Autonomous Vehicles: The Winners and Losers

When elevators first came along, they came with a few safety issues. Movement between floors was all controlled by the lift operator’s hand and well, us humans tend to be pretty inconsistent, easily distracted with no inherent safety features. As a result, people kept dying.

If you think about it, it’s not too different to us as drivers. In 2013, there were 1.24 million road deaths. Think about that number for a second. If cars were a drug – they’d have never made it past a second stage trial. We now have a new promised land in driverless cars and in the States, they’ve sent a clear statement that driverless cars need to have brakes, steering wheels, and other things us incapable humans can interfere with and cause accidents.

This happened with lifts too. When the lifts were eventually automated to make them faster, more efficient and safer – people lost their shit. They were petrified of unspeakable accidents, which is rich considering people kept getting obliterated due to lifts not stopping or chopped in half owing to mistimed James Bond style jumps.

But eventually, over the course of years, people got comfortable with the machines taking over. Things settled down and a whole new way of doing things emerged. While the lift operators were laid off in their droves, companies were set up to design these new automated lifts. There were installation and maintenance engineers, decommission professionals, people optimising the sensory experience. A whole new economy was spawned off the back of it.

I thought it would be cool to imagine the next 10-15 years of unfounded paranoia, mass hysteria and cultural dissonance had all happened already and we were in the midst of the second phase of driverless cars. So they’ve been introduced, people have got over it and innovation has either happened (or not). Here’s where I ended up after this rather fun musing:

The winners

Manufacturers

All of the financial services arms of the manufacturers (think Fiat Financial Services, BMW Financial Services etc.) are clamouring to put you on a monthly payment plan to provide you with a vehicle.

The paradigm of car ownership has changed just as drastically as car travel. Traditionally, when we bought cars, we made a judgement based on: all the things I do, how often I do them, how long I plan to keep the car and what my family circumstances are. That then led to ‘I think I want this one’. There are a whole lot of assumptions in there:

1)     The things you’re doing now will be the same as in 6 months or 6 years’ time.

2)     Thoughts around family planning are static and aren’t going to change.

3)     You’re not going to happen upon new interests.

4)     You’re not going to change jobs or circumstances.

In today’s world, I wouldn’t want to be making assumptions on any one of those things – let alone all of them.

So a more flexible model where you pay per month and can use different models from the manufacturer’s range at different times seems just the ticket to me. Planning on moving house? You’re driven by the BMW X5. Making your way around town on a commute to work? Then you get access to a BMW i3. Sounds cool to me.

Rental companies

Rental companies know they need to act fast. Positively, they’ve already got the systems and processes to get off the ground quickly and set up dedicated business units. Car ownership dies off almost entirely in favour of a dynamic model of rental.

This allows traditional car rental companies to offer a nice middle ground between Uber (journey based) and the car manufacturers (lifestyle based). Use case specific rental if you will.

Moving house, for example, which is always an interesting experience. Many a white collar worker have had run ins with traffic lights, kerbs and walls in their first-time endeavours driving a long wheel base transit van.

Holiday rental occupies a huge slice of the rental pie. In offering an end to end airport collection, Holiday car rental, and drop off service business is booming. E commerce Point of Sale attach to package holidays, flights and accommodation booking becomes a major income stream. By plugging in the car’s GPS and journey planning system to the flight arrival time API from airports, the rental companies can ensure that resources are allocated accordingly and utilisation is maximised.

Uber

Uber goes from perennial loss making startup to a wildly profitable utility company.

Back when drivers were used for Uber, their infrastructure was evidently optimised for a time when  there wouldn’t have to be a human being at the helm. It only figures that they’re the first out of the traps with journey based driverless cars.

They’re also looking early on at ways to be even more disruptive and to increase the amount of supply.

One of the ideas that catches on quickly gives those who have access to a driverless car with excess availability at certain times of the day the opportunity to send their vehicle out to make them money. Much in the same way people can rent their driveways out, or rent out a spare room on Airbnb – those who own/rent a driverless car will be able to offset the cost through one of these more innovative models. While you’re working, send your vehicle out to do shopping runs for the OAPs. While you sleep your car could be a night owl taking home dreary eyed party goers who have all had a few too many. This all further distances us from the emotional engagement we have with our cars.

As a result, the real term cost of off peak travel drastically reduces due to an oversupply of vehicles. As such, peak time demand soars - mainly as a result of the casualties of the world of driverless cars

The casualties

‘Traditional’ Public transport

Because not everyone would want to ride-share 120 miles in a confined space with a stranger, I think there’s probably still a place for trains. Yes, people still generally dislike being with strange people, however I’m sure most people find it soothing when they have a couple of seats to sprawl themselves out or the opportunity to slump in the corner of the quiet carriage. That said, demand dramatically decreases. Fuelled partly by the innovations we see in driverless cars, but also by holographic meetings, more seamless remote collaboration and the emergence of millennials are the dominant paradigm in leadership positions. Paying ￡80bn for HS2 seems like a poor bet for the future to me.

Things are even more shaky for coach travel brands like National Express. The indirect model of going to your destination via a number of other stations when competing with ride sharing driverless algorithms that get you where you’re going in a quicker way proves very difficult. A poor track record in innovation is a curse. Eventually, new types of multi user driverless transport appear, using AI analytics to customise journeys based on the actual people travelling at that particular time. We also see mobile working hubs on wheels – complete with standing desks, holographic video conferencing booths and coffee areas/networking zones giving an interesting option. This echoes the way that long haul aeroplanes overhauled their cabins to respond to what customers actually wanted.

Leasing companies

Very rarely are leasing companies set up to be innovative. In a world where manufacturers decided not to offer the monthly payments to drive different cars, there is a role for lease companies to provide that. However, I can’t see manufacturers shying away from the opportunity to ‘own’ the customer.

Hence, strangled between the manufacturers, rental companies, and the likes of Uber – lease companies buying stock from manufacturers and dishing them out on a monthly payment is heavily disrupted. That’s not to say they all disappear. The odd few survive and thrive by going niche for some markets. But in general, a lot of work was required to get there and many don't have the legs.

The disrupted dinosaurs

We’ve still got a number of years until driverless cars go mainstream, But, like most other areas of exponential tech, it’s coming whether you like it or not. Brands in this space must start positioning themselves now for the opportunities that will undoubtedly arise. Hell, everything Uber has done up until this point is gearing up for this world. And they’ve achieved penetration in a short space of time globally that the majority of organisations in any market would die for. Car manufacturers, lease companies, public transport providers and rental companies need to think about the changing nature of the way people will consume car travel in the brave new world we’re heading to. If they don’t, they’re going down the pan.