BUY UP ALL THE DISCONNECTED CARS

I believe that the next wave of transportation innovation will occur just like the elimination of street cars. Companies will develop programs, create consortiums, and lobby for policy to drive the adoption of new transportation services. We need to buy up all of the disconnected cars. Consider the disconnected cars to be anything manufactured before 2014 and connected cars are defined as any vehicle with its own internet connection. This will enable Vehicle-to-Vehicle (V2V)and Vehicle-to-anything (V2X). Think of the connected car as the biggest Internet of Things opportunity and the most disruptive innovation of our lifetime.

The answer is not another round of “cash for clunkers”. Financial incentives for purchasing new vehicles will lock consumers into another 1 or 2 cycles of vehicle ownership. We need programs that encourage exchanging an owned vehicle for access to a mobility suite. These programs could be government sponsored or privately managed by companies that will profit from consumers shifting to transportation services as their primary mode. It likely will need to be a combination of both.

Consider that the last car you bought could be the last car you ever buy. What would it take for you to give up owning a car?

THE ECONOMICS

At best, those who live near where they work (or work from home) will spend 9% of their annual household income on transportation. If you commute, you may spend upwards of 25% of your annual household income on transportation and the American family average is 19% of annual household income. Most people don’t want to know how much they really spend on transportation when you consider fuel, insurance, maintenance, and the many other costs associated with car ownership). Between your home and your car, that’s almost 50% of your annual earnings. Imagine the economic impact of a community that is able to reduce the total cost of transportation for their citizens by even 10%. It’s powerful.

COMMUNITY

Now we are all familiar with Uber and Lyft. These companies are paving the way through policy and consumer adoption to create the first forms of transportation as a service. Let’s say Uber is AOL and Lyft is Lycos (or another dotCom bubble company that was first but didn’t win). While these companies have a strong lead and huge valuations, I don’t think they will win (at least not to the point of monopoly). I think our communities will be the winner. And here’s how they will win.

We need community-based mobility suites that go beyond public transportation. They also need to be built on profitable business models that do not rely on tax subsidy for operation. Today, individual vehicle ownership is our #1 choice of transportation. Uber and Lyft are convenient services, but they don’t work if you live in the suburbs. As we look at what will differentiate a smart city, we need to consider how a community-based mobility service can effectively reduce how much citizens spend on transportation. To accomplish this, we need to combine public transportation, ridesharing like uber and lyft, on-demand carsharing like Car2Go and ReachNow, peer-to-peer carsharing like Turo, carpooling, and bikesharing. While Uber is trying to eliminate the drivers, a community-centric mobility suite will consider the needs of their citizens and what jobs will be created and eliminated. Communities will also take the responsibility of providing transportation options for niche groups, such as elderly, handicapped, children, immigrants, and medical transportation.

BIG IDEA

This is a big idea (some may even call it yuge). No one company will win because each community will have specific needs that create opportunities for companies to specialize and localize transportation services. The nuances of each city are such that its unlikely that any one company will be able to scale a mobility suite. Individual service providers that are private and public need to work together, leveraging each others strengths. When one company fails, another company can be plugged into the mobility suite. Imagine living in a suburb, like Dublin, Ohio, where you can carpool with your neighbors that leave at the same time in a shared vehicle that drives you to a public transit hub (and your vehicle is making money for you through p2p rentals when you are not using it). From there you take mass transit close to your final destination and rideshares take you to your specific place of employment for the last mile. This doesn’t require new technology or policy. This requires coordination and data, which are two major objectives of smart city initiatives like Smart Columbus.

By actively purchase the existing vehicles and replacing owned vehicles with a mobility-as-a-service suite, the innovation cycle in the automotive industry can accelerate because vehicle utilization will increase while the useful life of vehicles decreases. Use up a car faster and you can get the latest technology (you just won’t own it). While the transition to transportation services will happen much like the elimination of street cars, one major difference needs to be how we communicate the strategy to consumers. Instead of backchannels and alliances, we need to communicate a clear vision for why this change is in everyones best interest. It is not a conspiracy. It is disruption.

In conclusion, if we want self-driving cars, transportation services will need to replace individual car ownership. This will accelerate automotive innovation and allow for all vehicles to be connected. We can learn alot from how street cars were eliminated and this time around, we can ensure that better and more affordable transportation options are available.

About the Author

Ryan McManus is the CEO and Co-Founder of AVE AutoMedia, a software company developing connected car apps and mobility services. This topic was originally presented at the AutoTech CBUS meetup in Columbus, Ohio on February 9, 2017.