Tomorrow’s Transportation Ecosystem: From Autonomous Vehicles to Public Transit

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There is growing evidence that tomorrow’s urban cars will be “safe, green and connected,” Mary Gustanski, Delphi’s vice president of engineering, recently told Car Talk, a blog and radio show. “We’re going to see more electrification, and the electric car will merge with automated driving and the connected car.”

Electric vehicles (EVs) now hold just a 1% share of the global fleet on the road, but it could comprise 15% to 35% of total global new vehicle sales by 2040, according to IHS Markit. Worldwide sales are up more than 1,000% since 2010. In Europe and China, where regulation encourages plug-ins, EVs could be more than half of new passenger vehicle sales by 2040 — the same time fully autonomous cars are expected to rule the roads.

Cars That Drive Themselves

The auto industry is moving toward the self-driving car; and semi-autonomous cars — able to operate hands-off, but with a driver behind the wheel — are already on sale. According to Deloitte, the shift to take our hands off the wheel “could occur more quickly and at greater scale than many are prepared for, especially in densely populated areas.” Cities will probably be the first laboratories for autonomous technology.

Will these vehicles simply replace our current private cars? Maybe not. With cities in the vanguard, we seem to be evolving toward a growing reliance on shared fleet cars. “We will primarily see autonomous cars in on-demand mobility fleets,” said Sam Abuelsamid, a senior research analyst at Navigant Research. “There’s a distinct possibility that consumers will never actually be able to buy them.”

As Abuelsamid pointed out, there are good reasons for fleet ownership of self-driving cars, including the fact that maintenance will be critical. “Once a car is sold to a consumer, the manufacturer no longer has control over which parts are put on that vehicle, and when we’re talking about the sensors that control the car, it’s critical that they not be replaced with cheap, off-brand parts,” he said. But poor-quality parts could also be outlawed by regulation.

“We will primarily see autonomous cars in on-demand mobility fleets.” –Sam Abuelsamid, Navigant Research

Robin Chase, co-founder of Zipcar, argued that serving our transportation needs with fleets of autonomous electric cars is an ideal scenario for these reasons. “Simply eliminating the drivers from cars, and keeping everything else the same, will be a disaster,” she said. “If we share rides in shared cars, we will only need 10% of the cars we have today. … We have the ability to eliminate congestion, transform the livability of cities, make it possible to travel quickly and safely from A to B for the price of a bus ticket, improve the quality of our air, and make a significant dent in reducing carbon dioxide emissions,” she said.

“The footprint of the [U.S. car rental] industry stretches from coast to coast, and includes both airport and what we call the home-city market,” said Chris Brown, executive editor of Auto Rental News. “The fact is, the autonomous vehicle model most likely will be well suited for a pay-as-you-go system, especially on the local level. And this plays into car rental’s strengths of customer interface and management for the long term.”

Jack Nerad, an executive market analyst at Kelley Blue Book, agreed that fleets will be in the autonomous and electric vanguard. “In fleets, it works,” he said. “Cities are a challenge, because space is at a premium, and there’s no place for apartment dwellers to charge. But fleets can be charged en masse at centralized locations.”

Gary Survis, a venture partner at Insight Venture Partners and a senior fellow at Wharton’s Initiative for Global Environmental Leadership (IGEL), said he believes that at least the early generation of autonomous cars will let their owners take the wheel when they want to, because the love of driving is still strong in today’s motorists. “A lot of research shows that, even with autonomous cars, people are still going to want to drive,” he said. “I don’t think that goes away.”

The Future of Transportation

“When it comes to urban transportation, there is a huge amount of disruption to what we consider the norms,” said Survis. “The whole question of auto ownership is being challenged by sharing services and the autonomous car.”

Survis said that accommodating self-driving cars will require cities to adjust their infrastructure — for instance, by adding special dedicated lanes, or geo-fenced areas. “The infrastructure for modern transportation in the urban environment demands major thinking and federal funding,” Survis said. “As the population continues to rise in our bigger cities, this should become a major priority.”

For Asia’s growing “megacities” (with populations above 10 million), new transportation models may not involve four wheels at all. A startup called Gogoro has sold 15,000 of its electric scooters in Taipei, Taiwan, and keeps them on the road with hundreds of battery swap stations. Founder Horace Luke said he plans to expand to other Asian megacities. The company also has a separate scooter-sharing operation in Berlin, Germany with Bosch as a partner.

Automakers will remain a big part of future mobility, but they see their roles changing.

In the U.S., Americans are responding to the renaissance in urban public transit investment. According to the American Public Transportation Association (APTA) Fact Book for 2015, “Since the early 1970s, public transportation has shown a long-term growth in ridership [60% since 1973]. … Bus ridership has grown 15% over that time period while heavy rail and light rail ridership have each more than doubled. … Public transportation ridership has increased by over a billion trips each of the past two decades.” But more needs to be done, since the U.S. transit system is aging, and the population is expected to increase by 100 million by 2050.

The good news is that despite infrastructure challenges, cities are committing to adding transit options, especially light rail. According to New Geography in 2014, it is “legacy” cities like New York, San Francisco, Chicago and Washington, D.C. with well-established subways and rail that account for 77% of transit commuting nationally. But that’s changing, as newcomers like Phoenix (which opened a 20-mile rail system), Dallas (93 miles in four lines), Salt Lake City (four new lines in one year), Denver (which realigned its downtown around the rail hub) and others become far more transit-friendly.

That said, automakers will remain a big part of future mobility, but they see their roles changing. Volkswagen, for instance, launched a new brand called MOIA, which is providing a ride-hailing commuter shuttle in Germany using electric vans. According to a 2016 article in the Financial Times, “[Automakers] are partly being pushed into it by Uber, which has made ride-hailing in cities so convenient and comparatively cheap that it may start to take the place of car ownership. … Road transport becomes a utility, something that can be bought by volume, like gas, electricity and water.”

John Paul MacDuffie, a professor of management at Wharton, believes that in the near future, urban dwellers will “start each day figuring out where they need to go, and will put some options together that might be unique to that day, possibly combining public transit, car rentals, ride-hailing, car sharing and city bikes.”

MacDuffie also said that there is likely a market for “mobility services providers that can make it all work for you.” Ideally, that would mean the traveler would tell the provider where they wanted to go, and they would get a detailed itinerary with all the intermodal links worked out.

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