2030 – Decade of change in Transportation

We have entered what many industry professionals acknowledge as the decade of change in transportation. There are three technology forces universally agreed as growth catalysts; electric vehicles, connected car and mobility as a service. Change is no longer an “if” but a “when” in the world of transportation. A competition between those that embrace change and those who oppose it is poised to play out; the winners will shape our mobility future. Change agents will need to either collaborate with existing car manufacturers, dealers, suppliers, banks and insurance companies or create their own ecosystem that competes against the established structure. This final entry to The Next Decade in Transportation blog series explores possible outcomes for change-agents.

Cost as a mass market disruption catalystUsed Cars

Amazon has set the blueprint for mass market disruption. They drive down price for the same if not better experience. The average consumer spends around $9,500 per year on transportation, still number two behind housing. Technology companies may go after market share by lowering monthly spend on basic transportation while at the same time offering consumers lifestyle alternatives. Imagine a company like Amazon aggregating quality used vehicle inventory and then selling monthly subscriptions between $350 and $400 fully insured with Alexa installed (see appendix). Another scenario, Car Companies or a large technology company, re-cycling off lease vehicles by retro-fitting them and re-wholesaling at a fixed price. They could do this through dealer networks by creating a direct to consumer subscription model ensuring dealers handle customers with exceptional customer and vehicle service (see appendix). Both examples offer customers a new level of transactional transparency. The market could bare between 10 and 20 million used vehicles under models like this by 2030.

Product and cost as a mass market disruption catalyst

Henry Ford disrupted the market by bringing an affordable car to the masses. Elon Musk has already disrupted the luxury market through the Tesla brand. The question remains if anyone will bring electric to the mass market? As battery prices decrease and electric networks increase, there is a strong case that base electric vehicles could sell between $12,000 and $20,000 by 2030 (average new car costs $37,000 at the time of this publication). That price-point coupled with reduction in insurance and monthly fuel costs would move mass consumers to electric vehicles. Why would car manufactures do this? There is a big motivator for large companies to go electric, the fact that executives at VW went to jail for their parts in Dieselgate. Boards of large companies and their executives need to follow ARB, EPA and Euro 7 emission standards. The easiest ways to avoid massive fines and bad behavior in the next decade is for these companies to seriously invest in a push on electric. Electric vehicle sales have beat most estimates in the past 10 years, especially those put out by OPEC. If history repeats, Electric vehicle adoption will again beat most forecasts by 2030.

Technology as a mass market disruption catalyst

Smartphone distraction on the road continues to threaten safety in transportation. Human interaction and addiction to technology enhancements are beginning to augment our behavior, some would even say that we are already cyborgs. Autonomous vehicles are clearly the long-term answer to our addiction to technology, but will they adopt to the masses by 2030? Government officials at the federal and local level are critically important to mass adoption. The U.S. Department of Transportation is neutral / border line embracing the reality of autonomous vehicle adoption especially in the Preparing for the Future of Transportation release. While the U.S. leads in innovation, other countries, especially The Netherlands, are better prepared for full scale adoption. Companies preparing to launch mass autonomous solutions have a big responsibility to get it right the first time. Trust is key to adoption, trust of customers and trust of governments. If companies like Waymo and Argo AI succeed and launch well at the right price point, my guess is that autonomous cars will adopt a lot faster than we think by 2030.

Do you believe we are entering a decade of change in transportation? The transportation network as a whole has created innovation and market disruption balanced with a history of bad behavior and mistrust of key stakeholders. Tesla has already created a cult like experience where customers love their products and brand. Authentic leaders who collaborate and embrace change can re-imagine the entire industry and work within the existing framework through transformational change. Customers need to be the focal point of all meaningful change, focusing on the right experience, price, timeliness and above all gaining their trust. I see the next decade as an incredible opportunity for professionals in automotive, tech and data to impact the future of our collective industries by embracing what is possible. I look forward to collaborating with authentic leaders to shape what I believe will be an incredible decade of opportunity and growth.

Thank you for reading and commenting on my first blog series. I set out to write about topics that spark thought and discussion. I’m so encouraged by the response, support and side-conversations I’ve had in person and through e-mail. This has been an awesome experience, I truly appreciate your time.

Appendix

Scenario 1 – Used Vehicle Aggregation

One click subscription of used cars could happen right now. By 2030 a large fleet operator could have a portfolio of 5 to 10Million used cars in their subscription portfolio. Theoretically, a price point between $350 and $400 per month with insurance is extremely competitive for a clean well functioning 2 to 6 year old used vehicle. Companies with existing large user base like Amazon could spin this up quickly by partnering with a 3rd party bank, insurance company and car dealers. Average used car prices are around $20,500, they depreciate at around 40% to 50% over 3 years of usage. Simple math says at $400 per month a subscription model could create a profitable certified used vehicle subscription with insurance for a large tech company. Additional revenue could occur through set price service plans for normal wear and tear (tires, brakes, oil changes) through dealers or Costco.

Scenario 2 – Car Companies Recycle their off-lease cars

There is a strong case for a car company or third party company to “recycle” off-lease vehicles by refurbishing them to a higher standard than a certified pre-owned vehicle (potentially retro fit them to run on electric). Car companies with captive banks have incredible knowledge of the condition of their off-lease vehicles. A repurchase model for good condition vehicles into a ship-through up-fitter would have a number of benefits that balance out the depreciation risk. First benefit is they could set a fixed price for refurbished vehicles by factory-backing them. Second, they could re-wholesale the vehicles as a factory certified, retro-fit or call them a recycled vehicle creating a new revenue stream. This could create a low price point vehicle in the secondary market, allow new revenue stream for OEM’s and also franchise dealers. It also increases transparency to end consumers.

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