Industry challenges, global demands, and consumer trends ahead will define automobile transportation in the years
In November I found myself on a panel discussion in the Kingdom of Bahrain, and one of the people in the audience asked me to give my impression of the future of the automobile industry. I have to admit that I did a rather poor job of answering the question, and it really deserved more time than I had on this panel.
The automobile industry has literally cemented a firm grip on global cultures with streets and roadways that are designed for cars and little else. As part of my job at the DaVinci Institute, I come in contact with many of the people working on next-generation vehicles, engines, navigation systems, and power sources. The amount of effort going on in this area, driven largely by the desire to wean our nation off our reliance on oil, is truly staggering. But so far, no real disruptive technologies or systems have emerged.
First, a few data points to consider.
According to the Bureau of Transportation Statistics, the number of new automobiles produced in the world each year is now over 60 million. Currently, the US Bureau of Transit Statistics shows there are over 243 million registered passenger vehicles in the US with an overall median age of 8.9 years, a significant increase over 1990 when the median age of vehicles was 6.5 years.
At the same time, a report by the World Bank entitled Global Economic Prospectus 2007 projects the rise of the global middle class. This is a group that will grow from 7.9% of the global population in 2000 to 16.1% in the year 2030, with the majority of this growth occurring in Asia.
Ernst & Young also looks closely at the shifting global economies with their European Attractiveness Survey 2007. In this survey they conclude that by 2050 India, Brazil, Russia, China, Indonesia, Mexico and Turkey will overtake the economy of G7 countries – Britain, Canada, France, Germany, Italy, Japan, and the US – in terms of GDP.
Assuming these projections are close, it is easy to speculate that by 2050 the automobile industry will grow to over 200 million new cars produced each year globally, the total number of cars in use will climb to over 3 billion vehicles, and the number of roads and highways needed to accommodate all these cars will need to grow several fold.
Since these numbers rapidly grow past the realm of reasonableness, there will obviously be a breaking point somewhere along the way where the trend line changes. But what will this breaking point look like, and what are the driving forces?
As a futurist, I pay close attention to the things that will trigger a possible change, meaning events or technologies that will cause a major shift. Triggers come in many shapes and forms, but the major shifts in automobile transportation will likely stem from one of three categories: disruptive technologies, disruptive public policies, or a global catastrophe.
In the field of transportation, disruptive technologies come in many forms, but most innovators are focusing on either changing the vehicle design or the power source.
For some, the answer to this impending global transportation crisis lies in creating alternative transportation vehicles, and I have seen many. These vehicles range from electric skateboards, to scooters, to power boots, to electric bicycles, to robotic drones, to hybrid cars, to a variety of mass transit systems. Some are carving out interesting niche businesses, even ones that are quite profitable, but so far none are even close to disrupting traditional buying patterns for the automobile industry.
It is important to note that we have an existing highway infrastructure that accommodates cars and little else. Yes, it is possible to put bicycles, scooters, and other one-person vehicles on these roads, but safety becomes a much bigger issue whenever mismatched forms of transportation try to coexist. And it takes much more than mere allowances. Communities that do not actively promote (and accommodate) the use of alternative transportation, are, by default, promoting the ongoing use of cars. As the number of cars and drivers increase over time, we simply run out of room for all the cars.
An alternative to road-based traffic problems will naturally be flying cars. A recent report I was shown described over 150 separate development projects where teams are working on some version of a flying car. This age old vision is far more than a mere pipe dream. However, once a well-functioning flying car is produced, it will take another 10-15 years for traffic systems to be implemented that will accommodate a high-volume flying car network. Affordability is another primary constraint that will severely limit the flying car’s impact.
For other people, the disruptive technology that changes the industry is an alternative fuel that is less caustic to the environment. Energy systems, on one hand, only solve part of the equation, as traffic, parking, and vehicle accommodation issues continue to grow. Hybrid cars improve efficiency and reduce reliance on oil, but serve as only an interim solution. A truly disruptive energy system can itself be transformative in that it gives us a different set of tools for problem solving.
The amount of effort going into finding that truly disruptive form of alternative energy is quite staggering. In the US this quest for clean energy has become something of a national obsession with solutions ranging from bio-diesel, to hydrogen fuel cells, to ethanol, to electric, to solar, to nuclear. But once again, nothing so far has made a significant impact on oil consumption.
Here are some of the technologies that I see as being the most disruptive, causing major shifts in the automobile industry:
- WiMax – Often described as WiFi on steroids, WiMax has the ability to blanket entire countries with a vibrant high speed wireless communications network that will enable moving vehicles to talk to each other. The highly prized freedom associated with the driving experience will be replaced with a variety of new travel experiences enabled by the WiMax connection. WiMax will lesson the demand for face-to-face meetings, make people more productive while traveling, and breathe life into a new breed of on-demand transportation services. Expect this type of WiMax system to be in place within 5 years.
- Automated Navigation Systems – Once reliable vehicle proximity maps can be generated, much effort will be focused on removing the driver from the equation. These proximity-based signals will give rise to automated navigation systems that will guide people effortlessly along the route they choose. Since the DARPA Grand Challenge proved this technology is feasible, we will begin to see automated navigation systems in production within a ten year timeframe.
- Flying Delivery Drones – Contrary to what many of the flying car advocates believe, the first mass production flying consumer-based vehicles will be the unmanned flying delivery drone. Enabled by a vibrant wireless communications network and a newly formulated three dimensional navigation system, flying drones will serve as the test bed for a later developing flying car industry. A major tuning point will be when a major delivery service such as FedEx or UPS begins to implement flying drones into their fleet. Estimated timeframe – 10-15 years.
The reason the automated navigation system will prove to be so disruptive for the automobile industry is that it will enable an on-demand transportation services to replace the need for individual car ownership. Rather than having to conform to the route and timing of today’s mass transit systems, people will simply be able to request a vehicle through their cellphones or handheld devices whenever they need it and a driverless vehicle will show up, on-demand, and take the passengers to wherever they desire to go.
An on-demand transportation system will not significantly reduce the overall number of vehicles on the road at peak times, but will be better at matching the size of the vehicle with the number of people traveling. Since the vehicles will be in continuous operation, there will be significantly less need for parking spaces.
Removing drivers from the equation will enable vehicles to be operated with optimum precision, performance, and efficiency. Traffic will flow more smoothly, breakdowns and maintenance issues will be greatly reduced, and at the same time vehicle longevity will be extended dramatically.
While most cars today only get used an hour or two per day, an on-demand car transportation system will keep individual vehicles in use as much as 18-20 hours per day. One on-demand vehicle could easily replace as many as 20 cars.
Naturally there will be resistance to these types of changes, and the overall rate of change will be highly dependant upon pricing and public policy issues guiding countries through this transition.
Disruptive Public Policy
Enacting laws that demand overall improvements in vehicle efficiency or reduced emissions will make an impact. However, the truly disruptive public policies will be far more bold. They will add credibility to some of the emerging new technologies and set the stage for a much more efficient transportation system in the future.
Here are a few examples:
- By 2015 all vehicles must be wireless-enabled according to GPS and data communication standards. This form of vehicle “awareness” will open the doors for a variety of new technologies
- By 2020 a minimum of 50% of all new vehicles sold must come equipped with a fully automated navigation system. This alone will greatly reduce traffic accidents and maintenance issues, significantly increasing vehicle longevity.
- Individual cities, states or countries begin to limit the number of vehicle licenses to one per person or one per household. As an example, cities may limit the number of vehicles based on a formula that calculates the optimum number of vehicles per lane-mile of roadway.
- By 2025 every new vehicle for sale must come with a driverless version option. Simply making this option available will give entrepreneurs and innovators a new tools set to build strategies around.
The final category of disruption that may heavily change the automobile industry is that of global catastrophe. It’s easy to speculate on global disasters but very hard to predict. They tend to fall into two categories those produced by Mother Nature, which we have no control over, and those produces by humans.
Earthquakes, hurricanes, and flooding cause significant problems, but tend to be confined to specific locations and the disruption only lasts a short time. The 2004 Tsunami and 2005 Hurricane Katrina, are examples of far reaching global disasters, but neither had a significant long-term effect on the automobile industry.
Natural disasters that will have a long term effect exist as remote possibilities – a biological plague that ravages the population of Detroit; shifting tectonic plates that causes parts of California to drop into the ocean; or an alteration to the Earth’s magnetic field that disrupts the flow of business.
Man-made disasters, at least the ones we can conceive of, are also very distant possibilities – an outbreak of pollution-based breathing disorders; a terrorist act that destroys consumer confidence, destroying national economies, and causes car sales to plummet; or perhaps a major war between oil producing countries and oil consuming countries.
In the near term, the automobile industry will continue to prosper along with the global economy with the sales of cars increasing and the number of people who can afford cars also increasing. Sales will increase dramatically in the emerging economies of India, Brazil, Russia, China, Mexico and Turkey
Around the globe, we see increasingly mobile societies developing, and few leaders in these emerging countries will want to place restrictions or in any way slow the progress they’re making.
The first wave of challenges to the industry will come from US and European laws and policies enacted to promote alternative forms of energy and reduce reliance on oil. Additional laws will be designed to limit the number of cars on any given roadway and promote the use of alternative forms of transportation.
A second wave of challenges, in the ten year timeframe, will come from disruptive technologies. Many of these technologies are already in existence, but will take time to improve and gain market share.
We will see some early production models of flying cars within a few short years, but the impact will be minimal. However, flying drones are already in use in specialty fields, and will develop much quicker than the flying cars.
Changes in the field of transportation lag significantly behind the changes we have seen in communications and Internet technology. Mechanical systems are much harder to design, test, and implement. But the demand is strong and the coming years of experimentation will be very exciting to watch.
By Thomas Frey Executive Director and Senior Futurist at the DaVinci Institute