Q. Why are you so sure we’re past peak private car ownership?
A. There are a lot of things we can observe that suggest this is the case, from the number of car-sharing vehicles on the streets to the changed driving habits of Millennials. But in this case the underlying drivers (so to speak) may not be intuitive–but make it inevitable…
We can divide the market for “all then money people spend on access to automobile transportation” into three buckets:
A. You can own a car that sits idle when you’re not using it.
B.You can not own a car and rely on “car-as-a-service” options like Car2Go, ReachNow, Uber, and Lyft, and others.
C. You can own a car that is available to others (for a price) when you’re not using it.
Here’s the thing: as the market share of B and C increase, A’s share has to decrease–unless people reduce spending on something else in order to spend more, in total, on access to automobile transportation than they have been spending in the past.
Leaving aside whether that’s plausible in general, in Seattle where the cost of housing is rising faster than inflation or earnings that’s doubly implausible.
But we know the fix is in against A because the companies that have made their money from it–the automakers–are investing like mad making B and C better.
And B and C work in a self-reinforcing cycle: the more car-as-a-service options available, the more compelling it is not to own a car. The fewer people who own cars, the more demand there is for car-as-a-service options.
To put it another way, the only big players with a stake in maintaining A’s market share are working hard to grow B and C’s–because they’re in a race with companies like Apple, Google, and Uber that have no vested interest in the status quo.
Like them, the major auto companies are banking one way or another on c ar sharing or autonomous and semi-autonomous vehicles or both.
The bottom line is that A is going to become a progressively lamer option compared to B and C.
If there’s any way people will cannibalize their savings or spending on other things in order to willingly pay “more for less” then it’s possible we’re not past peak private car.
But the automakers don’t believe there is and neither should you.
Image: South Lake Union on a weekday morning
Update: 2021 looking to be a big year
Update: Ford doubles down
Update: BMW deal to make autonomous cars
Update: Good on the Feds: AI is a driver