Rethinking Transportation 2020-2030

Rethinking Transportation 2020-2030

Sep 17

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Clean Disruption of Energy and Transportation

• Batteries
• Electric Vehicles
• Autonomous Vehicles
• Ride-Hailing
• Solar

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Rethinking Transportation 2020-2030

The Disruption of Transportation and the Collapse of the Internal-Combustion Vehicle and Oil Industries

Download Full Report (pdf)

Executive Summary

We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history. By 2030, within 10 years of regulatory approval of autonomous vehicles (AVs), 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call “transportas-a-service” (TaaS). The TaaS disruption will have enormous implications across the transportation and oil industries, decimating entire portions of their value chains, causing oil demand and prices to plummet, and destroying trillions of dollars in investor value — but also creating trillions of dollars in new business opportunities, consumer surplus and GDP growth.

The disruption will be driven by economics. Using TaaS, the average American family will save more than $5,600 per year in transportation costs, equivalent to a wage raise of 10%. This will keep an additional $1 trillion per year in Americans’ pockets by 2030, potentially generating the largest infusion of consumer spending in history.

We have reached this conclusion through exhaustive analysis of data, market, consumer and regulatory dynamics, using well-established cost curves and assuming only existing technology. This report presents overwhelming evidence that mainstream analysis is missing, yet again, the speed, scope and impact of technology disruption. Unlike those analyses, which produce linear and incremental forecasts, our modeling incorporates systems dynamics, including feedback loops, network effects and market forces, that better reflect the reality of fast-paced technology-adoption S-curves. These systems dynamics, unleashed as adoption of TaaS begins, will create a virtuous cycle of decreasing costs and increasing quality of service and convenience, which will in turn drive further adoption along an exponential S-curve. Conversely, individual vehicle ownership, especially of internal combustion engine (ICE) vehicles, will enter a vicious cycle of increasing costs, decreasing convenience and diminishing quality of service.

Summary of Findings

– The approval of autonomous vehicles will unleash a highly competitive market-share grab among existing and new Pre-TaaS (ride-hailing) companies in expectation of the outsized rewards of trillions of dollars of market opportunities and network effects. Pre-TaaS platform providers like Uber, Lyft and Didi are already engaged, and others will join this high-speed race. Winners-take-all dynamics will force them to make large upfront investments to provide the highest possible level of service, ensuring supply matches demand in each geographic market they enter.

– In this intensely competitive environment, businesses will offer services at a price trending toward cost. As a result, their fleets will quickly transition from human-driven, internal combustion engine (ICE) vehicles to autonomous electric vehicles (A-EV) because of key cost factors, including ten times higher vehicle-utilization rates, 500,000-mile vehicle lifetimes (potentially improving to 1 million miles by 2030), and far lower maintenance, energy, finance and insurance costs.

– As a result, transport-as-a-service (TaaS) will offer vastly lower-cost transport alternatives — four to ten times cheaper per mile than buying a new car and two to four times cheaper than operating an existing vehicle in 2021.

– Other revenue sources from advertising, data monetization, entertainment and product sales will open a road to free transport in a TaaS Pool model, as private and public transportation begin to merge.

– Cost saving will also be the key factor in driving consumers to adopt TaaS.

– Adoption will start in cities and radiate outward to rural areas. Nonadopters will be largely restricted to the most rural areas, where cost and wait times are likely to be higher.

– High vehicle utilization (each car will be used at least 10 times more than individually owned cars) will mean that far fewer cars will be needed in the U.S. vehicle fleet, and therefore there will be no supply constraint to the speed and extent of TaaS adoption that we forecast.

Taken together, this analysis forecasts a very fast and extensive disruption: TaaS will provide 95% of the passenger miles traveled within 10 years of the widespread regulatory approval of AVs. By 2030, individually owned ICE vehicles will still represent 40% of the vehicles in the U.S. vehicle fleet, but they will provide just 5% of passenger miles.

Behavioral issues such as love of driving, fear of new technology or habit are generally believed to pose initial barriers to consumer uptake. However, Pre-TaaS companies such as Uber, Lyft and Didi have invested billions of dollars developing technologies and services to overcome these issues. In 2016, Pre-TaaS companies drove 500,000 passengers per day in New York City alone.1 That was triple the number of passengers driven the previous year. The combination of TaaS’s dramatically lower costs compared with car ownership and exposure to successful peer experience will drive more widespread usage of the service. Adopting TaaS requires no investment or lock-in. Consumers can try it with ease and increase usage as their comfort level increases. Even in suburban and rural areas, where wait times and cost might be slightly higher, adoption is likely to be more extensive than generally forecast because of the greater impact of cost savings on lower incomes. As with any technology disruption, adoption will grow along an exponential S-curve.

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Clean Disruption of Energy and Transportation: How Silicon Valley Will Make Oil, Nuclear, Natural Gas, Coal, Electric Utilities and Conventional Cars Obsolete
By Tony Seba

The industrial age of energy and transportation will be over by 2030. Maybe before. Exponentially improving technologies such as solar, electric vehicles, and autonomous (self-driving) cars will disrupt and sweep away the energy and transportation industries as we know it. The Stone Age did not end because we ran out of rocks. It ended because a disruptive technology ushered in the Bronze Age. The era of centralized, command-and-control, extraction-resource-based energy sources (oil, gas, coal and nuclear) will not end because we run out of petroleum, natural gas, coal, or uranium. It will end because these energy sources, the business models they employ, and the products that sustain them will be disrupted by superior technologies, product architectures, and business models. The same Silicon Valley ecosystem that created bit-based technologies that have disrupted atom-based industries is now creating bit- and electron-based technologies that will disrupt atom-based energy industries. This is a technology-based disruption reminiscent of how the cell phone, Internet, and personal computer swept away industries such as landline telephony, publishing, and mainframe computers. Just like those technology disruptions flipped the architecture of information and brought abundant, cheap and participatory information, the clean disruption will flip the architecture of energy and bring abundant, cheap and participatory energy. Just like those previous technology disruptions, the clean disruption is inevitable and will be swift. The industrial age of energy and transportation is already giving way to an information technology and knowledge-based energy and transportation era.

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Related Links:

• Clean Disruption of Energy and Transportation (book)
• Ray Kurzweil: Self-Driving Cars & Other Predictions
The Google Self-Driving Car
Self-Driving Cars
• Ray Kurzweil’s Predictions for the Next 25 Years
• Ray Kurzweil Defends His 2009 Predictions
• Google Cars Drive Themselves

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