The car is set to go the way of the VHS tape – prepare your portfolio
The car is as redundant as the record was 25 years ago, or the CD was in 2000.
In 15 years’ time, you will not own one.
Urban transport is about to undergo a huge transformation. The town planners are not ready for it.But you can be…
The great technology graveyard
In my student days, I spent way too much of my life in record shops buying records.
I was especially interested in 1970s soul, jazz and funk: what you might call, “rare groove”. To have some little known, out-of-print album that nobody else had was a badge of honour.
Then CDs came along and I started buying those instead, although never with as much dedication.
I was proud of my VHS collection of films and TV shows as well, and then my DVDs.
I still play my records occasionally, although just about every record I ever owned – even the obscure stuff – is on YouTube. My CDs have all been ripped – I play them all off my computer or phone. I never watch my VHS tapes – I’ve long since thrown them away – while DVDs are an occasional pleasure.
But I use the likes of YouTube, Vimeo, iTunes, Spotify, Netflix and Amazon Prime almost every day. New tech has made the ownership of media as we used to understand it – the DVD or record collection – almost obsolete.
The same thing is about to happen to cars. Are you ready for this? And is your portfolio positioned?
Change is not immediate, it is incremental. But within the slow process of change, there are big shifts. More and more water builds up until you reach a point where the dam can hold no longer and it gives way. The water then floods and flows until it reaches the next barrier, where the building up process begins again.
Eighteen months ago, while I was “between cars”, I started using Uber. It was so good I figured: “Why bother with the hassle and expense of a car?”
My eldest two kids, who are 14 and 15, are now registered to my account. When they need picking up, they call an Uber. I no longer have to go and get them from school, football, dance or their friends. Uber does it for me. It has freed up loads of time. Safety is not an issue – I can track them every step of the way. It works out cheaper.
Families are the last people who will make this switch, particularly those with younger kids. But the childless metropolitan will in many cases already have done so. So-called ride sharing is already becoming a feature of our cities.
It’s not just ride sharing, or driverless, but the combination of the two
Meanwhile, strides forward are being made in the field of driverless cars. In August in Singapore, the world’s first fleet of driverless taxis has hit the roads, thanks to a company called nuTonomy. Last week in Pittsburgh, USA, Uber launched its first self-driving cars, though with a human driver in the front seat supervising.
Google enjoys self-driving cars on its campus. Tesla’s cars too have a self-driving mode.
There will be hiccups and worse along the way. In Tesla’s case there already have been. But the greater trend is obvious.
Soon we will start to see driverless cars driving alongside old-fashioned vehicles. There will be speed limits (20-25mph probably), restrictions based on weather conditions, areas that these cars are not allowed to visit, and road hazards that are deemed too difficult to navigate. But the technology will get better and these restrictions will be gradually eaten away until every journey can be made by autonomous car.
As this happens, the cost of these cars and the transport they offer – assuming they are not taxed and licensed to death, which is not impossible – is going to keep falling, just as the cost of computers and phones has fallen.
This process will continue until people simply don’t own cars any more. In the same way that hipsters play vinyl to make a trendy statement, the same might happen with non-autonomous cars in 2035. Kids in the future will only buy a car that is normal today to show how groovy and alternative they are. And, in most cases, that car will be second-hand.
Think of all the space we’re going to have
The biggest barriers to progress are regulatory and legal, not technological. But the technology companies are moving so much faster than state institutions that the likelihood is that in most cases, as has happened with Uber in London, they will build up a base of happy and loyal customers who love the great service and the low prices, before the authorities react, by which time it will be much harder for the authorities to put a stop to it all.
You may know the phrase: “it’s easier to get forgiveness than permission”. Well, these guys aren’t seeking permission either. Where possible, they’re establishing themselves, then seeking permission – after, not before.
The Mayor of London’s recent decision to subsidise the licensed London taxi industry to the tune of £65m is the worst possible decision. I have both friends and family who drive black cabs. I sympathise with their plight as much as the next man.
But the subsidy will just prolong the agony for a sector of the economy which is out of date. It’s like subsidising the hansom cab, just as the car was becoming affordable to every man. That way zombies lie.
Town planners need to embrace these new technologies. They are going to make our congested cities much better places. Vehicles currently spend more than 95% of their time parked. That parked car is occupying valuable space.
Imagine if 90% of parked cars were no longer there. Not just the cars parked on the street, but cars in garages and car parks. What else can this space be used for? Public spaces, street markets, housing – who knows? We might even see kids playing football on the street again, like the “good old days”.
With fewer cars parked on our roads, there will be less congestion. Transport will move faster. The hope is that driverless cars will use the road space more efficiently than humans, anyway, but, with more space available, travel time – the bane of living not just in in my city of London, but almost any city – can be reduced significantly over time.
What industries will be affected by this? Insurance is going to get a much-needed kick up the backside. Car manufacturers – the ones that don’t modernise – will certainly go to the wall.
Car-park companies will need to adapt – the need for parking as we now know it is going change. “Dear Mr Car-Park Company CEO, you are HMV in 1995 – you still have a chance to get out, or reposition yourself.” I’d also be shorting the local council, if such a thing were possible, because parking revenue is about to disappear.
Finally, we can all celebrate an end to the days of legalised theft by parking ticket. Perhaps we can make some of the money that has been stolen off us back by shorting the companies that operate parking services on behalf of the council.
And so it goes on.
In 20 years, the roads of our cities are going to be much better places. The cities themselves? About that, I’m not so sure. Too much characterless, glass-fronted tat is being built. Planning laws are the cause of that – creative decisions are made not by the creative, but to suit the regulator. That is a subject for another article.
And Silicon Valley – if you can sort that out, I should be very grateful.
This article first appeared at Moneyweek.
@frizzers aka Dominic Frisby is a financial writer from London.