There are many industries that are going through changes. Over the next 5-10 years, we will see major shifts that alter how we operate in society.
One of those areas is transportation.
The automobile industry has not seen too many changes over the past 70 years. We still operate in a similar fashion to how we did things decades ago.
Cars are a symbol of freedom. Teenagers dreamed of the day they would get their license and get their own car. They were purchased from a local car dealership who bought them from the manufaturers.
Ownership was an important concept to society This is starting to diminish. In many areas of life, technology is shifting so that we now value access over ownership. Software is an example where we now access it on the cloud.
Transportation-as-a-Service is going to alter every aspect of society. One of the biggest shifts is the personal income statement where a major part of the budget is eliminated. Presently, estimates are that it costs 80 per mile driven in the United States.
Pushing this shift is advancements in automation, electric vehicles and software. It is an era where things move very quickly.
Uber was able to top all the taxis in the country within 7 years. It went from operating in an apartment to capturing more fares than the entire legacy industry.
Source: Gam Investments
Over the next few years, we are going to see the miles driven under the heading of TaaS increase. This is going to affect all aspects of the automobile industry especially manufacturing.
Last year, we saw a decrease in vehicle sales of more than 4%. Before the coronavirus, it was expected that the global auto industry was going to decline by more than 4 million vehicles in 2020. This number only increased as a result of the virus.
Manufacturers are starting to plan for the shift in the trend. Both Tesla and BMW are working on platforms where vehicle owners can operate in a manner similar to Uber. The difference is the platforms are for the time when autonomous vehicles are available. We are already seeing some of the early stages with Waymos experiments in Arizona.
The industry is anticipated to be near $8 trillion. It is one that will see the cost per mileage will drop from 80 cents to the 8-10 cents level. This is a 90% reduction from the present rates.
Further impact can be seen in how house are constructed. After all, if vehicle ownership goes away, what need is there for a garage and driveway.
There is also the impact on service centers, gas stations, and motels. We could also see effects on the airline industry as short hop flights will be bypassed for an autonomous vehicle (pod) where one can travel all night while sleeping.
Technological breakthroughs often extend beyond the initial industry they are disrupting. Instead, they tend to morph into other industries causing upheaval there also.
TaaS is the future and it might not be that far off.
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