In the United States each year, our cars alone cost us well over $1 trillion, burn about 2 billion barrels of oil, and emit about 1.5 gigatons of carbon dioxide—one quarter of all U.S. emissions. The indirect societal cost of these vehicles, including pollution, lost productivity (sitting in traffic), land use for roads and parking lots, road construction and maintenance, and injuries and fatalities cost us another $2 trillion per year, bringing the annual total to a staggering $3 trillion.
A big part of the problem is our cars and how we use them. Today’s vehicles are overdesigned, underutilized, underloaded, inefficient, polluting, and—thanks to the drivers behind the wheel—dangerous. The average personal vehicle sits idle (i.e., parked) for 95 percent of its life. When we do drive our mostly parked cars, we tend to drive alone (more than 75 percent of American commuters are solo drivers) even though our vehicles are designed for four, five, or more occupants (empty third-row seat, anyone?). This leads to so much traffic that we spend 38 extra hours per year sitting in a purgatory of our own making.
In addition, tens of thousands of Americans are killed and hundreds of thousands are injured in car accidents each year. And finally, gasoline engines burn relatively expensive fuel inefficiently, as only ~20 percent of potential energy is converted into useful power for a standard internal combustion engine vehicle.
Thus the average American car owner spends an estimated $0.59 per mile to operate a personal vehicle, which adds up to a yearly cost of about $15,000 per household. Year after year, personal transportation is the second-highest expense for the typical American family, behind only housing and greater than food and leisure combined.
Public transportation systems are also underutilized in many U.S. markets. This often results in taxpayer subsidy, a crucial leg of support to combat transportation inequality since such public transportation often offers the only inexpensive option for those who cannot afford cars.
REIMAGINING THE U.S. TRANSPORTATION SYSTEM
But there is a better way. A paradigm shift in our transportation system can drop per mile costs from $0.59 to $0.15, and when combined with public transit unlocks annual savings of $1 trillion. Or, if you’re business minded, you might see that substantial savings as value creation, for oil’s loss is another’s gain, in the form of new mobility service solutions that fill the gap between today’s fossil-fueled cars and tomorrow’s mobility paradigm. (For that matter, consumers too should be salivating. Someone who drives 12,000 miles per year could see his or her annual transportation costs slashed by more than $10,000 for two-car households.)
In addition to the monetary boon, the paradigm shift can reduce U.S. oil consumption by 50 percent (shaving off the full 2 billion barrels associated with our light-duty vehicles), and reduce carbon dioxide emissions by 1 gigaton per year. Cities, businesses, and entrepreneurs would be hard-pressed to find another arena with so much money on the table paired with so much potential societal benefit. And the public, you, and us stand to gain the most from this value creation opportunity.
FORGET CARS—AND TRANSPORTATION—AS YOU KNOW THEM TODAY
The transportation paradigm of the potentially not-too-distant future (e.g., starting in earnest by 2020) will look a world apart from the landscape of today, in which the Ford F150 remains the best-selling consumer vehicle in the U.S. Instead, tomorrow’s transportation system will involve shared, electrified, autonomous, lightweight, serviced-based vehicles. This will of course implicate our beloved American obsession with automobiles, but is not entirely synonymous with cars.
A recent convergence of societal trends and technological advances makes this shift possible in the very near future, and it’s in fact the integration of these trends that holds the most promise for unlocking the greatest potential.
Mobility service and vehicle-sharing businesses are booming thanks to smartphones, big data, and a rise in the sharing economy. The tech-savvy cab company Uber is valued at over $40 billion, and this is just a tiny sliver of the pie available to clever mobility entrepreneurs. Treating mobility as a service (MaaS) increases vehicle utilization (just ask any taxi cab driver how many miles he or she puts on a car with how many passenger trips in a year), as mobility service companies compete to create innovative ways to better utilize vehicle assets. For example, car-sharing services like ZipCar boast 30–40 percent or better asset utilization rates.
Electric powertrains begin to dominate in total cost when vehicles are better utilized. Traditional gas vehicles have very high operating cost due to maintenance, repair, and of course, fuel (there’s a reason Bloomberg has called it “pain at the pump”). On the other hand, though electric vehicles (EVs) currently cost more up front (prices are falling rapidly toward parity with conventional autos), they cost significantly less to operate since their fuel (i.e., electricity) is far cheaper than gas, their powertrains are triple or more efficient (i.e., ~120 MPGe), and they have fewer moving parts (less maintenance and repair). Internal combustion engine vehicles powered by gasoline or diesel (or any combustible fuel, for that matter) do not fit well in a high-utilization world, and thus EVs will dominate the mobility service paradigm.
Autonomous, self-driving vehicles have busted out of the pages of science fiction and are now becoming reality. Google’s self-driving car may be the most famous, having logged almost a million miles on public streets, but it’s hardly the only player in the game. Many other companies from traditional OEMs and automotive incumbents like GM, Volvo, and Nissan to Tesla to Silicon Valley tech giants like Apple and Uber to seemingly unrelated telecom companies such as Nokia are working on autonomous vehicles (AVs). So are teams of university researchers, from Stanford to Berkeley to Michigan (UMTRI) to Carnegie Mellon to Columbia.
Self-driving vehicles are able to attain incredible efficiencies for a variety of reasons. They accelerate and decelerate optimally, can draft and platoon with other AVs, and can reduce weight by removing unnecessary human interface equipment like steering wheels and brake pedals. But the largest opportunity for AVs—especially when paired with optimized mobility as a service businesses—is in a massive reduction of the vehicle fleet.
With some recent exceptions, for the past 35 years or so American automobiles have consistently been getting heavier. Investing in lightweighting and vehicle fitness (improved aerodynamics, decreased rolling resistance, etc.) becomes an easy economic decision when vehicles are properly utilized. Again, service-based vehicles will achieve very high utilization and reducing operating cost will become paramount. Expensive and capital-intensive materials like aluminum and carbon fiber composites pay back very quickly in a high-utilization world. In other words, our vehicles are about to go on a serious diet … without compromising performance or safety.
THE FIVE DEFINING ELEMENTS OF TOMORROW’S TRANSPORTATION SYSTEM
RMI foresees five elements that define tomorrow’s transportation system:
Multimodal transportation—it’s about more than just cars
To unlock cost-effective and convenient mobility in the near and long term, users must experience a level of service equal to or better than what they would experience with a personal vehicle. If mobility options such as walking, biking, riding public transit, ride sharing, and car sharing (think Uber and Lyft 2.0) are seamlessly connected to and interoperable with one another, mobility service providers will deliver the options that best suit user needs and preferences at any given time. Imagine users pulling out their smartphones, indicating their destinations, and having the fastest, most inexpensive, and/or most socially-enriching options made available to them in real time depending on their preferences.
Mobility on Demand (MoD)—from “just in case” to “just in time”
We tend to think of personal vehicles as being available to fulfill any combination of potential needs “just in case”—think of the people who own a high-clearance, 4WD SUV with a third-row seat, even though most of the time they drive it a short distance on paved roads to and from the office, gym, grocery store, school, soccer practice. Meanwhile, regardless of the vehicle choice, it’s usually just sitting there … ready and waiting, just in case. Mobility on Demand (MoD), on the other hand, is a disruptive mobility paradigm in which multimodal mobility is delivered only when and where it is needed: “just in time.” This allows fewer vehicles to do the same job (higher utilization) at lower cost, in turn increasing access to mobility for users from all income levels. This is particularly important to low-income Americans who can spend up to 50 percent of their income on transportation.
Automated mobility—your robot chauffeur awaits
Individual self-driving vehicles are one thing. But the truly revolutionary benefits of AVs come if we consider a bigger picture, a completely automated mobility system. The platforms and business models created by mobility on demand become an order of magnitude more scalable, cost effective, and optimal when the vehicles involved are automated. Columbia University’s Earth Institute found that a city like Ann Arbor, Michigan, could achieve all mobility needs with a fleet of AVs for $0.15 per mile. The University of Texas at Austin found that Austin could meet all of its mobility needs with a fleet of AVs less than one-tenth the size of its existing car fleet.
Purpose-designed vehicles—the right vehicle for the right job
In a sense, we already purpose design vehicles. We have pickup trucks for hauling things, small sedans for commuting, large buses to carry 50 people, and sport utility vehicles for excursions and off-roading. However, consumers rarely use vehicles near their capacity or potential. But in the future, service providers can provide users with the right vehicle for the right job. For commuting, your mobility service provides a comfortable one-seater with WiFI (or one seat in a multi-occupant vehicle ride-shared with other passengers). For your family’s weekend getaway, you get a large AWD SUV. For your home-improvement project, you get a full-sized truck. The implications of vehicle “right-sizing” are a massive reduction in America’s fleet size and a massive improvement in fleet efficiency.
Mobility-friendly cities—urban landscapes should be about people, not cars
Today’s U.S. cities have evolved largely around the personal vehicle. The average city has three non-residential parking spaces for each car and spends a large portion of its budget maintaining roads and other vehicle infrastructure. A city with mobility on demand (MoD) delivered by a connected, automated fleet of purpose-designed vehicles can be redesigned to save money, reduce travel distances, and improve quality of life. Unnecessary parking spaces can be infilled, and unnecessary roads can be converted to pedestrian malls, bike paths, and additional housing and businesses. With less congestion and pollution and more housing and businesses, city centers will be both more livable and more economically viable if they embrace the future of mobility.
A MOBILITY REVOLUTION IS COMING
The world’s largest companies, savviest entrepreneurs, and most forward-thinking cities are working on certain pieces of the puzzle. Tesla, GM, Nissan, VW, and Ford will all have long-range EVs on the market in the next three years. Google, Apple, Uber, Baidu, and some OEMs will have autonomous vehicles on the road within five years. Helsinki, San Francisco, Copenhagen, London, Portland, and many other major world and U.S. cities plan to role out multimodal, mobility on demand services in the next five years, including exclusive zones for such services and/or goals to significantly reduce single-occupant and gasoline-powered vehicles. Already several major U.S. cities are moving aggressively on MoD/MaaS initiatives, with Palo Alto and its Silicon Valley sister cities on the forefront of implementation.
But to unlock the full potential of the coming mobility transformation, exceptionally diverse stakeholders will need to work together—not just across intra-industry siloes, but across industries (automotive, data/IT, software, public works). That’s where we believe RMI—with our whole-systems perspective; legacy of transportation work on oil-free mobility, the Hypercar, and electric vehicle adoption; and convening capability—can foster a holistic approach to the coming transportation transformation. The whole can and will be greater than the sum of the individual parts. Entrepreneurial innovation competing for the $1 trillion prize will result in innovative mobility service solutions that are probably even beyond the limits of what we might imagine today.
This mobility revolution has been a century in the making. Not since the horse and buggy gave way to Ford’s Model T has mobility been in the midst of such a radical change. As with other major societal trends right now—the sharing economy (think AirBnB), accelerating rooftop solar adoption disrupting traditional utility business models—consumers are leading the charge, supported by the disruptive tech companies, service providers, and progressive incumbents that embrace them. The road ahead looks very different from the road behind. The only question now is who will chart the course, who will be along for the ride, and who will be left standing in the dust on the side of the road.
Authors: Jonathan Walker, Greg Rucks, and Jerry Weiland
Source: RMI. Reproduced with permission.