize cars at the expense of alternatives. Walking, biking, car sharing and transit are not sufficiently feasible transportation options for many. New options like Uber and Lyft are still too expensive and unreliable to provoke a broad based shift if travel mode. Even for people living in cities, the existing suite of transportation options may not be sufficient to meet every need without a car

It may be that nothing short of outright prohibition of owning a car will prevent those driven largely by ego from buying a car. But assuming that these people represent a minority of society, we’ll focus on those who own cars because of convenience, necessity and cost. What features of driverless car technology will make owning a driverless car less attractive than renting one on an as needed basis.

TaaS will be far more affordable

The first reason, especially in the beginning, will be cost. Early generations of driverless cars may be prohibitively expensive. After all, driverless cars require substantial additions of hardware and software to what is already an expensive piece of equipment. As a result, owning will probably be unrealistic for most.

TaaS autonomous vehicles, however, will likely be far more affordable. In fact, many estimates suggest that renting an autonomous vehicle through a TaaS will cost less than owning and operating today’s average non-autonomous vehicle. So, for those who want to enjoy the benefits of driverless cars, renting may be the only affordable option for a while.

Mobility

As I noted above, Uber and Lyft are still far to expensive to replace car ownership in any significant way. As a result, they don’t provide adequate mobility in most locations. High costs drive down demand and supply. When autonomous vehicles drive down the cost of TaaS, demand for those services will expand supply dramatically. More vehicles will be available in more places more immediately. Wait times will shrink and service areas will expand bringing mobility benefits of TaaS closer to that of car ownership.  

A fleet at your fingertips

Beyond the cost benefit of renting, the flexibility of renting will also provide convenience! You will no longer be limited by the functionality of the car you own. Instead, you will have access to a whole fleet of vehicles. For your drive to work, you can rent a one or two person pod. For hauling appliances, you can rent a truck. For the family vacation, pick your favorite van with lots of room in the back for luggage and a hitch to pull your trailer. For your next date, you can rent the red convertible. It also quite likely that this technology will open up new travel opportunities. For example, overnight trips may be completed by vehicles with beds.

Fleet vehicles will be newer

The average vehicle on the road today is over 11 years old. That is partly because we really don’t use cars very much. They are parked for over 90% of their existence. Fleet operated autonomous vehicles, however, will be used far more intensely. After they are done dropping you off, they will move on the the next trip. As a result, they will need to be replaced far more often and will newer. Given how rapidly car technology is evolving and improving, it will be no small perk to rent a new car with all of the latest features versus owning an old one.

No more maintenance

Another consideration is the burden of car ownership. Cars require regular maintenance: oil changes, tune-ups, tire replacement, brake replacement and on and on and on.  It will be awfully nice to have someone else take care of this (as will be the case with TaaS) without losing your car to the shop for a week.

No more parking and no more garage

We often forget this, but cars also require expensive storage space, be it a garage, renting parking at your apartments, or paying for parking at an event. All that time our cars spend sitting idle can cost quite a bit. Renting driverless cars will drive down the cost of our homes and our apartments (or they’ll give us more space for our hobbies).

In sum, renting driverless cars will be more affordable, more flexible and less burdensome than owning one. Consequently, I believe the era of mass car ownership may be coming to an end.

Additional Resources:

World Transport, Policy & Practice: Peak Car Use