future of auto industry
Photo: http://gas2.org

By Dr. David Rosen

As the story goes, Western Union, founded in 1851, insisted it was a telegraph company for 150 years. It could not adapt to a world where no one cared about telegrams any more than they cared about a horse trough in the town square. It could not use its core principle of providing communication to pivot, until 2007. How many opportunities had it passed up? It had rejected offers to become a phone company, a television company, and a computer company.

Pivoting from the core is the way that companies reinvent themselves, repurposing their assets. IBM did it. It is now a big-data-crunching company.

So will the US auto industry successfully confront the change, pivot and survive? It doesn’t want to be Netflix-ed out of existence the way Blockbuster was. Regionally, Nissan and General Motors and all of us have much at stake in this.

Automakers—or “mobility companies,” as they are starting to think of themselves—have some common fears of disruption. Innovations like long-range, quick-filling batteries promise to make the internal combustion engine, as well as the contemporary horse trough, the gas station, obsolete.

To avoid extinction, auto companies are investing in the new technologies. In fact, they are helping invent them. So, of course, are other companies like Google and Apple. If you can’t beat them, join them? No. You can’t beat them unless you compete with them.

Bob Murphy, founder and president of Nashville’s RPM Transportation Consultants, had an epiphany about transportation when he was a civil engineering student at the University of Tennessee. He realized that transportation wasn’t about vehicles. It was about people, about getting them where they needed to go.

Good pivot.

But automobiles are more complex, because the car has become an extension of who we are.

What happens to the driver in the age of driverless vehicles?

Possibly many of us will still own a car, even if we use it to demonstrate the fact that we CAN own one, like the affluent Chinese who park multiple luxury vehicles in front of their houses. But it is also likely that drivers will be Starbucked from their habits, like the coffee drinkers who traded Mister Coffee for Madame Barista. As at Starbucks, the experience will become the encompassing focus. How will all those buttons that owning a car pushed so pleasurably be pushed by the car’s autonomy?

It is difficult right now to imagine a world in which every day we “buy” the magic carpet of our dreams and have it take us wherever we wish. Uber is already herding us in that direction. So the day will come, and sooner than we expect.

And here is the scary part about living in a sci-fi world. Just as Google, Facebook and Amazon know all our personal preferences and habits and plague us by constant reminders about them, so those cars will run on big data and know each of us as well. Are we ready to be friends with our cars? Maybe, as in the movie Her, we will feel fortunate to have anything in the universe (God excepted) that understands and cares about us so thoroughly.

Will the auto industry survive as it sells decreasing number of cars and becomes real mobility companies, owning fleets of vehicles and having us as subscribers, rather than drivers? And will there be something like cable companies that cluster mobility services and let us click among them? I think so.

And as the auto industry reinvents itself, the way IBM has, there will be other impacts. Autonomous, electric vehicles will not only reduce the number of cars but also make parking go away. Gas stations will disappear for a more dispersed model of fueling. I bet that every garage that doesn’t become a bonus room will be rented as a slumber pod and recharge station for roaming vehicles. And how will those changes in the way we have organized urban space change how we think about a city? Will cities become denser, like Hong Kong, or spread like Detroit?

Probably most important, how will this brave new world change those proud people formerly known as drivers?

If you have thoughts, telegraph them to me.

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