Looking ahead, the cost to own is expected to go way down.
Ale Resnik is Chief Executive Officer of Beepi.
By the end of the month, your Uber journey could take place in a fully autonomous Volvo XC90 if you live in Pittsburgh thanks to a $300 million partnership that the automaker and ridesharing company recently announced. This will be the first interaction between consumers and true self-driving technology, and it is a big deal. Uber is rapidly working towards this future—a world in which Uber CEO Travis Kalanick says consumers will all be carpooling and ownership will be on life support.
While ride-shares will certainly play a part in the future, car ownership isn’t going anywhere. That’s because the same trends that will make car sharing more affordable will also make ownership significantly more affordable and even profitable.
Ride-sharing is not killing car ownership, but complementing it. Cars are getting smarter and more connected, costs to own are expected to fall and new models of ownership will emerge.
Much like the CEOs of Uber and Lyft have an interest in promoting an end to individual ownership, as CEO of Beepi, an online marketplace to buy and sell cars, I believe in the future of ownership. But the trends speak for themselves.
Several factors could bring down the cost of ownership — among them, the rise of electric cars, lower energy costs and developments in autonomous technology. According to the consulting firm IHS, nearly 76 million autonomous vehicles will be sold globally between now and 2035. And a Goldman Sachs report shows that with increasing reliance on software and electronics, these vehicles will consist of fewer parts, going from 30,000 to 11,000 components, leading manufacturing costs to go down.
Helping bring down the cost of ownership further is the shift to electric energy, which could negate the need for fossil fuels. As will more affordable insurance rates, driven by evidence that suggests self-driving cars could lead to fewer accidents on the road.
The rise of autonomous vehicles will also lead to a productivity boom, according to a report by Morgan Stanley. With commuter time freed up for people who are not actively driving, we will have more time to complete important tasks in the privacy of our own mobile offices.
Lower costs and improved productivity are only part of the equation. Automobiles will also be a source of income for their owners; people will be able to rent their cars to the network, making ownership more efficient – possibly even profitable.
Tesla CEO Elon Musk recently speculated about this development, which—as with the recent Uber/Volvo self-driving deal in Pittsburgh—could happen sooner than many expect. By 2022, Musk believes consumers will be able to pay for their self-driving Teslas by having them autonomously pick up and drop off other passengers during the 90% of time the vehicles aren’t utilized by owners.
Consumers have seen how cars can be a source of income. Plenty of Uber and Lyft drivers turn their cars into part-time jobs. Imagine when they can rent cars to the network while simultaneously working elsewhere.
So car ownership is here to stay, even when autonomous vehicles go mainstream.
And while some may think millennials don’t want to own a car, the notion that all millennials want to share is simply not true. According to a recent study by Credit Karma, more than 90% of millennials currently own a car or have a desire to own one.
With a culture of independence and geographic mobility, along with a significant interstate highway system, car ownership is woven into the fabric of American life. A recent Pew Research report says two-thirds of regular ride-sharing users also own a personal vehicle. The ride-sharing model isn’t feasible for families with young children or in most rural areas. In fact, the same Pew study found that just 3% of rural residents have ever used a ride-sharing service. But, perhaps more importantly, the majority of drivers see the cabin of their car as a personal space they treasure – and don’t want to give up.
According to GM President Dan Ammann, the auto industry will see more change in the next five years than it has in the last 50. Self-driving cars will deliver more personal freedom, possibilities for productivity and additional income than ever before. These phenomena will lead to new and different models of ownership. After all, cars are becoming computers on wheels and computers advance at the speed of Moore’s law.