Americans are thinking about giving up their cars, a once unfathomable proposition that will change how we get around and diminish the oil industry’s future.
Nearly two-thirds of Americans who use a ride-hailing service, such as Uber or Lyft, would consider getting rid of their private vehicles within the next decade, according to research by Accenture, the business consulting firm.
More than 90 percent report high satisfaction with ride-hailing, leading many considering whether to depend on them completely. After all, 95 percent of the time their car is sitting empty.
“This is a service that consumers love, and it is reshaping the way they look at transportation,” said Robin Murdoch, who leads Accenture’s global software and platforms practice. “We're on this evolutionary path.”
The average American household spent $70 on taxis and ride-hailing in 2018, up from $20 in 2015, according to the Bureau of Labor Statistics. Most of that increase came from digital taxi services.
Ride-hailing companies frequently say self-driving cars will be critical to their long-term profitability. A few years ago, Americans found the idea of autonomous cars horrifying. Today, more than half say they would ride in a self-driving vehicle tomorrow, if they could, Accenture found.
Autonomous vehicles aren’t ready yet, but another way to reduce costs is to switch to electric vehicles, which are 60 percent cheaper to operate, the Energy Department says. Get rid of both the driver and the gasoline, and a $10 ride would cost $2, Accenture found.
“When you layer on top electrification and vehicle autonomy,” Murdoch said, “obviously that's going to massively change how we move around.”
These are two components of an idea I first wrote about three years ago known as ACES, which stands for autonomous, connected, electric and shared. Accenture’s survey shows consumer attitudes are changing as companies develop the technology.
Automakers, long worried about the end of individual car ownership, have begun developing “mobility as a service” business models. Many are teaming up with ride-hailing companies.
Car makers offered 50 plug-in electric models in 2019 and will add 14 more 100 percent electric vehicles in 2020. By 2021, manufacturers will offer eight all-electric pickups.
These changes are having a limited impact on the oil industry, for now, said Muqsit Ashraf, senior managing director for energy at Accenture Strategy. Studies show ride sharing has not reduced the total number of miles traveled and could increase it by 30 percent if prices go down.
In the long term, though, oil companies will need to radically transform as electric vehicles become common, Ashraf added. Growing urbanization and population density also will create congestion, limit parking and reduce travel distances, encouraging adoption of shared, electric vehicles.
“There's also an overall shift in people's behaviors socially in terms of going from owning things to wanting more experiences,” Ashraf said. “That is going to have an impact on car ownership.”
Recent technological roadblocks have deflated optimism for a quick roll-out of autonomous cars. Computers are good drivers; they just can’t anticipate human idiosyncrasies. But tech companies will get there, Sony CEO Kenichiro Yoshida promised.
“I believe the next megatrend will be mobility, as vehicles become more connected, autonomous, shared and electric in the coming years,” Yoshida told the Consumer Electronics Show in Las Vegas earlier this month.
Yoshida introduced new sensors and image-processing technology at the conference, but he made the biggest splash with a Sony concept car. Vehicles enabled by high-speed 5G data links, he said,will “redefine cars into a new entertainment space, where customers can be immersed in the content they love.”
One day in the not-so distant future, Americans in big cities will use their phones to summon a self-driving, electric car that will envelop them in a space where they can enjoy their favorite music or the latest television show. Taxi services will roll out these features over the next few years.
Ride-hailing companies eventually will need to make a profit, but, according to Accenture, more than half of consumers feel no loyalty to a particular brand.
To make money, ride-hailing companies will need to differentiate themselves, build brand loyalty and raise prices to generate decent profits.
Lyft is allowing riders to request an electric vehicle, and Uber is offering cash incentives to some drivers to switch to electric vehicles. Smart drivers will offer 5G connectivity to passengers. Taxi services will get help from cities and states that are increasing tolls and taxes to make car ownership less attractive.
Rather than owning our own gas-guzzling, living room on wheels to commute around town, we’ll be renting someone else’s electric version.
Tomlinson writes commentary about business, economics and policy.