#Driverless #Economy - The car you don’t own

How will an evolution to fully autonomous cars change our infrastructure?

Look outside your window now. There are probably hundreds, maybe thousands of cars within a one-mile radius of you, right now.  Many of them will be parked up, empty and static, for many hours. Taxis, empty of passengers, may be cruising around looking for their next fare. 

Now take a look at the infrastructure out there. Huge roads, sometimes choked by traffic and parked cars, sometimes half empty.  Signage and traffic control hardware and furniture are everywhere. Start to add up the square footage of central city land taken up by stationary and parked cars, and unused roads. And then add up the cost of that land, and the potential if it were freed up and made available to new development in the city. 

So how does an evolution to fully autonomous cars change any of that? Well a fully autonomous car probably doesn’t need a private owner, it just needs to be working, reliable, available - clean & affordable. That sounds a lot like what we want from our public transport, and our quasi-public transport, like taxis. We subscribe in whole or in part to those services, through our taxes and our apps, and fully autonomous cars lend themselves ideally to those models and potentially great savings for individuals and fleet owners, as well as the public purse. 

Changing perceptions

Of course a move to large scale public ownership or subscription type availability of cars requires a huge step change in the way we think about our cars, even if we have lived with mobility on demand through taxis for generations. For many, their car is a private cocoon, an extension of a living space, be it immaculately clean or covered in last month’s coffee cups.  It’s also a safe, intimate space – rarely, if ever, shared with strangers. We don’t expect to share a car (unlike a bus or a train carriage), yet if car transport evolved to become like getting a taxi, how long will you wait at busy times to get one on your own? Or will cars just become mini-buses, with closed off booths and minimal stops?

The current car industry relies on the relationship between a car and its owner, or owner family. Existing motor industry economics wants, or needs, to have a car for every household, possibly more. The same is true of car washes, petrol stations, parking lots, car dealers, independent repair garages too. Cars are sold on image, powertrains and performance metrics. 

But imagine a subscription deal, with multiple levels of service and comfort, that guaranteed cars of a certain standard (and perhaps fellow passengers too). Where the more you pay each month, the better the service. Consumers could get all of this at a fraction of the price of actually owning a car – as well as maintaining, washing and fuelling it at non-wholesale pump prices. And automony opens up the car market to a swathe of new technology entrants, be it Google, Apple or laptop maker Asus, who have the capital resources to start from scratch, and build their car brands on ease of subscription, usualibility and, crucially, always on availability.

Higher utilisation of shared cars ought to mean less cars, although that may be offset by access to cars by nearly all of society.  The planners would be pleased, but car manufacturers, especially those at the luxury end of the market will be less so. There may still be status to be gained from the frivolity of owning outright your own autonomous car, but prices will leap as economies of scale at that end of the market melt away.  And surely nobody will buy a second car – you’ll surely have your son’s or daughter’s car available on subscription, even if you hang on to the family car. They don’t buy music anymore– and they won’t buy cars.

Think for a moment about your phone – people with a wide variance of income enjoy the exact same mobile phone unit, and almost everyone has one. They are affordable by large swathes of the population, and nearly everybody rents, or more accurately buys a heavily subsided unit and signs up to the costs of the monthly usage. You upgrade regularly but phones start to look the same, and do much the same too.  Differentiation is hard to achieve. Reflect on owning an on-demand car,  it’s hard to see why, in the long run, it would be any different than the model you currently use to “have” your mobile phone.

So what will car manufacturers do? 

Well for one they may actively promote legislation that keeps an active driver at the wheel as long as they can. They need to maintain the emotional connection between the driver and the car, even if the physical connection is increasingly muted. They may promote privacy and security of car ownership, not just in terms of the ride itself, but also in the vast quantities of data churned out by each journey, which subscription models will surely access and exploit in order to subsidise their pricing. 

But the track record of companies protecting the status quo against the inevitability of change is not good.  The world is littered with the shells of once dominant companies that were afraid to cannibalise their own business and revenues, despite the imperative to change – think Kodak, Blockbuster, Nokia, Blackberry – the list goes on. We’ve searched and failed to find any reference to the dominant brands of horse drawn carriages at the dawn of the 20th century.

New technologies are transformative when they pass the Google co-founder and Alphabet CEO Larry Page’s “toothbrush test”.  You have to use it every day and it makes your life better. We’ll add to that the obvious – it needs to be affordable too – and fully autonomous vehicles are set to transform car ownership and with it the shape of our cities, as much as they will the fading art of driving.

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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Alan Owens

Partner - Head of Technology & Communications

I am the Head of Technology & Communications sector at DWF, and a Partner in the Commercial Litigation and Arbitration team based in London.