The Coming Disruption of Transport

[mdrejhon]

1.. True driverless-ness helps car owners as much as it helps car renters. If your car is totally self-driving, then you won't need to study for the licence and pass the test. Just like you don't need a license to use a TV or a dishwasher today.

This be true. I did mention the dystopia scenario as much as the utopia scenario.

That said, car owners can sign up their car to do driverless rideshare duty while they don't need the car. Especially if they're needing a bit help paying the bills. Potentially alleviating ownership for other people.

New hybrid business models may pop up. There could even be smaller/community rideshare pools if you don't want to sign up for heavy duty city wide Uber service. Your neighbour's car might as well be your own car too, if the neighbour is only a Sunday driver. New apps will pop up that makes that closer-knit car timesharing possible if some carowners are more comfortable with that. Etc.

There will be a lot of technological, legal & legislative considerations that influence what's possible and what's not.

Overall, I can easily see the per capita car ownership going down 20% or 30% in the next 5 to 10 years, but I doubt it can go down 50% or more.

I think that's an accurate target. Though it feels more like 10-20% because of inertia (used car market will keep things alive for quite a while) -- but 20%-30% unit sale drops in a 10-year timescale for new purchases at least for this region. I'm not really likely to buy another car again (unless I live rural) after my existing car wears out -- as I intend to fallback into carshare and other modes. By then, it is possible that driverless ridesharing may have airrived.

2. The notion that cars will be getting more expensive, runs against the general observation that all things made of metal, plastic, and semiconductors, get cheaper over time.

There's a very good reason why cars are getting more expensive -- but I will omit the novel -- and just ask you to google "cars are getting more expensive" on average.

It's not like brand new $300 Model T's anymore (A Model T Tourer used to cost that much in 1923; about $4500 today, inflation adjusted). If you are a student of history, one gets the idea why cars trend differently from electronics.

People are demanding more features, bells and whistles -- and goverments are demanding more safety, etc. Legislation didn't demand video backup cameras in 1960 and there were no seat belts in 1920s.

 

[Admiral Beez]

There's a very good reason why cars are getting more expensive -- but I will omit the novel -- and just ask you to google "cars are getting more expensive" on average.

It's not like brand new $300 Model T's anymore (A Model T Tourer used to cost that much in 1923; about $4500 today, inflation adjusted). If you are a student of history, one gets the idea why cars trend differently from electronics.

People are demanding more features, bells and whistles -- and goverments are demanding more safety, etc. Legislation didn't demand video backup cameras in 1960 and there were no seat belts in 1920s.

I’m glad I got to start driving in the late 1980s. Back then you could get a used light and torquey Honda CRX or VW GTI for cheap. Safety? Don’t hit anything, that‘s your safety. Do we really want the self driving indestructible cars from Demolition Man?

If we don’t own the car, and the car drives itself, isn’t this just a fleet of self driving taxis and limos? I could dispense with car ownership take a taxi everywhere now?

 

[kEiThZ]

There's a very good reason why cars are getting more expensive -- but I will omit the novel -- and just ask you to google "cars are getting more expensive" on average.

The interesting part here is that gas cars are getting more expensive while EVs fall in price. In fact, new fuel economy standards will only accelerate this trend.

If we don’t own the car, and the car drives itself, isn’t this just a fleet of self driving taxis and limos? I could dispense with car ownership take a taxi everywhere now?

Nobody is quite sure how the business models would work. Uber and Lyft are racing to get IP in autonomous vehicles so they can be the taxi services of tomorrow. Google is developing tech that people suspect is a platform. The Android of Autonomy. Car companies will be able to bolt their sensors on and use their operating system. But Seba's whole example of his commute ride being included in the cost of his latte shows how the dramatic reduction in per mile costs enables all kinds of business models that nobody has imagined before.

 

[Admiral Beez]

@kEiThZ I just watched the entire vid, thanks for posting. One thing that stuck out to me, is the inconsistency of his past analysis to future prediction. In the last, with horses to cars, before that disruption got well underway, we didn‘t know the names of the disrupters, since many of the oil companies and car companies didn’t exist yet, and in fact most car companies failed. But in his prediction of the coming disruption he’s focused on the tech companies that we’ve known for over a decade, like Tesla (2003), Apple (1976), Google (1998), and Uber (2009). I’m hopeful that the true disruption is the destruction of Google’s hold over us. And Tesla and Uber have never had a profitable year, never once, though Tesla has seen IIRC one recent profitable quarter.

Based on this presentation’s analysis of the past, the coming disrupters won‘t be the same corporations we’ve been watching since from the last decade or before, but something entirely unexpected (by the masses). And why is it assumed the disrupters will always be American? In many ways, the 20th Century was America’s, but I’m not convinced the 21st will be. Nov 2020 may nudge me in one direction or another - I‘m unfortunately predicting a win for theocracy, coal and backward thinking for America.

 

[Admiral Beez]

Uber and Lyft are racing to get IP in autonomous vehicles so they can be the taxi services of tomorrow.

No, they’re racing to pursue autonous vehicles because they’ve never made a dime of profit and their key stockholders are terrified the shell game might end. Their biggest cost is driver payouts, so appearing to pursue their elimination helps to continue the massive, yet unwarranted stock evaluations and million dollar bonuses.

Uber is drive sharing, that’s why we use it. Once private companies begin running fleets of self driving cars, I see no reason why we’d need Uber. Any company can buy a fleet. Maybe Uber can lease out the software? Again though, it’s not going to be Uber, but some other entity we’ve not heard of.

 

[crs1026]

That said, car owners can sign up their car to do driverless rideshare duty while they don't need the car. Especially if they're needing a bit help paying the bills. Potentially alleviating ownership for other people.

New hybrid business models may pop up. There could even be smaller/community rideshare pools if you don't want to sign up for heavy duty city wide Uber service. Your neighbour's car might as well be your own car too, if the neighbour is only a Sunday driver. New apps will pop up that makes that closer-knit car timesharing possible if some carowners are more comfortable with that. Etc.

Thank you. The penny just dropped for me.

I have friends and neighbours who gladly let people into their personal spaces to defray the cost.... cottage rentals, Florida condo rentals....and there are already services that let them manage the rentals from their smartphone. Airbnb being only one. Why would an auto not be in this market, especially if it’s self driving and you aren’t worried about the renter’s driving record. While I’m watching the hockey game, my car can pop out to Pearson and make a couple of trips as an airport limo. I can probably program it not to accept customers near bars, so I don’t have to worry about what shape it might be in when it comes back. When I go out of town, it need not sit in the airport long term parking lot. (And as mentioned in the video, that parking lot can be redeveloped.) Come to think of it, the service can send my car to be detailed before I get it back, just like the Florida condo management company handles housekeepingfor my friend’s unit.

The condo and cottage rentals have kind of converged with timeshares, too....although real estate remains an asset worth holding for investment reasons, whereas cars seldom hold or appreciate capital value. Timeshares are dirt cheap in some locations (the fees are the killer). So the owned but pooled car and the timeshare in a fleet may converge too. I can see how the price point would take us places that seem unbelievable to date.

I love having my own car, but for a price....

- Paul

 

[mdrejhon]

I have friends and neighbours who gladly let people into their personal spaces to defray the cost.... cottage rentals, Florida condo rentals....and there are already services that let them manage the rentals from their smartphone. Airbnb being only one. Why would an auto not be in this market, especially if it’s self driving and you aren’t worried about the renter’s driving record.

There are now already apps that lets you "rent" your neighbour's car. Basically there's already apps that acts as an AirBnB for cars.

At this point, it's just simply automating everything (things like billing, self-delivery of car, time-slotting etc) and various market specializations (e.g. community fleet). And features that allow you to easily manage things. It probably will be a while longer (somewhat more than 10 years) rather than 5 years, because of the increased difficulty of AI-engineering with Canadian winters. But It'll certainly all converge.

(Standing next to friendly neighbour at cottage near Muskoka) "Alexa, please add John Smith to my CarPlayRoom as authorized user."

(To phone on nightstand) "Siri, put my car on WheelsBnB duty until 7am tomorrow" (video of clean car interior pops up, confirming no forgotten items) (car acknowledges through its own AI object recognition) (you fall asleep on pillow, as car merrily backs out of driveway).

 

[lenaitch]

^ Interesting liability and income tax implications.

 

[crs1026]

^ Interesting liability and income tax implications.

I’m not a Uber user, so I will ask.....what do the current ridesharing apps do about tax records? I would guess it’s an auditor’s windfall, since it’s cash-free and every transaction is recorded on line. Drivers must be accustomed to declaring the income. Unlike old school taxis, where “off the meter” rates were practised by many in cash fare days, and tips always were unrecorded.

I am convinced that the liability lawyers will delay rollout of the technology long after the engineers say it’s technically road-ready. Will we see another chapter of scandals, like the exploding Pinto or the shrapnel-linked Takata airbags, or the 737, where a vendor adamantly stands behind their products and stonewalls legal challenge, right up til the day when they have to admit there was a problem that they knew or suspected all along? Will it take investigative reporting and a trail of litigants to watch for and piece together a trend of similar mishaps before the problem is addressed? Who has the right to download data from a vehicle after an accident - the software vendor? The injured party? The insurer?

I would like to see legislators get ahead of this by declaring some regime of transparency and legalised discovery for safety issues. There are billions of dollars of IP tied up in self driving cars, and I’m sure that investors will fight to protect the secrecy every dollar of it. However - I’m just contrarian enough to want the whole industry to operate on the basis of open source code. That’s probably not on, but it’s a new industry so maybe there should be new legal approaches. My trust of corporations to admit and self declare problems is very low.

- Paul

 

[Admiral Beez]

I'd like to see insurance move from a per vehicle to per driver coverage. Otherwise if I loan out my car and the borrower hits someone, I'm liable.

 

[kEiThZ]

But in his prediction of the coming disruption he’s focused on the tech companies that we’ve known for over a decade, like Tesla (2003), Apple (1976), Google (1998), and Uber (2009). I’m hopeful that the true disruption is the destruction of Google’s hold over us. And Tesla and Uber have never had a profitable year, never once, though Tesla has seen IIRC one recent profitable quarter.

Tesla is now profitable....barely. But here's the interesting bit about Tesla. Their battery costs are ridiculously lower than their competitors. Nobody touches them in the industry. And nobody else has the battery capacity to match their manufacturing. They took all those losses for years while most analysts and investors and regular folks (like me and you) thought they were just burning cash. They've scaled their revenue from by 9x in one year (2019). And look set to double it again in about 3 years (say 2022). This reminds me of all those years people were wondering how Google would make money with a search engine. In a year or two I think you'll start to see Tesla's profits suddenly accelerate as all those industrial investments pay off.

Looking at the year of founding misses the point. Apple hadn't made phones before 2007. The biggest phonemakers then were Nokia, Sony-Ericsson, RIM and Palm. Where are they now? Tesla was a Silicon Valley company with no prior experience building cars based in an area where there hasn't been much automotive work. They aren't an automaker from Detroit. This is what Seba means by disruption coming from outside.

Based on this presentation’s analysis of the past, the coming disrupters won‘t be the same corporations we’ve been watching since from the last decade or before, but something entirely unexpected (by the masses). And why is it assumed the disrupters will always be American?

I don't think that's the assumption. It's just the way it's worked out. Let's just look at Canada. We have some of the world's best AI experts in Montreal. We have a large auto sector in Southern Ontario. We have some of the best engineering and software talent in the Toronto-Kitchener corridor. We have lots of cheap hydro in several provinces. And every mineral required to build all these cars here. Why is there no Tesla in Canada? I would chalk it to up this country being happy to ship resources and talent to others, our fixation on oil & gas and our utter incompetence are forming industrial policy. Compare us sleepwalking through this disruption right now to the utter panic in Europe, with the EU and Germany literally throwing billions of Euros at battery makers to enable their auto sector to compete.

I was lucky enough to go to grad school near the Bay Area and have lots of interaction with folks from the Valley. All I can say is that there's no place like that on Earth. The more audacious the idea, the more likely you are to get funding in Silicon Valley. The appetite for risk taking just doesn't exist anywhere else. And thanks to past successes they now have lots of potential wealthy investors who have tons of experience building past startups. Success builds upon success. Compare that to hard it is to grow a startup in most countries, particularly Canada (I know, I have a failed one under my belt).

If you want to know why it works like that, imagine this conversation:

Elon Musk: "So to succeed with electric cars, the cost curves require us to build a plant that doubles global Li-ion battery output in one shot."
Canadian or European investor: "That's a totally insane idea. You've lost your mind. We should fire you as CEO."
Silicon Valley investor: "Let me get my chequebook."

No, they’re racing to pursue autonous vehicles because they’ve never made a dime of profit and their key stockholders are terrified the shell game might end. Their biggest cost is driver payouts, so appearing to pursue their elimination helps to continue the massive, yet unwarranted stock evaluations and million dollar bonuses.

Uber is racing to build an IP portfolio on autonomous vehicles because if Tesla and Google and MobilEye get there first, they will enable anyone to provide networked transportation on demand killing Uber. They need IP leverage of their own to survive.

 

[kEiThZ]

I'd like to see insurance move from a per vehicle to per driver coverage. Otherwise if I loan out my car and the borrower hits someone, I'm liable.

If autonomous cars really are that much safer, I can see lots of OEMs jumping into the fray and offering to sell insurance themselves. Tesla is doing it.

 

[kEiThZ]

I would like to see legislators get ahead of this by declaring some regime of transparency and legalised discovery for safety issues.

They are. Just because us northern bumpkins don't really spend much time looking at this stuff, doesn't mean the rest aren't.

I love having my own car, but for a price....

To be honest, I think Tony Seba makes one mistake. He conflates EVs with autonomous vehicles. I think the S-curve will be very different for both. I think he's underestimating how fast EVs are coming on. And overestimating how fast automation with come on and enable TaaS. So I think people will be owning their own cars for a long time to come yet. And even when TaaS exists, there will still be people that own their own cars and don't share. While some might put that vehicle in a pool.

I am always struck by how inflexible personal vehicle ownership is. I drive a compact car. I can't move furniture with it. I can't take lots of people or gear or roadtrips. I can't take a full load of passengers with a suitcase for each to the airport. I can't pick up 2x4s from Home Depot with it. But let's say there's TaaS or some kind of pool for different vehicles, I would be able to do all those things with a click of the button and contribute my own vehicle as necessary.

 

[kEiThZ]

Going back to impacts of the disruption. In his presentation, Seba talks about how it doesn't take a lot of penetration by new tech to cause major market impacts (which he terms "market trauma"). Given our reliance on oil and gas in this country, I am particularly worried. This is a short 4 minute video by Bloomberg that shows how a small increase in EV penetration could result in a similar oil glut that lead to the oil crash in 2014:

That video is 4 years old. Bloomberg underestimated how fast EVs are coming on. And they've since dramatically upped their forecast. Essentially we could see a collapse in demand for oil sands output within a few years, if EVs create an oil shock. That has huge implications for us. I wish the government would understand this and go full bore on industrial development in other ways.

Bloomberg's hypothesis here is particularly poignant when you consider how fast fleet electrification is going. Amazon's 100 000 order caught attention. But there are plenty of large companies committing to electrify their entire ground fleet by 2030. And fleets will do more to cut oil demand than individual car buyers ever could. It's been estimated that switching a bus to electric cuts half of barrel of demand per day. This is why China's 400 000 buses displaced 270 000 bbls per day in 2019. Imagine virtually every fleet being electrified by 2030. Delivery trucks, garbage trucks, transit buses, school buses, hydro service vehicles, etc. Imagine what impact that alone would have on global oil demand.

 

[mdrejhon]

Elon Musk: "So to succeed with electric cars, the cost curves require us to build a plant that doubles global Li-ion battery output in one shot."
Canadian or European investor: "That's a totally insane idea. You've lost your mind. We should fire you as CEO."
Silicon Valley investor: "Let me get my chequebook."

Even though Thomas Edison wasn't the first to the light bulb, Henry Ford wasn't the first to the automobile, Steve Jobs wasn't first to the GUI or smartphone, and Elon Musk wasn't first to BEVs and reusable rockets.

But they all have in common: The visionary thinking that few believed in at the time. These people successfully "perfected" respective inventions to succeed at hitherto unimagined mass-market levels. Musk is doing things at a historical ginormous industrial scale, that has made a lot of us jaw drop collectively. Now we're seeing mass-market BEVs that drive themselves, and rockets landing themselves. It takes really visionary thinking to create a market where one formerly thought possible to become economical.

Of course, none of these figures mentioned are perfect human specimens (all the drama exists with all of them too), but let's face it -- their creations have created an undeniable impact to society.

Before the light bulb was mass marketed, it was once a totally bonkers idea to replace candles with mysteriously dangerous magic (electricity) flowing mysteriously through a thin filament inside a glass sphere. Even when this succeeded, few thought this expensive fragile "Rube Goldberg" contraption (light bulbs connected to an electricity grid) would ever become cheaper hourly than operating a candle. But it did.
/Circa 1879