- Autonomous Vehicles
- Fuel Efficiency and Emerging Technologies
- Transportation Efficiencies
Automakers Protect Their Turf by Cannibalizing Themselves
Time may heal all wounds, but for the auto industry, not enough time has elapsed yet to forget the pain caused by the 2008 financial meltdown. With that sales collapse still visible in its rear-view mirror, the industry is wary of another potential collapse due to innovations from Silicon Valley as it takes to heart the warning from the late Steve Jobs: “If you don’t cannibalize yourself, someone else will.”
Jobs was talking to his biographer Walter Isaacson about how the then-new iPad had the potential to steal sales from Apple’s own MacBook laptop computers. With the mobility ecosystem on the precipice of a transformation stemming from a combination of automation, connectivity, car/ride sharing, and electrification, incumbent automakers have recognized the potential for a massive drop in future sales and are positioning themselves to take advantage of the new normal, whatever that might be.
Navigant Research’s Autonomous Vehicles report projects global sales of more than 40 million autonomous light duty vehicles annually by 2030, while carsharing programs are projected to have 23.4 million members around the world by 2024. Along with increasing urbanization, automakers see the combination of these trends potentially decimating sales of personally owned vehicles in mature markets like Europe and North America in the second half of the 2020s and beyond.
Industry Takes Note
Based on recent announcements from several incumbent automakers, automakers hope to partner with the technology industry to transform how they make money from personal ownership to on-demand mobility-as-a-service. General Motors (GM) kicked off the 2016 International CES with an announcement that it would invest $500 million in fast-growing ridesharing company Lyft while Audi is leading a Series C investment round in Austin, Texas-based rental firm Silvercar.
The GM-Lyft deal includes plans to develop a network of autonomous vehicles that can be summoned on demand by Lyft customers. In September 2015, GM announced plans for a pilot program with a fleet of autonomous Chevrolet Volts to be used as on-demand shuttles by employees at its Warren, Michigan technical center.
Airport rental startup Silvercar now operates in 12 cities across the United States with a fleet of identical Audi sedans. Like Uber and Lyft, customers get service through a website or smartphone app. A reserved car can be unlocked with a phone and the all-inclusive flat daily rate is also paid automatically through the app.
Like GM, Ford has thousands of employees that move among the dozens of buildings in its product development center and global headquarters in Dearborn, Michigan. Ford recently launched a dynamic shuttle service with a fleet of Wi-Fi and power-equipped Transit vans so that employees can stay in contact or work on the move. Rides can be summoned and tracked from a smartphone app, just like Uber or Lyft. While retirees from nearby Ford factories currently drive the vans, Ken Washington, Ford's vice-president of research and advanced engineering, has not ruled out using autonomous vehicles at some point when the technology is ready.
With increasingly congested cities looking for ways to help people move around while reducing accidents and improving air quality, urban centers may well ban human-driven vehicles at some future date. Each of these investments point to a time when fewer people need or want to own a vehicle but still need a convenient way to get around. With companies like Google, Uber, and potentially Apple hoping to step into the breach, automakers are smart to look at ways to cannibalize their existing business in favor of a whole new way of making money.