Shared self-driving cars could slash demand for US sedans: study

[Hamartia Antidote]

https://www.aol.com/article/finance...ld-slash-demand-for-us-sedans-study/23289481/

DETROIT (Reuters) - Ride services using self-driving vehicles could slash by more than half demand for owner-driven sedans in the United States by 2030, according to a study released Monday by consulting firm KPMG that used cellphone data to map commuter travel in three large U.S. cities.

The KPMG researchers forecast that ride services using self-driving vehicles will launch first in densely populated urban and suburban areas it calls "island markets." Alphabet Inc's Waymo self-driving car unit and General Motors Co have said recently they intend to launch pilot autonomous ride sharing services in limited urban or suburban areas.

As costs for ride hailing drop, KPMG predicts that by 2030 many families will no longer need to own a sedan to get to work or do errands, but will hail a ride instead.

The result will be a "precipitous decline" to 2.1 million sedan sales annually in the United States by 2030 from 5.4 million sales currently, the study predicts, as families dump smaller sedans and keep larger vehicles for longer trips.

Automakers in the United States already are scrambling to re-tool product programs and factories to respond to lower demand for conventional compact and midsize cars, driven by a shift toward sport utility vehicles and pickup trucks.

Fiat Chrysler Automobiles NV already has exited the small and midsize sedan markets in the United States. KPMG predicts more will follow until only three or four companies are serving that market, instead of 10 companies today.

KPMG said it used data collected from cell phones to analyze trips in Atlanta, Chicago and the Los Angeles-San Diego metropolitan regions. In Chicago, many trips are shorter than 15 minutes. In Atlanta, the study found 75 percent of trips are between suburbs, not from the city center to a suburb. Los Angeles trips are the longest, with many rides taking 90 minutes or more, the study found.

The KPMG study, released in conjunction with the Los Angeles auto show, echoed comments by auto and technology industry executives that self-driving vehicles will be deployed first in ride-for-hire services limited to specific areas of cities or suburbs.

 

[xyxmt]

I dont think ride sharing vehicle will ever get cheaper than owning a car.

 

[Hamartia Antidote]

https://www.marketwatch.com/story/demand-for-driverless-cars-could-boost-uber-to-2016-09-19

Driverless cars could cost 35 cents per mile for the Uber consumer
Driverless cars will be a trillion-dollar industry, analyst says

Uber
Uber’s self-driving cars began a pilot program in Pittsburgh.
In the brave new world of autonomous cars, Uber Technologies Inc. may lower prices for consumers and take on added costs, but still see a benefit to their bottom line.

Uber launched a pilot program of autonomous vehicles in Pittsburgh last week. If successful, the program will likely mean eliminating some jobs for drivers, which may in turn lead to lower fares and the added cost of maintaining a fleet of cars. Still, some experts say the cost will be offset by the large addressable market and increased demand, while others caution that Uber would be taking on a new and unknown business model .

Uber’s current model puts the vehicle cost on drivers, who own or lease their cars and are responsible for maintenance and gas. Uber takes a percentage commission from their fares, which can fluctuate based on demand.

With driverless cars, Tasha Keeney, an industrial innovation analyst with ARK Investment Management, is expecting Uber to lower fares. Self-driving cars won’t require drivers, eliminating the labor cost, she said. And the cars will be used more -- Uber is expecting them to be on the road 24 hours a day.

“I think that they would drop their prices because they would expand their market so much by doing so,” Keeney said.

According to her estimates, the cost for an autonomous taxi would be 35 cents per mile, versus the $2.86 per mile a passenger currently pays in San Francisco, assuming an average gas price of $2.36 per gallon. The average taxi in the U.S. costs $3.46 per mile, she said.

Then there’s the cost of the fleet itself, which Keeney said is too early to estimate, though a driverless electric vehicle is expected to cost $15,000 in 2020, she said. Because it’s an emerging technology, it’s also hard to evaluate the secondary market for the vehicles, said Ken Elias, a partner at Maryann Keller & Associates. But the cars may not have an afterlife, as Elias expects a lot of usage and wear and tear from their extended driving spans.

Still, Uber may be able to defray that cost. There are an increasing number of partnerships in the space, and Keeney is betting that Uber will partner with an automobile manufacturer that could own or maintain the fleet. Uber is currently in a partnership with Volvo, which will provide some autonomous sport-utility vehicles for the company, according to The Wall Street Journal.

The biggest operating cost for Uber may be third-party operators, rather than the human safety monitors Uber is using in the self-driving pilot, Keeney said. In the future, Keeney is expecting Uber to employ engineers in a control room, similar to air traffic control, who can monitor several autonomous cars and give direction if needed.

But even with the price drop and the additional labor cost, Keeney said she expects the consumer demand to make self-driving cars a profitable business.

“We think the market will be measured in the trillions,” Keeney said. She is modeling a market of $1 trillion in North America by 2030.

In another scenario, ARK Investment is expecting individuals who buy autonomous cars to send them out on the road to drive for Uber. If those rides are priced at 35 cents per mile, a $30,000 car would be able to pay itself off in about five years, the firm estimates.

A luxury car, such as a Tesla Model 3, could charge more per mile on a luxury service such as UberPlus and similarly pay itself off, she added.

Uber has said it expects its future to be a mixture of self-driving Ubers and rides provided by humans. Elias said he expects self-driving Ubers to be more ubiquitous in large cities, where there will be greater transportation demand, while Uber cars with drivers will likely be more present in the suburbs and rural areas.

Still, Uber’s drivers, who it classifies as independent contractors, not employees, are a key point in Uber‘s market share at this point, said Max Wolff, chief economist at Manhattan Venture Partners.

“Uber’s advantage right now is that they’ve signed up so many drivers,” Wolff said.

Without the drivers, Uber will need a superior app or superior technology to remain a leader, he said. But as it stands, Keeney and Wolff agree that Uber is lagging its competitors in terms of self-driving development.

“I think Uber has very far to go compared to Google,” Keeney said.

Alphabet Inc.’s Google GOOG, -1.10% GOOGL, -1.07% is the “one to beat,” Keeney said, as it has the most advanced technology. Tesla Motors Co. TSLA, -0.75% is the “one to watch,” she said, because of its accelerating developments in technology, thanks to its data collection from customers.