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We're Nearing Peak Car Ownership

Buy your cars now: After 2021, the personal vehicle will be in decline.

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Millennials have fundamentally different attitudes to cars than their parents. Purchases of vehicles by the 18-to-34 age group are down from previous generations (some of this might be because they're too poor to afford cars) and millennials are less likely to get their licenses when reaching eligibility age. Millennials don't necessarily equate car ownership with freedom, especially when they live in cities and other options, including car sharing, ride sharing, and transit, are available. And that's before we even talk about autonomous vehicles (AVs), which could create a much more collaborative mobility system than we have now.

In a new report, the Rocky Mountain Institute (RMI), an environmental think tank, sketches out the dramatic implications of a world of shared AVs. By 2021, it says, personal ownership will have peaked at about 225 million vehicles. By 2030, car ownership will be down to about 100 million vehicles, as people shift from having their own vehicles to using shared services run by Uber, Lyft, and the car companies. Society in general will see enormous benefits, RMI says: a reduction of $120 billion in overall mobility costs, fewer parking spaces in cities, and more room for new buildings, and, by 2035, a reduction in CO2 emissions of about 800 million tons a year (about 10% of overall U.S. emissions).

"For the first time in history, mobility services rather than personal vehicles could dominate, and it's extremely promising what that could do for climate change and urban densification. Some pretty disruptive things could happen in the next 10-ish years," says Jon Walker, co-author of the report.

With Lyft and Uber looking to automate their fleets within a decade, and car companies investing heavily in mobility service startups, RMI's forecasts are not fanciful, though perhaps on the bold side. Walker says the projections are based on urban millennials taking strongly to autonomous services, and regulators allowing driverless cars on the road in the not-distant future. The U.S. Department of Transportation recently said AVs should meet a safety threshold of a "median" human driver (a low bar given the number of accidents today). Walker thinks car companies will have enough data to do that within two years, starting with markets like Austin and Pittsburgh, where Uber is testing its robo-cars.

RMI finds that once you take human drivers out of the cost equation, "transportation network companies" (TNCs) soon become price competitive with personal ownership. The per mile cost of Uber in 2016 is about three times that of owning a Toyota Camry. Without the driver, though, and accounting for the cost of a LIDAR auto-navigation system (about $30,000), the numbers reach parity.

Automation will also make electric cars more viable, especially when they're used for high-mileage service (like as taxis). RMI sees a power shift from oil companies, which will see decreasing gasoline demand, to electric utilities and the TNCs. "Early-to-market automated mobility service providers could capture over $100 billion in revenue at the expense of incumbents like oil companies and traditional carmakers," the report says.

See more here.

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