For decades, the car industry has trundled along. Yes, it saw a setback during the Great Recession when some carmakers got bailed out. And, yes, it saw problems during the 1970s oil crises. But by and large, the industry has remained largely intact. Go back to the 1970s, and the industry still has all of the major players we know and love today.
But things are about to change big time for the car industry. There’s technology on the horizon that threatens to slash the volume of cars needed on the roads right now. And it's going to change the nature of what it means to travel by car. There’s every possibility that car makers are going to have to change forever. And just like in other industries, like entertainment, we’re heading towards massive disruption. Let’s see why.
The Promise Of Ridesharing
Ridesharing today is dominated by three major ridesharing companies. In the West, we’ve got Uber and Lyft. And in China, we’ve got Didi Kuaidi. Who comes out on top in that market doesn’t really matter for car companies. (Although Lyft is owned by General Motors). Ultimately, they’re all going to lose, at least when it comes to the volume of cars sold.
Right now we’ve got a situation where each person who wants to benefit from car services has to own their own car. (Unless you want to spend all day ordering taxis, at great expense). Ridesharing today already makes owning your own car less appealing. Yes, ridesharing is still quite expensive. But for the odd trip here and there, it’s a cheaper alternative to owning a car for some people.
But with the rise of autonomous tech, ridesharing is about to get a lot cheaper. Uber has already signaled that it wants to get rid of all humans drivers in its fleet. Uber taxis that drive themselves will offer passengers unparalleled low prices. And that’s going to force a big switch in consumer habits.
As prices come down, more and more people will choose not to own their own cars. Instead, ridesharing cars like Uber will operate pools of cars. They will be directed from job to job as they’re hailed on smartphones in real time. Cars will be in operation constantly, rather than for about 5 percent of the day, as they are now. And this is going to reduce the overall demand for cars in the car market. We just don’t need as many cars as we have today to move everybody around.
As any DUI attorney will tell you, drink driving is one of the biggest problems we have on the road right now. But it’s unlikely that any responsible government will try to crack down on ridesharing in the long term. The reason? It’s a technology that permanently solves the problem of drink driving. People who are totally inebriated can hop into a self-driving rideshare car, and it’ll take them home without an issue.
It all means that ridesharing is going to blow the automotive industry wide open. We already see all sorts of new high-tech car startups, like Faraday Future. One thing is sure: in thirty years time, the automobile industry will be unrecognizable.