How often do you use your car? Possibly quite a lot if you commute daily, travel extensively for work, or simply enjoy driving. But many of us hardly use our vehicles at all. Much of the time, the car just sits in the garage, by the side of the road, or in a parking lot. Average vehicle utilisation globally is reckoned to be just 5 per cent, or little more than an hour a day. Most people reasonably see the car as an essential feature of modern life. Yet the cost of buying, maintaining and keeping a vehicle on the road is also one of the most inefficient uses of money and physical resources known to man.
Enter the tech giants of Silicon Valley. The global automotive industry, they reckon, is ripe for disruption, and with balance sheets flush with cash, they are setting about it with ruthless determination. It was swiftly denied, but the report last month that Apple has held talks with Formula One’s McLaren on a strategic stake, or even a potential takeover, is symptomatic of an industry on the cusp of transformational change, with far-reaching implications for jobs, investment, energy consumption and the way we live and travel. It also serves as a powerful antidote to those who still cling pessimistically to a Malthusian view of history, believing our ever-growing appetite for energy and other natural resources to be unsustainable and a catastrophe in the making.
In fact, efficiency gains in transport now seem likely to far exceed growth in demand, even taking account of the explosive expansion of car use in the developing world. Sometimes a healthy degree of scepticism is required when it comes to technology, and we should obviously be careful not to get too swept up in Utopian Silicon Valley thinking. Yet what used to belong to the world of science fiction is fast becoming a reality.
Key to the changes sweeping the automotive industry is the advent of electrified, and more particularly autonomous, or driverless, vehicles. Forecasters at Goldman Sachs believe that electrified vehicles, including hybrids and fuel-cell vehicles, will account for a quarter of global car sales within 10 years. This change is in itself far reaching enough. Many factories will have to be completely re-tooled, rendering billions of already sunk capital substantially obsolete and wreaking havoc in existing supply chains.
Further questions are raised about future demand for hydrocarbons. The oil industry, too, may in time be rendered ex-growth by technology. Yet it is not so much the electric car as the driverless one that provides the holy grail of automotive development and gives the tech giants their strategic opening.
Mass car production is traditionally characterised by virtually insurmountable barriers to entry. Autonomous vehicles are no less complex in their design and engineering, but they require a whole new layer of technology that established car manufacturers are quite unused to.
Driverless cars also promise to transform the market in ways that the incumbents will find bruising and difficult. Once driverless, the car can theoretically be kept in operation 24 hours a day, rather in the manner of a taxi, only without the human driver. Cars will thus become quite widely shared, with many choosing not to own one at all.
Worries about the potential for reputational damage, as well as the administrative hassle of having to deal with thousands of drivers, have to date kept Google away from the taxi-hailing market, left to the likes of rival tech start-ups such as Uber. But once cars are driverless, fleet ownership becomes a much more attractive market opportunity. Autonomous vehicles are also seen as “mobile living spaces”, ripe for Big Data harvesting of the type Google specialises in.
Regulators permitting, Google hopes to have a fully autonomous vehicle ready for sale by 2020. Sensing its vulnerability, Uber is also pushing hard, with trials already under way in Pittsburgh of its own driverless technology. Uber has an ambitious goal: to own the road as no other. Apple’s plans remain shrouded in secrecy, but the market appears wide open to the iPhone giant’s unique combination of design and technology.
Let the battle for driverless supremacy begin.
New industries have a nasty habit of laying waste to old ones. Where are the jobs going to come from for the likes of Uber’s displaced drivers? At this stage, it is not entirely clear. Suffice it to say that the destruction of old jobs invariably creates new ones, in this case in millimetre-wave radar, cameras, laser radar, ultrasonics and logistics.
Just remember: once upon a time, the overwhelming majority of people worked on the land. So, please, let’s not hear anything more of this nonsense about the age of economic progress and improved living standards being over. In driverless cars and much else besides, we can already see the contours of spectacular future advancement. And we may even be on the verge of another giant leap forward.
–The Telegraph Group Limited, London 2016
