The Self-Driving Car Will Kill the Car Industry

Car is the worst asset one can own. It’s pricy. Its value declines rapidly. Insurance is expensive. So are fuel, maintenance and city-parking. Yet the most frustrating aspect – it’s really just waits there doing nothing about 95% of the time.

Zipcar is a good alternative for city people, as well as public transport and taxis. It’s far more economical than using a car, but because it’s quite less comfortable (and going with taxis everywhere does eventually get quite expensive), numerous people (including myself) still own a car.

Self-driving cars will change everything. And thanks to Google, it’s not science fiction, but a working product, only a few years away from mass-production.

Google Self Driving Car

Self-driving cars will quickly lead to companies operating self-driving, ride-sharing, taxis.¬†These will significantly reduce the highest cost-factors of today’s taxis – drivers salaries, fuel costs and car maintenance. We’ll set our travel destination and summon a taxi via our smart-phones, the best available taxi (considering its location and planned route) will pick us up and drop us exactly where we need. It may pick up other passengers along the way. Cost will be calculated dynamically, based on route and amount of people sharing the ride with us.

It will be convenient, fast and cheap. Way better than owning our own car: no need to worry about parking, fueling, insurance, value depreciation or wasting time in traffic (we are not the one driving, so reading becomes a good option, or more realistically, watching endless versions of Harlem Shake).

The result will be simple: Car ownership will go down significantly. The industry will move from producing 80 million cars a year that are utilized about 5% of the time to producing about 10-million cars that are at 50% capacity (Ride-sharing offers more than 100% utilization, yet it needs to be offset with ‘quiet hours’ in which people are in the office, asleep, or both :) ).

Another interesting thing will happen: we’ll actually get faster from point to another. There will be significantly less cars on the road, less accidents (robots err less than humans), and traffic flow will be easily projected based on historical and real-time data. My kids will look at the 20th century car-travel in the same way we look at wagon-based travel of the 19th century: with bewilderment.

And as for the car industry – any industry whose demand for its main product drops so drastically will suffer dire, unavoidable, consequences. In 10-15 years we’ll probably see a lot of¬†bankruptcies, financial¬†restructuring and M&A activities in the space (similar to what happend to the car industry following the 2008 market crash, yet without the recovery aspect).