Ride-hailing services and self-driving advances change the playing field.
For decades, automakers have been able to count on a fundamental fact of American life: You pretty much need a car to get around.
But lately, novel technologies, including ride-hailing services like Uber and advances in self-driving cars, are creating new alternatives for commuting, shuttling children and going to the store — particularly in urban settings.
There are also demographic and economic trends in play. Many younger Americans do not consider owning a car a goal or necessity — or a necessary expense. So carmakers are looking ahead to a day when the automobile plays a smaller role, or even no role at all, in many people’s daily routines.
“The historical model is you buy a car and it’s in your garage most of the time,” says Glen DeVos, vice president for engineering and services at Delphi Automotive, a big developer and supplier of automobile technology. “It’s the second-most expensive thing you buy after your home, so if you can get around without owning a car, there are a lot of economic reasons people may not own a car, or own only one instead of two.”
General Motors and its partner, Lyft, are about to begin testing a fleet of self-driving cars, ferrying passengers short distances in Detroit and other cities. Uber already has similar trials underway in Pittsburgh and has just expanded its tests to San Francisco. Next year, Delphi Automotive expects to have self-driving Audis providing rides to mass transit stations in a section of Singapore.
Ford, meanwhile, has vowed to begin producing a self-driving car, with no steering wheel and no pedals, by 2021. The vehicle would be intended for ride-hailing services in large cities.
If these types of cars and services proliferate, DeVos at Delphi says, people will have more freedom to not own automobiles.
Monica Manjarres, a 21-year-old college student, is embracing that freedom. She lives in Azusa, Calif., 24 miles east of Los Angeles, and uses light rail to get around.
“I can confidently say I don’t really need a car,” she says.
Kelly Skow has all but come to the same conclusion. A 28-year-old video producer, Skow lives in the Hollywood area and rides the subway to her office in Santa Monica.
“I only drive maybe once a week, usually to go shopping on weekends,” she says.
The twist in Skow’s story: She works for TrueCar, a website that provides automotive pricing and information to help connect consumers with new- and used-car dealers.
Forecasters expect people in metropolitan areas to own fewer cars in the future. But they are not ready to predict a big drop in the total number of vehicles sold, which this year will total more than 17 million cars and light trucks in the United States.
Automakers are generally betting that sales of vehicles to fleet services will offset any decline in sales to individual consumers. Boston Consulting Group predicts that 44,000 cars will be sold to ride-sharing fleets in North America in 2021, more than making up for an expected net decline in consumer sales of about 8,000 vehicles.
According to consulting firm PwC, the global automotive industry generates about $400 billion a year in profits; about 41 percent of that — or about $164 billion — comes from new vehicle sales.
By 2030, PwC forecasts that even as overall automotive profits grow to about $600 billion, only about 29 percent of that will come from new vehicle sales. By then, PwC predicts that “mobility services’’ — including ride-hailing and other types of last-mile transportation services — will represent 20 percent of the automotive industry’s profits.
Ford is among the automakers angling to be in position if that shift occurs.
“We are on the cusp of a revolution,” says Mark Fields, Ford’s chief executive. Cars, he says, “are no longer our entire game.”
Some of Ford’s mobility efforts don’t involve cars at all. Ford is sponsoring a bicycle-sharing program in the San Francisco area, with the goal of having 7,000 blue, Ford-branded bikes in operation by 2018.
In recent months, the company has also begun demonstrating a motorized conveyance device to help people cover the last mile — especially if they are carrying luggage or groceries that make walking a challenge.
Called the Carr-e, it looks like a giant white hockey puck. The passenger stands on it as it travels to her destination, or she can set a parcel on it and have the Carr-e follow along. Ford has no plans to put it into production, but the company says it represents the ways it is thinking about the transportation future.