Mobility – Private Vehicles Lead the Pack

“Mobility” is a buzz word. In Australia it refers to assisting those who are mobility challenged (handicapped). Here we think of it as moving people from private vehicles to trains, buses, bicycles, scooters and foot.

However, at least for the next few decades, mobility will be primarily driven by private vehicles, many of them, but not a majority, autonomous.

Goldman Sachs has done an extensive review of the future of autonomous vehicles and after reading the 60 page report it can be summarized as follows:

• The main drivers of the AV concept are and will be rideshare companies. Their goal is to remove the single major expense, that is the human driver. Second, they have issues finding enough drivers.
• Rideshare is currently a third of the taxi market, but in a decade, it could be five times the size of the taxi market.
• OEMs (GM, Ford, etc) are really into this. It is projected that AV fleet management could generate up to $14,000 profit over the life of the vehicle, that’s five times what the OEM makes on the sale of the car. Look to the OEMs to drive and own fleet management.
• Car ownership will survive, as car purchase and usage are separate. While Uber/lyft popularity will increase, individual ownership will hold strong with status, availability, privacy, security, and familiarity remaining strong influences in private ownership.

There are other take aways from the report, but the last one above should give us that warm and fuzzy feeling we have been looking for.

Goldman Sachs predicts that car sales will continue to rise and by 2030 will hit 100 million (its about 85 million per year currently). Many of those may be AVs, assuming they are on the road and functioning by then. GS makes no prediction in that area.

This is a report written by Goldman Sachs researchers with the idea in mind of making recommendations to their customers as to which stocks to buy, hold, or sell. They are taking, I think, a conservative view of the AV, car, and rideshare markets.

I find it interesting that they couch their report in terms of “mobility” but include single ride vehicles as the primary mover of people in urban areas world wide. They do note that automated trams and buses will come on line, but focus on cars as the way people will be getting around, at least through the next few decades.

Why? I think it has to do with cost. Attempting to transform urban areas into train/tram/non auto transportation areas is simply too costly, at least in the short term. When a subway in Los Angeles costs $1.3 billion PER MILE the likelihood of enough transit systems being expanded into urban areas where they don’t now exist is difficult to imagine.

There are also the ‘first mile-last mile’ issues which come to bear on cities like Houston, Los Angeles, Oklahoma City, and Atlanta which have 10s of millions of people spread over huge areas.

The market will drive autonomous vehicles, with the idea of doing away with an expensive driver making the concept extremely viable for Uber/Lyft, long haul trucking, deliveries, buses, and other transportation systems that require human intervention. It seems doubtful that private individuals will be a major purchaser of autonomous vehicles.

JVH