The Times They Are a-Changin’: Are We Seeing the End of Car Ownership?
The car is a symbol of independence and a fundamental aspect of material wellbeing, giving individuals more choice over where they live, travel and work. For this reason car ownership became an unchallenged orthodoxy of 20th century life with cities designed to accommodate them and space surrendered for parking. The subsequent congestion and pollution that this contributes to, has already started to diminish the quality of city life. The times, however, are changing. In cities where Mobility as a Service (MaaS) in the form of carsharing, e-scooters and ridesharing is growing, and as autonomous vehicles (AV) move from a crazy dream to everyday reality, an old dream in itself may be disappearing. What does this all mean then for such a classic symbol of individual prosperity?
An urbanising world
Today 55 percent of the world’s population lives in urban areas which is set to increase to 68 percent by 2050. In North America (82%) and Europe (74%) rates of urbanization are already high. The modern car is built for long distances with its bulky frame designed to deliver comfort and security. In cities, however, these great man-made mammoths are not suitable for their urban environment (for more click here). The requirements of today’s city dwellers are more varied. Smaller, lighter vehicles are more appropriate for navigating busy streets in the last mile while a car may still be more appropriate on-demand for longer trips, bringing home groceries or picking up the kids from school.
Costs of owning a car — time and money
When the 19th century economist Adam Smith posited his theory of rational choice, suggesting that people, as rational actors, will make choices that maximize reward while minimizing cost, he probably didn’t have the automobile and the modern city in mind. For a long time, those living in cities didn’t stop to question the status quo of owning a car, even when the economics and convenience of it are compromised. In fact, in the last ten years American commuter habits have hardly changed at all. This was in part because of the lack of alternatives.
In the US where car ownership is notoriously desirable, the costs per individual are mind blowing. According to the U.S. Department of Labor’s statistics, the average vehicle costs around $9,500 per year to own and operate. The costs of the vehicle itself, as well as maintenance, insurance and fuel, are therefore burning holes in the wallets of US consumers. In European countries where fuel is even more expensive, these costs could well be higher. Add to this the major inconvenience of looking for ever-decreasing numbers of parking spaces, and owning a car doesn’t appear to be the dream it once was. No wonder then that given a choice, consumers in cities with alternatives may turn their backs on car ownership completely.
Shared vehicles can solve these problems by cutting the upfront and running costs, while providing convenience in that, in most cases, they can be parked anywhere. Gartner Inc., a market research firm, predicts that shared vehicles will make up 20 percent of the vehicles in urban centres by 2025. Although there is scant evidence at this stage to make exact prophecies about the mobility habits of future generations, there do appear to be differences among younger people and older people towards ownership. A Deloitte Insights study found that at 64 percent, Generation Y/Z ride-hailing users are nearly four times as likely as baby boomer and pre-boomer ride-hailing users to question their need to own a vehicle entirely. This, although far from concrete, does suggest a difference in attitude towards ownership.
Although it is densely urbanized areas where there is a concentration of MaaS options, it is actually in the suburbs where these forms of mobility may have the greatest impact. Where public transport connections are often patchy, MaaS options, such as e-scooters and AVs, can help to plug these gaps.
The present now will later be passed — autonomous vehicles
The most significant nail in the coffin to the classic model of car ownership could well be the onset of autonomous vehicles (AVs). The major benefit for users will be convenience. The user can be picked up and dropped off without having to worry about parking, traffic jams or even steering the car itself. Whereas one may question the value of a scooter for a whole family, or the reliability of finding a nearby carshare, AVs have a significant all-purpose benefit. While previously it was the car that was seen as the great all-rounder, AVs offer all that and more. There are many technical and ethical questions involving AVs that need to be addressed. But, their potential to change urban mobility preferences is undeniable.
AVs are most likely to be deployed initially as shared vehicles in the form of “robotaxis”. At the beginning this is inevitable because of the high costs of the sensors. As AVs will be more expensive than normal cars, they would only pay themselves back with high rates of utilization — not the five percent for the average car driver today. This can be seen when you take a look at some of the leaders in the field. Waymo, a subsidiary of Alphabet, is experimenting with self-driving minivans in Phoenix, in partnership with Lyft. Here they have gone straight for the “shared” market, rather than to design vehicles for private individuals.
In the long term, even as AVs become more affordable, it is likely that consumers will continue to use this model rather than owning them. Without a driver, the costs of “robotaxis” could fall dramatically and with this in mind, users may well find it economical not to own one at all. This leads UBS, the financial services provider, to predict that by 2035, 80% of people will be using robotaxis in cities where they are available, and that urban car ownership will fall by 70%.
Benefits all round — reducing congestion
MaaS has the potential to improve city life, not just in terms of the convenience to individual users, but to the city as a whole. Congestion is a growing problem across the world and the pollution that comes with it is a pressing issue. This is not helped by the fact that the majority of cars spend most of their time sitting idly by the side of the road (around 95 percent), forcing drivers to look further in search of somewhere to park. By increasing the utilization rates, shared vehicles can free up valuable space which could be used for more efficient purposes or given back to the community.
The uptake in AVs would be especially effective in alleviating congestion for two main reasons. First, by removing the need to park, AVs can simply circle around, only requiring pick-up and drop-off space. Bearing in mind an estimated 30 percent of urban traffic is spent looking for a parking space, the benefits in removing this entirely would be enormous. Second, as AVs will in most cases operate in a network, traffic can be better managed. If one area is already congested, the AVs will communicate with each other and can be automatically rerouted in order to avoid traffic jams. Consequently, the benefits to the individual and to the city, makes the adoption of AV-based mobility infrastructure very attractive for cities. It is in truth difficult at this stage to predict where we are heading. Increased urbanization and a growing number of service-based mobility options are clear trends. Whether that signifies the death of car ownership is still unclear, but it is likely that private car usage will decline.
Ubiq — the curbside brain at the centre of innovation in mobility
At Ubiq we are shaping the mobility of the future by digitizing the last mile. We organize the world’s parking-related data and transform it into actionable information to enable better mobility decisions. Today we support rideshare, carshare and micromobility operators, as well as OEMs, by providing parking intelligence and guidance for users. With demand prediction and operational efficiency services, we enable vehicle sharing operators to maximize the utilization of their fleets.
With eyes on the future as well, we see an important role for Ubiq in providing the parking brain (further reading here) for AVs. Our curbside intelligence would enable AVs to make intelligent decisions in parking situations. Based on our coverage of 62 cities on three continents, we found that 30 percent of all rules and restrictions are implicit, with no explicit sign. The cameras and other sensors found in an AV, that can read road signs, are therefore insufficient in themselves. Here we provide the AVs with this implicit knowledge to help them make the correct decisions in the last mile. As AVs are most likely to be deployed on-demand as a service, this will in most cases take the form of pick-up and drop-off scenarios (read more here).
If car ownership brought about an individualistic revolution in how we get around, the future of mobility is one defined by convenience and sharing. Mobility as a service will reduce the time wasted in traffic and looking for parking spaces, while saving individuals the costs associated with owning something that is used only a fraction of the time. This has the potential to transform the way we move around. There is still some way to go before we can rely on automated mobility, nonetheless, with developments already underway in carsharing and in micromobility, a change is already taking shape. And with change, some things get left behind. The dream of car ownership may eventually disappear, the future of mobility could well be more about using, not owning.
Maximilian Mayer is Head of Sales at Ubiq, a Vienna-based company providing data-driven operational services for shared mobility.
Get in touch with him here to find out more.