Video: The car is dead - long live the car
December 1, 2016
Many academic studies point out that self-driving cars will dramatically reduce the number of vehicles on the road. Indeed, one study by the University of Utah found that a single RoboTaxi could replace 12 conventional vehicles. Another study concluded that the entire population of Singapore could be served with one-third the current number of vehicles if they were all autonomous. That threat comes on the back of the rise of on-demand car technology companies, such as Uber and Lyft. Last year these firms generated $30bn in revenue in the US and yet they still only accounted for less than 0.1 per cent of miles driven. The theory holds that as calling a car becomes increasingly cheap and convenient, more vehicles will be taken off the road. One MIT study found that New York’s 13,500-strong taxi fleet could be reduced by two-fifths with on-demand vehicles. Perhaps unsurprisingly, the price of New York taxi medallions has halved from about $1m two years ago.
If that isn’t enough, social attitudes regarding car ownership appear to be changing. While over 75 per cent of all Americans prefer to own a car, only 64 per cent of younger ‘Generation Y’ consumers view a car as their preferred method of transport. Furthermore, the proportion of 16-24 year olds holding a driver’s license has dropped from 76 per cent in 2000 to 71 per cent today. Similar trends exist in European countries.
While most people will look forward to a world with less road congestion, carmakers fear a structural decline in the car market. And this just as they emerge from their post-crisis resuscitation. They shouldn’t worry. While the move towards on-demand and self-driving cars will certainly reduce the number of vehicles on the road, the industry can actually look forward to a resulting sales boost from the phenomenon.