There are two foundational technology changes rolling through the car industry at the moment; electric and autonomy. We all know and can guess the first order effects of this - batteries and the impact on oil industry, on road accidents etc. But what about second order and third order effects.
The following blog post by Benedict Evans is an interesting read: (http://ben-evans.com/benedictevans/2017/3/20/cars-and-second-order-consequences)
Here are some of the highlights from the blog:
Electric is happening right now, largely as a consequence of falling battery prices, while autonomy, or at least full autonomy, is a bit further off - perhaps 5-10 years.
Half of global oil production today goes to gasoline, and removing that demand will have geopolitical as well as industrial consequences.
Over a million people are killed in car accidents every year around the world, mostly due to human error, and in a fully autonomous world all of those (and many more injuries) will also go away.
What about the second and third order consequences of these two technology changes. Quite what those consequences would be is much harder to predict: as the saying goes, it was easy to predict mass car ownership but hard to predict Wal-mart, and the broader consequences of the move to electric and autonomy will come in some very widely-spread industries, in complex interlocked ways.
Moving to electric reduces the number of moving parts in a car by something like an order of magnitude. It’s less about replacing the fuel tank with a battery than ripping out the spine. That remakes the car industry and its supplier base (as well as related industries such as machine tools)
Next, gas itself is bought in gas stations, of which there are about 150k in the USA. Those will also go away (unless there are radical changes in how long it takes to charge an EV).
These retailers/gas stations make their actual money as convenience stores, so what happens to the products that are sold there? Some of this demand will be displaced to other retailers, and some may be going online anyway (especially if an Amazon drone can get you a bag of Cheesy Puffs in 15 minutes).
Tobacco in particular might be interesting - well over half of US tobacco sales happens at gas stations
Gasoline is taxed, much less in the USA than in many other developed markets: it is 4% of UK tax revenue, for example. That tax revenue will have to be replaced, with other taxes on things that may be more elastic, and there will be economic and political consequences to that. In the USA, for example, highways are funded partly from gas taxes.
Conversely, in many places (especially emerging markets) fuel is subsidised by the state - coal, gasoline and kerosene (for light and heat - see for example kerosene subsidies in India). EVs on one hand and solar on the other may change this as well.
Meanwhile, of course, we will still actually need to charge our EVs. Most estimates suggest that charging a fully electric fleet would lead to 10-20% more electricity demand.
The really obvious consequence of autonomy is a near-elimination in accidents, which kill over 1m people globally every year. Think about effects on hospitals, medical services, reduced demand on emergency services.
No accidents/collisions, in turn, has consequences for vehicle design - if you have no collisions then eventually you can remove many of the safety features in today’s vehicles, all of which add cost and weight and constrain the overall design - no more airbags or crumple zones, perhaps.
As more and more cars are driven by computer, they can drive in different ways. They don’t suffer from traffic waves, they don’t need to stop for traffic signals and they can platoon - they can safely drive 2 feet apart at 80 mph.
As more and more cars are driven by computer, they can drive in different ways. They don’t suffer from traffic waves, they don’t need to stop for traffic signals and they can platoon - they can safely drive 2 feet apart at 80 mph.
The extreme case here is Los Angeles: it has been estimated that 14% of the incorporated land of LA county is used for parking. Adding parking to a new development pushes up construction costs: parking garages cost money, and so does leaving land vacant for parking lots. A study in Oakland, in the San Francisco Bay Area, found that parking requirements pushed up construction costs per apartment by 18%. Back in LA, adding underground car-parking to a shopping mall might double the construction cost. If you both remove those costs on new construction, and make that space available for new uses, how does that affect cities? What does it do to house prices, or to the value of commercial real-estate?
Pretty much all of these themes feed into the potential of on-demand. If you remove the cost of the human driver from an on-demand trip, the cost goes down by perhaps three quarters. If you can also remove or reduce the cost of the insurance, once the accident rate has fallen, it goes down even further. So, autonomy is rocket-fuel for on-demand. This makes it much easier for many more people to dispense with a car, or only have one, or leave their car at home and take an on-demand ride for any given trip.
Then, of course, there are the drivers. There are something over 230,000 taxi and private car drivers in the USA and around 1.5m long-haul truck-drivers.
Pulling all of these threads together: if parking goes away, road capacity increases by, perhaps, several times, and an on-demand ride is the cost of a coffee, then one needs to start thinking much more generally, not just about cars, trucks and roads but cities, land use and real-estate. In fact, one needs to think about cities. Cars have remade cities over the past century, and if cars are now going to change entirely, cities will change too.
Does an hour-long commute with no traffic and no need to watch the road feel better or worse than a half-hour commute stuck in near-stationary traffic staring at the car in front? How willing are people to go from their home in a suburb to dinner in a city centre on a dark cold wet night if they don’t have to park and an on-demand ride is cheap? What happens to rural pubs if you don’t have to worry about drink-driving anymore? And what do you DO in the car, while it’s taking you somewhere? Long Netflix and brewers, short BAT - and medevac helicopters.
Finally, remember the cameras. Pretty much every vision of automatic cars involves them using HD, 360 degree computer vision. That means that every AV will be watching everything that goes on around it - even the things that are not related to driving.
Something about me: I have been reading voraciously since my childhood. Mostly junk to begin with (comics, mysteries, pulp fiction), then moved onto non fiction mostly self-help (I am a self-help junkie, huge fan of Zig Ziglar & Tony Robbins - they changed my life), then onto serious non fiction. My reading had been mostly for pleasure, knowing more stuff, able to impress people with my knowledge were the primary motivations. I read 1-2 hours at least 5 days a week. A couple of years back I discovered that reading, thinking & investing based on those insights could be a profitable past time. Ever since I have tried to do that - it is a lot tougher than what I read. I am still in my infancy, but I am hopeful - I like the challenge and the thought that you could make real money through your insights is too alluring to me.