by Andrew Grandahl
In their new report published just this month, Tony Seba and James Arbib have flipped current mainstream economic projections on their heads. Rethinking Transportation 2020-2030 is perhaps an understated description of a report that holds some very dramatic content. In the full report, Seba and Arbib go into detail as to how current economic analyses dramatically underestimate the disruptive power of emerging technologies, and that the transportation sector as a whole is on the cusp of a revolution so significant, it has the potential to reshape our world as we know it.
The authors use the acronym “TaaS” to represent “transportation as a service”, referring to a new shift in how our world moves. It is essentially the culmination of the combined technologies created by electric vehicles, increasing renewable energy implementation, rapidly-improving battery technology, and ride-sharing services and applications such as Uber and Lyft. In their view, it’s only a matter of time until the cost-curves of all these technologies reach a place where they can feasibly converge, creating novel, broader platforms which allow entrepreneurs to implement highly disruptive services and products.
So what exactly would TaaS look like? Imagine a service similar to Uber or Lyft, but rather than contracting out to individual drivers who own their own cars, the company itself owns a massive fleet of cars, and the drivers have been replaced by autonomous technology. Imagine you could summon any one of those self-driving cars via an app on your phone, and that it could pull up to your doorstep smoothly, promptly, and powered by clean electricity.
Compared to the current costs, the amount of use that this hypothetical company would be getting out of each car would increase by tenfold, as their fleet of autonomous vehicles could be used at any hour of the day. The cost of maintaining the cars would also decrease significantly, as electric cars have vastly fewer moving parts than traditional internal combustion engines vehicles. And not only would a fleet of vehicles require significantly less maintenance, but electric cars are also expected to have dramatically longer lifespans that their fossil-fuel burning counterparts, with anticipated lifespans between 500,000 and 1,000,000 miles as technology and reliability continue to improve.
Now imagine that this technology and the financial accessibility created by its large-scale implementation become so widespread and so affordable, that it no longer becomes economically advantageous for individuals to actually own a car themselves. Picture corporate advertising in the car and government subsidies for public transportation programs lowering the price until it eventually (as the report projects), becomes free, at least for those willing to share their ride with others. And as people transition from private car ownership to TaaS, more and more self driving cars fill the roads, receiving traffic, weather, and safety updates every few milliseconds. The end result of this creates a hyper efficient, far safer, and much faster commute for everyone.
Sounds too good to be true? To quote Seba and Arbib; “We think the scenarios we lay out to be far more probable than others currently forecast. In fact, we consider these disruptions to be inevitable.”
Many are skeptical of such a revolution. In my personal experience, around half of those with whom I converse about autonomous vehicles respond with eye-rolling and dismissal. But as the authors of this report reasonably explain to those who are hesitant “The combination of TaaS’s dramatically lower costs compared with car ownership and exposure to successful peer experience will drive more widespread usage of the service. Adopting TaaS requires no investment or lock-in. Consumers can try it with ease and increase usage as their comfort level increases.”
In other words, there won’t be an overnight transition to autonomous ride-sharing, but rather a gradual process facilitated by open-minded potential consumers trying the new platform at will, and sharing their positive experiences with friends and family. Internal combustion engines won’t phase-out overnight either, but companies such as Uber already see the economic benefits of electric, self-driving vehicles (CEO Travis Kalanick has been reported as wanting to purchase all 500,000 autonomous cars Tesla is aiming to produce by 2020). And carmakers from Volkswagen to Ford to Daimler-Chrysler have all set ambitious goals for electric cars to account for much larger percentages of their overall production numbers. VW is poised to have 30 purely battery-powered cars by 2025, when they estimate EV’s will account for a quarter of their total sales as the largest car manufacturer in the world. Between intensifying emissions regulations and the falling costs of batteries, car companies are adjusting to the electricity-powered revolution, and those who do so rapidly stand to make the most from the TaaS revolution.
Undoubtedly, this vision is disruptive to several major industries, and even the economies of entire nations. Fossil-fuel producers and distributors, automotive manufacturers who don’t evolve with the times, and those who drive for a living, will all obviously be deeply impacted. And though the authors readily admit that energy and transportation sector jobs will suffer substantial losses in the initial transition and that policies should be implemented to help ease this process, they also point to substantial increases in disposable income for American citizens totaling 1 trillion USD by 2030 because of practically eliminated transportation costs, an increase that in and of itself will create economic stimulation and new jobs.
The advent of TaaS also brings with it a rapid decline in the geopolitical significance of fossil fuels. Many Middle-Eastern countries will need to rethink their economic models in short order, and adapt to a renewables-powered planet. Offshore drilling in North America and Western Europe, Canadian tar sands, Venezuelan heavy-crude fields, and projects such as the Keystone XL and Dakota Access pipelines, will essentially be stranded assets by 2030 under this scenario. And though the political and socioeconomic shifts catalyzed by the implementation of TaaS will no doubt be huge in scale and challenging to manage, affordable and clean transportation for the masses has so many benefits for so many individuals, that regardless of the growing pains, we should be living in a more accessible, more equitable, and significantly more sustainable world.
The impacts of this report are undoubtedly massive, and one could be forgiven for being skeptical or even outright rejecting the premise of this proposed transition. Much more time could be dedicated to simply analyzing the economic and political repercussions of TaaS. But as Arbib and Seba repeatedly point out, these shifts are not being brought about by ideology or politics; they are the inevitable product of years of investment in technology R&D, entrepreneurial innovation, and irreversible shifts in energy markets. Investors, politicians, entrepreneurs, and forward-thinking citizens alike have much to gain from considering these projections, and I’d highly encourage anyone to read the full text of the report in order to get an exciting and viable vision of a clean, efficient future that is truly within reach.
Additional Reading:
You can read the full RethinkX report here
Business Insider
The Economist
Andrew Grandahl is a guest blogger for Climable.org. You can reach him at andrewgrandahl@gmail.com