The car industry : What’s Next ?

The transport industry is on the verge of a new era.  After ages of practically no major revolutions, it seems that tomorrow might look a lot different.

Electric cars

Although they were not the first to announce an electric car, Tesla was the first to make electric cars sexy and cool.  Whereas the electric car was long seen as a transport method for people that only eat homegrown vegetables and cows that died of old age, it has become the future of transport.

A lot of car manufacturers were already researching and developing electric cars, but due to the fear of launching too early in a market that wasn’t ready, they followed in the success of Tesla.  And although Tesla isn’t making any profit yet, they seem to have given the “go”-signal to a lot of other brands to announce their electric vehicles.

This is remarkable.  Because for the first time ever, a newcomer was able to revolutionise an industry that seemed to be very rigid and old school.  Tesla is not your typical car manufacturer and neither are Google and soon Apple.  They are technological companies sitting on a big pile of investor capital, ready to attack the car industry.

But the adoption rate on the consumers’ side is slow and without governmental stimulation the fleet is not going to suddenly become electric.  This is due to some very important reasons:

1. The batteries

The main concern of consumers is the range you can drive with a car.  This is still limited and this worries a lot of customers.  For city traffic and countries with a high population density, this is not an issue.  But if you live a 2 hour drive from work, this might be a problem.  This is likely to improve over time as developments in the battery-industry are advancing at the speed of light.

2. Charging

Charging is another problem.  At this moment charging takes a lot of time and people want to be able to have their car ready at every moment.  A car having to charge up to 2 or 4 hours is a very expensive waste of space.  And not all garages, garage boxes or streets a outfitted with a power supply.  Certainly not if we would replace all cars with electric cars.  It would become a jungle of power cables running across streets and sidewalks.

Leaving your car in an assigned charging station is also not really an option while you might have to walk with your groceries for half an hour to reach your home.

3. Purchase cost

The purchase cost of an electric vehicle is high and unless you have the money or unless you have a company car, it’s unlikely that you are going to make the switch now.  There are still too many disadvantages to opt for an electric vehicle.

Self-driving vehicles

Another technological advancement is the self-driving vehicle.  Although many of them are still in a test phase, the technology will soon be mature enough to say that a self-driving vehicle is safer than a car with a human driver.

Although governments and insurance companies are not ready to allow self-driving cars without a driver behind the steering wheel, the technology allows us to be a passenger on the backseat of our own car.  And as creepy as it might sound, this will be much safer.

Even now a lot of cars (mostly in the more luxurious segment) are already able to do a lot of tasks without the interference of the driver.  Automated cruise-control, automated parking, detecting lane-changes, detecting other vehicles and people in the surroundings of the car, emergency braking, self-braking, …  Tesla even claims to be able to let their vehicles drive autonomous for 90% of the time.

And again we see companies that don’t have any historical experience in car manufacturing (Google, Tesla, Apple, …), taking the lead.


A new transport network

Though these two advancements are very exciting and not even that futuristic, they might lead to an idea that IS futuristic.

Because self-driving cars might be able to operate without a driver, after having you dropped off in front of your house, they might look for a charging station themselves.  The only thing you need to do when in need of your car is calling it through an app on your smartphone.

And if you take it one step further, we have to wonder wether we still need to own a car…

On average, we only use our car 4% of the time, meaning that even the least optimistic study shows that we might be able to ditch 90% of the current fleet.  The impact of cars is very heavy on multiple levels, it’s an expensive investment, it has an impact on the environment, disposing of a car again has an impact on the environment, cars take up a lot of valuable real estate in cities, accidents cause a lot of injuries and dramatic losses, …

Renting a car for the duration of your trip and giving it back at the moment you step out of the vehicle opens up a broad range of opportunities.  Need to travel a longer distance?  Ask for a more luxurious model.  Just going to a friend?  Request a small car.  Having to move house?  Order a truck.  And you only pay a monthly fee based on your trips and the models you ordered.

Success stories of Uber and BlaBlaCar are showing that the public is ready to adopt a more flexible ride-sharing platform.


Car industry

Of course there are casualties in this new future.  It will have a major impact on several sectors.

Car brands will have little to no impact on the market, because the system would only work when one supplier offers a wide range of vehicles, independent of the brand.  If every brand would start its own network, it is still not flexible and we would still need a bigger amount of empty cars driving around.  And even garages that fix cars will have a lot less cars coming in.

Insurance companies will struggle as self-driving cars would decrease the number of casualties and accidents drastically.

Car rental companies will either have to provide cars for this new market or they will go bankrupt.

Governments will lose the income from speeding tickets, although the costly impact on roads and health insurance will also be lower.

Taxi-drivers will be out of jobs.

And all industries that are involved in the construction of roads will suffer.  Because do we still need traffic lights, lights next to the road, or … even lanes to be painted?

When is this coming ?

Though most of these things are already possible in one way or another, it will take at least 15 years for this to happen.  And that is an ideal case scenario.

While it takes approximately 5 years on average for a fleet to renew and all this technology is still 3 generations away of being implemented in all cars, we are looking at a time-frame of at least 15 years.

But who would have said 15 years ago that we would carry our desktop computer from back then on our wrist?  And since the car industry is now dictated by the technology companies… brace yourselves!

Kristof Drossaert

Digital Strategist