THE HISTORY OF TRANSPORTATION

Future of Mobility: Transportation Innovation

Our current reality is shaped by the historical developments of policy, technology, competition, and a strong desire for freedom. Cars were first invented and refined in Germany and France in the late 1800s, but it was the United States that came to lead the global automotive industry by the early 20th century. This shift had a transformative impact, as the car reshaped personal freedom and revolutionized how people traveled and connected with each other.

Our Journey So Far

In the early 20th century in the United States, the affordability and availability of cars revolutionized personal freedom by enabling people to travel to jobs, access services, and engage in social activities according to their own schedules. This surge in automobile use also boosted economic growth in related industries, especially steel, petroleum, tourism, and public infrastructure.

In 1900, the country had only about 8,000 registered automobiles. Roads were mostly unpaved, and gas stations were nonexistent, so drivers bought gasoline from pharmacies and blacksmiths, often parking their cars alongside horse-drawn carriages.

Soon after, World War I hastened the transition from horse-powered transportation to cars. During the war, the U.S. automobile industry adapted to produce essential military vehicles, including tanks and planes, further cementing the car's central role in American life.

By the 1940s, the U.S. automobile industry had become a powerhouse, producing vehicles for both civilian use and the military. As demand for personal vehicles grew, so did the need for military vehicles and equipment to support the Allied forces during World War II. Automakers expanded their operations to produce not only cars and trucks, but also tanks, engines, cannons, aircraft, and other wartime essentials. When the war ended, the U.S. had about 31 million registered vehicles. By 1960, that number more than doubled to around 74 million, a shift that came with major changes in American society. The postwar years saw the rise of suburbs, the creation of the interstate highway system, and a booming car culture that shaped daily life and reshaped cities.

By 1970, rapid advances in vehicle design, roadway infrastructure, energy distribution, and supporting policies made the automobile the backbone of U.S. transportation. The government’s investment in highways and fuel taxes supported the expanding infrastructure, while new parking policies accommodated the growing number of cars. During this period, U.S. and European automakers dominated the industry, leading in both market share and technological expertise. However, this reliance on cars brought challenges: dependence on oil, rising pollution levels, and increased traffic accidents.

Today, the U.S. has around 275 million registered vehicles, with an extensive network of 2.8 million miles of paved roads, 145,000 gas stations, and an estimated six parking spaces per vehicle. Car ownership is widespread, with 92% of households owning at least one vehicle and 22% owning three or more. Americans collectively drive over three trillion miles each year, though cars are parked 95% of the time.

The enormous growth in automobile use reflects the American desire for independence and convenience. However, the costs of car ownership—averaging $50,000 for a new car and $25,000 for a used one—along with the environmental and safety challenges, underscore the need for a new mobility system. Future solutions will need to balance the efficiency, sustainability, and safety of transportation while still offering the freedom that Americans expect.

The expansion of the U.S. auto industry and related policies

Between 1900 and 1970, the U.S. auto industry grew swiftly, establishing an interconnected system involving cars, steel, oil, roads, and parking infrastructure. Driven by consumer demand and economic growth, car ownership skyrocketed, fueling job creation, infrastructure expansion, and feedback loops where more cars meant more roads, gas stations, and parking, which further boosted car ownership. By 1970, this growth led to Americans driving 110 million cars across 1.6 million miles of paved roads, but it also resulted in rising pollution, traffic fatalities, and reliance on foreign oil.

In response, the 1970s saw the U.S. government take significant steps to mitigate these issues. New agencies, such as the National Highway Transportation Safety Administration (NHTSA) and the Environmental Protection Agency (EPA), were established to enforce safety, emissions, and efficiency standards. Key policies, like the Clean Air Act and the Corporate Average Fuel Economy (CAFE) standards, sought to address pollution and reduce fuel consumption. For example, the Clean Air Act mandated a 90% cut in car emissions by 1975, and the CAFE standards aimed to improve fuel economy in response to the 1973 oil crisis.

These efforts had long-lasting effects on public health, safety, and environmental protection. From 1970 to 2020, emissions of major pollutants in the U.S. decreased by 78%, and highway fatalities dropped significantly, despite increased vehicle usage. By 2030, fuel efficiency programs are projected to save over 3 million barrels of oil daily. These policy measures laid the groundwork for modern transportation regulations, aiming to balance the benefits of car ownership with environmental and safety considerations.

At the Periphery: The Role of Public Transit

In the 20th century, public transit in the U.S. saw a steady decline in popularity and usage as private car ownership soared. Cars offered unparalleled convenience and flexibility, especially with investments in extensive road networks and suburban growth. Transit, with fixed routes and limited coverage, struggled to compete over sprawling areas, and factors like service frequency, fares, and gas prices further influenced people's choice to drive when possible.

As more people embraced driving, transit ridership suffered, and by the mid-20th century, transit services faced operational challenges. Poorly managed franchise operations led to many transit services being taken over by public ownership. Between 1950 and 1980, inflation-adjusted operating costs for transit rose significantly (by 183%), while ridership halved, and car ownership tripled.

By the 1970s and 80s, a very small portion of urban trips relied on public transit, as most Americans preferred the freedom of driving. Monthly transit trips fell drastically, from nine per capita in 1950 to just 2.5 in 2018. As of 2023, only around 1.3% of trips are made by public transit in the U.S., partly due to the lack of political support for transit investments outside dense urban areas, where people seldom use transit.

Most U.S. transit agencies now face major budget challenges, and fixed-route transit struggles with efficiency and public appeal. Since the 1980s, efforts to improve transit through public-private partnerships have largely failed. Although transit remains essential for those who can’t drive or afford a car and is crucial for urban mobility in many cities globally, the sector faces hurdles. The COVID-19 pandemic, along with changing mobility preferences for more flexible options, has driven down transit ridership further. These shifts are pressing transit authorities to find sustainable economic models to adapt to a new era of mobility preferences and challenges in public acceptance and cost efficiency.

Global competition reshapes the auto market

In the 1970s, U.S. automakers faced a wave of new regulations aimed at reducing pollution, addressing dwindling oil supplies, and improving vehicle safety. To meet these requirements, American car manufacturers began transitioning their cars from rear-wheel-drive, body-on-frame designs to more compact and fuel-efficient front-wheel-drive vehicles with integrated body-frame construction. However, this shift was challenging, and U.S. automakers struggled to adapt quickly.

At the same time, Japanese carmakers expanded significantly into the U.S. market, raising the bar for quality, efficiency, and fuel economy. These Japanese manufacturers had been supported by government subsidies in the 1950s and 1960s and benefited from consistent access to essential materials, which helped them establish a strong foothold in the American market. By the early 1980s, Japanese cars had become so popular that, under pressure from the Reagan administration, Japan's Ministry of International Trade and Industry (MITI) introduced a Voluntary Restraint Agreement (VRA) to limit Japanese car exports to the U.S. This action aimed to protect the struggling American auto industry, which had been hit hard by the 1970s oil crisis and failed to keep up with consumers’ demand for more efficient vehicles.

In addition to Japanese competition, Korean automakers entered the U.S. market in the 1990s, offering cars known for quality, reliability, and innovative design. By the 21st century, brands like Toyota, Honda, Nissan, Hyundai, and Kia had reduced the dominance of the "Big Three" U.S. automakers (GM, Ford, and Chrysler). The Big Three’s market share dropped dramatically from 85% in 1970 to just 44% by 2010, marking a major shift in the American automotive landscape.

A Worldwide Financial Crisis and the Rise of Disruptive Transport Tech

In the late 2000s, the U.S. auto industry faced severe challenges due to the 2008 financial crisis, which led to a 40% drop in car sales. Oil prices also hit a record high, reducing demand for large, fuel-intensive vehicles like pickups and SUVs. As a result, some manufacturers, such as Toyota, began offering hybrid vehicles to capture market interest in more fuel-efficient options. To prevent a total collapse, the U.S. government intervened with the Troubled Asset Relief Program, helping to preserve jobs and stabilize the industry. General Motors and Chrysler went bankrupt, while Ford avoided the same fate due to prior financial preparations.

Meanwhile, innovation in the auto sector was gaining momentum. Electric vehicles (EVs) and connectivity technologies were transforming the landscape, marked by the debut of Tesla’s Roadster in 2006, which broke the stereotype of EVs as low-performance city cars. General Motors' Volt concept in 2007 further validated EV viability, attracting public attention. Connectivity tech, originally used mainly for emergency telematics like GM’s OnStar, rapidly expanded with the advancement of software services and 4G/5G networks, allowing third-party providers to offer high-speed, connected vehicle solutions.

In autonomous vehicle (AV) tech, Google recruited top talent from DARPA's AV challenges, accelerating the development of self-driving technology. This project, now known as Waymo, laid the foundation for modern AV systems. Additionally, ride-hailing services like Uber and Lyft, which evolved from early carpooling apps, leveraged mobile tech and GPS to allow on-demand, point-to-point rides. These services brought new benefits like reduced parking hassles and fewer instances of impaired driving.

During this turbulent period for traditional automakers, tech companies from outside the industry were pioneering the future of mobility. These companies, deeply rooted in digital technology and connectivity, were not just designing cars but were creating integrated, compelling mobility solutions.

Today’s Turning Point in Mobility

Today, mobility has reached several critical tipping points, driven by advancements in electric vehicles, autonomous driving, and connected vehicle technology. Demand for electric vehicles (EVs) is growing globally, with sales projected to make up half of the U.S. market by 2030, thanks in part to incentives like the Inflation Reduction Act. Electric and hybrid vehicles are popular due to their environmental and economic benefits, while advanced driver-assistance systems (ADAS) are becoming standard, making driving safer and more efficient.

Connected vehicle technology has advanced significantly, with vehicles now capable of real-time communication with each other and with infrastructure (like traffic lights and cameras) to improve safety and efficiency. Enhanced 5G capabilities in cars enable remote updates and software-driven improvements. Ridehailing services have also grown rapidly, offering convenient, on-demand transportation options. In addition, companies like Waymo and Cruise are piloting autonomous vehicles in urban areas, with autonomous freight trucks already operating in select regions.

Beyond individual vehicles, societal changes in digital communication and remote work have transformed travel patterns and urban planning. Digital tools allow people more flexibility in where and how they work, reducing unnecessary travel and reshaping transportation demands. This shift underscores the automotive industry's need to evolve from traditional vehicle manufacturing to integrating broader digital and transportation systems.

As the convergence of transportation and digital technology transforms society, it presents an opportunity for policymakers to guide these advancements to ensure that the future of mobility is equitable, sustainable, and secure for all. Decisions made now will determine which nations and communities thrive in this rapidly evolving landscape.

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