The Future Is Sooner Than You Might Think

Transportation as a Service (TaaS)—which can be thought of as that ride-hailing, self-driving approach—will become the way for most people to go by 2030.

 

In the larger context, nowadays it is all about autonomous driving and mobility. Investments are being made in these categories by the Brinks truck-full by OEMs (as well as suppliers).

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Which, because we are pro-tech development, is a good thing.

But perhaps not an unmitigated good thing because unless there are fundamental preparations made for the ride-hailing, self-driving vehicle future, then plenty of companies are going to find themselves no longer being companies.

Consider: the technology think-tank RethinkX (rethinkx.com) released a study last year, Rethinking Transportation 2020-2030, that looks, in part, at how people will go from A to B in the not-too-distant future. They propose that “transportation as a service” (TaaS)—which can be thought of as that ride-hailing, self-driving approach—will become the way for most people to go by 2030—and by “most people” they mean “95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals.”

What’s more—and if you haven’t heard this before, you’d better sit down: “Demand for new vehicles will plummet: 70% fewer passenger cars and trucks will be manufactured each year. . . . Car manufacturers will have options to adapt, either as low-margin, high-volume assemblers of A-EVs [autonomous electric vehicles], or by becoming TaaS providers.”

How many companies do you know are able to make money as “low-margin, high-volume assemblers”? How many of them are located in the U.S. or Europe?

Let’s say the RethinkX people are just half right. Not 70 percent. Just 35. This is still cause for pause.

But there is something that is going on right now that will have some serious consequences sooner rather than later. And it has nothing to do with TaaS.

Everybody knows that crossover and truck sales are increasing, which is seemingly resulting in the champagne corks being popped and choruses of “Happy Days Are Here Again.” After all, as everyone knows, the margins on those are better than for most cars.

Car sales are softening. Or wilting. Or maybe let’s call it what it is: collapsing. And margins notwithstanding, there is still the issue of volume. This industry has historically been based on that, and unless there is a way for all companies to get serious about returns not total units, then there is going to be a problem.

And arguably, even if that happens, there will still be a problem, and when this happens here’s hoping that people see it for what it is: a transition in the market, not something that has to do with robots or automated guided vehicles or Elon Musk.

Let’s look at the Autodata (motorintelligence.com) numbers for select Detroit 3 cars for all of 2017, with the percentage showing how the vehicles did compared with their deliveries for all of 2016:

  
First, the exceptions. The CTS and the Continental are both up, but their combined volume is 22,554, which is no great shake regardless of whatever metric you choose. And while the Challenger is up 0.2 percent: that’s not even a percentage that you’d round up to 1.

If you combine all of the Buick and Cadillac deliveries you get to 65,706. If we take a typical assembly plant as being capable of producing 250,000 vehicles per year, that combined number leaves 73.7 percent of the plant with open capacity.

The number of Tauruses sold is remarkably anemic, and when the Mustang is off by over 20 percent, and its muscle car kin all showing signs of atrophy, things don’t bode well.

If there is anyone with sort-of-good news it is FCA, as its three vehicles combined are 204,125, so that’s at least better.

Here’s the thing. There will probably not be a RethinkX-like collapse anytime soon. We are not likely to all be riding around in autonomous, electrified econoboxes in the next 10 years.

But what is also unlikely is that the sedan plants that have been producing all of those cars are going to be transformed into crossover or truck plants. (The FCA Sterling Heights Assembly Plant was transformed from building the Chrysler 200 to the Ram 1500, but I’d submit that’s the exception, not the rule.)

Which means that there are likely to be plant closings. Which means job losses.

I don’t know what the answer is, but I do know that unless we come to grips with the problem sooner rather than in, oh, 2030, we’ll all be better off.