What is the future of urban car ownership? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Answer by Michael Barnard, low-carbon innovation analyst, on Quora:
Predicting the future in the middle of multiple ongoing disruptions in urban car 0wnership is difficult. But it’s also a question with great timing as Tony Seba, a Stanford economist among other things, just released a co-authored study which made the following claims:
- Private car ownership will drop 80% by 2030 in the US.
- The number of passenger vehicles on American roads will go from 247 million in 2020 to 44 million in 2030.
- Using electric ride-shares will be four to ten times cheaper per mile than buying a new car by 2021 (and each family could save up to $5,600 per year, compared to purchasing and maintaining a traditional vehicle).
Those are compelling numbers, but I’m not buying them. I think the underlying model of human behavior and transportation is too simplistic. To be clear, I think that this future or something close to it will transpire, just not in thirteen years.
Let’s tear this apart a bit.
Economics of car ownership.
This is interesting as I’m currently in this future that they predict. I spend less than $2,000 on vehicles annually through car share programs like Car2Go and Modo, through UberX, through the occasional formally rented car and through bike share programs (I have Toronto, Montreal and Vancouver fobs). And I know I’m a weirdo who has been trending in this direction for a couple of decades. Outside of fun cars on twisty windy roads, I prefer to let other people drive while I do something else.
This has been a completely viable lifestyle choice for many years in most major cities around the world, yet car ownership has continually increased by an average of 4% per year. I dug into this when researching my own, also simplistic, model of electric car penetration and its impact on oil consumption about eighteen months ago.
I looked at the trends, and I didn’t see global impacts, but only local impacts on car ownership. In certain cities such as San Francisco, Vancouver and Toronto the ownership trend was flatter, but not flat, but globally, growth was chugging along at 4% per year and had been for decades.
Uber and Lyft existed when I did this study and had in many cities for years. Taxis exist everywhere, and in many cities such as Singapore they are as cheap as UberX already. Transit exists in cities globally, and there are many cities which have had huge cycling cultures for decades. Yet car ownership continued to climb.
I remember the argument for cycling to work saving $6,000 per year and giving lots of benefits being touted two decades ago. Yet people persisted in buying cars.
I like to cite Singapore for irrational car ownership behavior. They’ve had explicitly car unfriendly policies for years. Their Certificate of Entitlement auctions which gives people the privilege of driving a car for a decade vary from a low of about $50,000 SGD right now to a high of $100,000 SGD. 1.6 litre four cylinder economy sedans cost $160,000 SGD. Congestion charges are tolled for everyone entering the central business district. Transit is ubiquitous, clean and cheap, with the national target being that 80% of the populace of the country live within 400 meters of a subway stop. Taxis are widely available, clean and very cheap, about 40% the price of taxis in Toronto, which makes them cheaper than UberX.
So I’m not buying the narrow economic view of car ownership. It reeks of the problem of the rational consumer fallacy that has plagued economics for a long time. That fallacy suggests that people make decisions that are fact-based and logical, presumably the same way that people in the USA voted in 2016. People choose to spend extraordinary amounts of their personal income on vehicles which are much more expensive than any rational decision can justify, both in initial outlay and long-term operational costs. If decisions about cars were rational, there would be a lot more tiny econoboxes on the road and a lot fewer SUVs.
People are attached to private cars.
I’ve written on this subject in various ways before, but basically cars aren’t just A-B transportation for most people. They are extended backpacks, lifestyle aspirations, decompression zones, status signifiers, vacation vehicles and fashion accessories. None of those values that people place on cars are actually rational, but they are incredibly strong.
Put up your hand if you know this story. A person is deciding to buy a new vehicle. Once a year, they tow a twenty-foot boat to a lake in the mountains to go fishing. The rest of the year, they drive an average of fifteen miles a day on congested urban streets. The rational decision is to buy a tiny commuter car that’s easy to get around in cities and rent a truck for the two weeks a year. But they buy a truck that can tow their boat as their primary vehicle instead. People don’t buy vehicles for their daily average use, but much more so for their annual extreme use.
I know a couple who spend $30,000 annually on their two cars. They live in Vancouver where I live without a car. They are in the catchment area for Car2Go. They could bike, walk and take transit. Heck, they could take taxis everywhere and save money and live more conveniently. But they don’t.
People will persist in having private cars rather than have to wait for an autonomous vehicle. They will want to throw their gym clothes or baseball equipment in the trunk and leave it there while they work.
Autonomous cars aren’t going to reduce congestion.
There’s a theory which has little empirical support that when every car is autonomous, road congestion will drop a lot. But my assessment of the research in this area last year made it clear that the opposite was more likely. There will be a lot more road miles driven. Without careful urban densification strategies sprawl will increase. While highway throughput will likely increase, urban street and intersections will slow substantially.
The table above is one I put together to outline the possible impacts on various types of things which cause congestion. Autonomous cars don’t solve physics, weather, road work and the like. But they do increase the number of vehicle miles driven for any given trip because they always drive from wherever they are to where the passenger is, pick them up, drop them off and then drive away. More road miles is directly correlated to congestion, especially off of highways.
What’s being disrupted is transit and taxis.
Seba’s model assumes that personal car ownership is what will be disrupted. That’s a common mistake, and to be clear, there will always be car-free weirdos like me. But what’s really happening is that people are choosing UberX and Lyft over buses, trains, taxis and bicycling. The major trend is a hollowing out of low-congestion ridership as car sharing options get cheap enough to attract people who can’t afford a car and need or want the convenience of saving time.
San Francisco is ground zero for this. Bus ridership has plummeted, anecdotally, so they are now doing empirical studies to figure out what the correlation and causation are. But taxi companies are up in arms globally over Uber because it is directly killing their more expensive business model. There’s nothing anecdotal about the impact on that business.
Imagine if you could get in a cheap, autonomous electric car instead of the commuter train and it would drop you off at your office instead of a three-to-five-block walk. Imagine if you already drove a nice car, parked it in your building and always had it conveniently handy for errands and leisure tasks. Which group is going to be displaced?
Personally, I understand clearly the impact of transactional costing of transportation. Whenever I’ve owned a car, I’ve considered the entire annual cost to be sunk, and used it much more than I use car share programs now, where the transactional cost, low as it is, stares me in the face in the moment of the trip.
So what does all this mean?
Well, I think there will be fewer people with cars in their driveways and car parks, but not that many. I live in just about the best place in Canada to not own a car and also likely the worst place in Canada to own a car. The last two buildings I have lived in I rented out my parking spot to people who just couldn’t live without one.
Will ownership be disrupted? Not really. Will everyone who owns a car let it run around autonomously picking up other passengers while they are at work? No.
Will car companies still be selling a lot of cars to individuals? Yes, but they will be different companies. I wouldn’t be surprised if several of the current big players wither away over the next fifteen to twenty years as they are so far behind on autonomy, electrification and a raft of other innovations that Tesla and companies like China’s BYD are bringing to market.
Status is shifting. The bloom is off of the BMW, Audi and Mercedes roses in many parts of the world with Tesla taking the forefront. New electric manufacturer’s concept cars are met with delight, while traditional manufacturers are met with yawns and demands for real cars, not concepts.
But that isn’t changing the fundamentals. Cars are status signifiers, backpacks, conveniences, transportation, sports vehicles, vacation vehicles and fashion accessories. There’s a lot more wrapped up in vehicle ownership than rational economic decision making.
What is changing for the positive is that in a few years, the percentage of fully electric vehicles on the road will be much higher. And the percentage of cars which avoid accidents and pedestrians by themselves regardless of driver inputs will be much higher. The world is going to be a better place. But it will be a better place with a lot of people in their privately owned cars on the roads.
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