There has been much hype and hoopla over driverless vehicles, then there is the fine print. I agree with Mr. Berko that driverless vehicles will be a massive failure, but his reasoning is wrong. While his and my generation were raised to love cars, today’s young’uns aren’t. Most Millenials wouldn’t bother to get a driver’s license if their high school didn’t mandate it as a requirement for graduation.
In truth the automotive industry is going to shrink 50% in size over the next decade. Many name plates we are familiar with today simply won’t exist by 2026. We’ve already seen one great purge which took the names Saturn, Pontiac, Plymouth, Oldsmobile and probably others from the ranks of “new” cars. The second wave will take even more.
While the upcoming economic downturn will be blamed for much of it, the simple truth is that cars have become a commodity instead of a status symbol. Most automakers keep trying to push base prices of vehicles customers might actually want well north of $30K creating fewer and fewer reasons to buy a vehicle priced north of $50K. A goodly number of vehicles “fully loaded” and priced under $40K have drive trains which will easily last more than 300,000 miles with proper maintenance so the 2-3 year turn over of yesteryear simply isn’t realistic.
The average age of a vehicle on the road today is 11.5 years. In truth I just picked up a 2002 Jeep Grand Cherokee Overland with roughly 140K on it to replace my previous beater Jeep, a 1990 Wagoneer Ltd. Granted, it was not my daily driver but my batting around the farm vehicle but I bought that thing in either 2000 or 2001 on eBay. Yes, I had it for roughly 15 years. I will probably have the current one the same but I will probably put more miles on this one than the last.
My daily driver is a 2006 Toyota Avalon I picked up a few years back. Bought on-line via Autotrader.com without ever having driven it. Phenom ride which gets better than EPA mileage. I plan on riding it out through its 300,000 mile reading.
Some will say I’m not the “typical” buyer but I’m not that far out there. With cars lasting longer and people driving less there will be fewer new cars sold, period. In this day and age people are making smarter financial decisions. Even if you can afford a new car instead of a “different” car, you have to ask yourself why you would want one. I paid roughly $10.5K for my Avalon including tax title and mystery dealer markup. While I plan on getting the 200,000 miles the previous owner didn’t want, if I get bored with or something bad happens to this ride, I can get another one for roughly the same price with roughly the same miles on it. Do you really want to tie up that extra $20-30K?
Automakers also have a completely unsustainable practice of building way more vehicles than they sell. Rather than drop the price of current models to move more they simply park these rides in abandon lots letting them rot. Eventually a good many consumers will refuse to buy a new car knowing full well the price they pay is covering the cost of 9 or more other vehicles which were made but will never sell.
Yes, Uber and a few other ride share services are all gaga over driverless cars. In short they are big on the idea because they are trying to get around legislation regulating their drivers. Very few people will be willing to pay for a ride without a driver, especially tourists. One of the main reasons you pay for someone to drive you around when visiting a place is so you can ask them insider details about what to see instead of visiting only the tourist traps advertised on the Internet.
Consider for the moment all of the news stories with various governments and criminal organizations hacking various things in America. Add to that the fact at least one manufacturer has already had to recall 1.4 million vehicles to prevent hacking and the thought of hopping in a driverless Uber ride is a very scary thing.
By its nature a driverless car has to be communicating with computer systems externally. No matter how complete the database is with respect to speed limits and construction when the vehicle rolls off the assembly line, it will need live updates. Having spent 30+ years in IT the following quote from the previous link doesn’t sit well with me.
“The software manipulation addressed by this recall required unique and extensive technical knowledge, prolonged physical access to a subject vehicle and extended periods of time to write code,”
So? Do you really think someone intent on causing chaos/terror isn’t going to put the time in?
I have heard the price of 2006 and older used cars is actually going up not down. Most of the vehicles from that era don’t have any of these wowsy-woosy fancy Schmansy infotainment systems with external communications which exposes a vehicle to such problems.
Where does all of this leave us? With Millenials moving to cities where they can have fun without needing or dealing with a car. Just take a taxi, Uber or whatever when they can’t walk or bike. They will eventually produce offspring which get raised in a family without a “family car.” When those offspring graduate high school they won’t be buying cars either. This crowd values “experiences with friends” way more than status symbols. $40,000 buys a lot of experiences and cool devices. Both my and Mr. Berko’s generation are headed for the far side of the actuarial tables. Sooner than any of us care to admit we will either be dropping off the end of that table or becoming “too old to drive safely.” Either way, those who love cars and driving them is a shrinking market.
The number of people willing, not able, but willing to purchase a new car will decline each and every day for the next 2 decades. Within a single decade the unsustainable practice of parking hundreds of thousands of brand new cars hoping Google Earth doesn’t find them will come home to roost. When it does there won’t be a second bail out. More badges will disappear and the auto market will contract to 50% of what it is today.
As devastating as this will be to those who work in the factories it will be necessary for the economy. America has a crumbled, not crumbling, crumbled infrastructure and a brain dead method of paying for it which is why it won’t get better. Until the gas tax is abolished and infrastructure is paid for from general tax revenues (i.e. income and capital gains taxes) our roads and bridges will be in a continued downward spiral. Edmonds currently lists 10 2016 models which get 40 MPG or better. We are in an era of both increasing fuel economy AND a divorcing from crude. How much highway infrastructure funding do those all electric cars contribute? None. That is collected at the pump and they don’t stop there.
Culturally Americans are moving away from the open road and those long driving vacations. They mostly disappeared with the full sized station wagon. In case that guy takes his hobby page down here is a link to a massive fan.
What does all of this have to do with the driverless car failing? Quite a bit. The glut of both serviceable vehicles and those unsold vehicles hidden from ordinary view will be competing for an ever shrinking market. Ride share services thinking consumers will jump for joy to hop into an empty vehicle are sadly mistaken. Have you ever watched someone “find” their Uber ride? If the car doesn’t have a driver with a cell phone talking to them from across the street it seems most would never find their ride, at least in cities like Chicago. Woe be to the dude with the white Prius because that vehicle disappears into the herd of white Prius rides on Chicago streets.
At any rate this means investing in driverless rides, while they may improve features for regular vehicles, is a bad bet if you think they will be the greatest thing since sliced bread. Financially any company trying to make it on sales of driverless vehicles alone will disappear once the venture capital runs out.
Oh, let us not forget that the single greatest selling point of a driverless car will never be legal in any state. Yes, religious extremists intent on committing the ultimate sin of man and dead broke municipalities thanks to those same religious extremists will never make it legal for you to get drunk, pile into the back of your driverless ride and tell it to take you home. Simply won’t happen. Even though you are in the back seat nowhere near the steering wheel you will still get a DUI.
Yes, thanks to these religious extremists the Clean Indoor Air Act has decimated tobacco tax revenue. With it went a major share of alcohol tax revenue (you know, those “sin” taxes not to be confused with syntax). After that happened the religious extremists used government being broke as justification for massive road blocks on weekends and holidays. They can spin it any way they want but they have deliberately turned police departments into revenue generation departments both ruining lives and further decimating tax revenues from those “sin” taxes religious extremists love to pass.
In short, the holier than thou crowd doesn’t have a single clue about how to fund itself. They certainly aren’t going to stop committing the ultimate sin of man long enough to realize if they let you lead the life you wanted piling into the back of your driverless car after having way more than one the municipality might not be broke. The bars and restaurants which have been closing hand over fist nationwide putting even more people out of work creating even more of a burden on the municipality might have a fighting chance of staying open if driverless vehicle could take you home, but . . . during my entire life religious extremists have never had a single clue to share amongst themselves so, your driverless car will be the next Sony BetaMax and 12 inch laser disk player.
