Why Driverless Cars May Hurt New Car Sales
There aren’t many people who deny that driverless cars are inevitable, but just how the introduction of autonomous driving will impact the industry is still impossible to predict. An analyst at Barclays, the British banking giant, thinks he has a pretty good idea though, and he says the future isn’t looking bright for car companies. If his predictions prove correct, auto sales in the U.S. will end up dropping by 40% or more, requiring major automakers to significantly cut production.
The Barclays analyst, Brian Johnson, says that “GM and Ford would need to reduce North American production by up to 68% and 58%, respectively,” and they “would need to shrink dramatically to survive.”
Johnson’s assertion is that when cars become fully autonomous, households will move away from owning multiple vehicles and will likely end up only owning a single car at most. No longer shackled to parking lots and driveways while not in use, autonomous cars will be able to drive back and forth, transporting family members as needed.
Luckily for automakers, while partially autonomous technology already exists and will become much more widely available over the next few years, the technology and regulations required for fully autonomous vehicles to operate on U.S. roads is probably going to take a while.
For a look at how something similar has played out in history, Johnson points to the horse population. Before the invention of the automobile, horses served much of the same purpose as the personal car. After the widespread adoption of the automobile, however, reduced demand for horses led to a sharp decline in their population.
Johnson also sees vehicles breaking down into four different categories. Conventional vehicles would mostly be used for work and in rural areas, while “family autonomous vehicles” would be privately owned and used by a single family. “Shared autonomous vehicles” would operate like autonomous taxis, while “pooled shared autonomous vehicles” would work a lot like a bus or van. He also expects each shared vehicle to replace nine traditional cars and each pooled vehicle to replace as many as 18 of them.
By removing the need to pay a driver from the cost of a ride, a taxi fare would probably drop drastically. The cost per mile in a private car would be about $0.44, and a shared ride would cost a little as $0.08 per mile. With such low transportation costs, it would be easy for many people in urban areas to go without personally owning a car. Families that may not be able to get by with only a single autonomous car would also be more likely to do so since they could supplement their additional transportation needs with inexpensive taxi rides.
One thing that is unclear in Johnson’s analysis is if he took the extra mileage into account when looking at new car sales. He expects autonomous cars to drive twice as many miles per year since families will still be travelling to the same places but won’t be doing so in their own vehicles. That would potentially lead to vehicles needing to be replaced much more often than they are currently and may offset the reduced need for individual cars.
For most car enthusiasts, the idea of a world full of autonomous cars is a terrifying one, but it might not be so bad. Even car enthusiasts hate commuting to and from work, and driving around town to run errands isn’t exactly fun either. Without the need to own a practical vehicle for commuting and shopping, enthusiasts will be free to purchase the cars they really want to own – sports cars, muscle cars, and all those other impractical-but-fun vehicles.
As long as driving a car yourself isn’t explicitly illegal, it would be awesome to not have to worry about practicality or reliability and just buy a car that’s as fun as possible for track days and weekend use. In fact, autonomous vehicles could actually be what revives the sports car industry in America: Freed from any need for practicality, anyone who remotely cares about driving would be able to justify buying something much more exciting than they ever would have before.
Companies that exclusively deal in basic transportation will likely suffer, but I doubt that Porsche sales will see much of an impact. It may be an unpopular opinion, but I actually welcome our autonomous vehicle overlords because it means I’m one step closer to Cayman GT4 ownership.