Is the Best Business Model for Autonomous Vehicles One-To-One or One-To-Many?

One of the more important trends at the 2016 CES show came from the auto industry. Although the Detroit and LA Auto Shows took place the following week, most of the big auto makers chose CES to show off how they planned to make their cars more connected and smarter. VW and KIA even used it to announce their autonomous car projects.

When we think about autonomous cars, we mostly view them with a one-to-one model in mind. Today, most of us own or lease a car as a personal form of transportation. Although some just buy a car as a means of transportation, most buy a car for its design, drive, feel, and performance. In these cases, the purchase of a vehicle is very personal. But, regardless of the reason for buying or leasing a vehicle, everyone uses them to get from point A to point B.

However, I would like to suggest we look at another angle and potential impact of autonomous vehicles for the near future and try and see them in a different light. Although there is still a lot of technological work to be done to create autonomous cars as well as sorting through many state and federal regulations that will govern how these cars can operate on our roadways, I see another model potentially evolving first that might make more sense for getting these vehicles into the market sooner rather than later and in use by the masses quickly.

I believe a major business model for using driverless cars could be tied more to a fleet of vehicles that will be handled or managed by the likes of someone like Uber, Lyft, Hertz, Avis, or even the auto manufacturers themselves. I think this is why Ford and Google are moving ahead with a program to create autonomous vehicles with an eye on them delivering these vehicles to fleet managers who would actually become dispatchers of these vehicles for people around the world.

Interestingly Uber plans to buy 500,000 of them and, even if they are expensive at first, they will not have to be paying driver salaries and can amortize their costs faster as they become dispatchers for these vehicles. This idea is also at the heart of heart of the Ford/Lyft investment. They too would become more of a fleet dispatcher in this model.

While I don’t believe most of us will give up our own personal cars anytime soon, the role of our personal vehicles may change. For some, it may make more sense to just call an autonomous vehicle to pick them up and drive them to their destination than it is to keep incurring the costs to drive and maintain a vehicle. This would be especially interesting in densely populated areas where parking is difficult, such as in New York and San Francisco. For many others, they might actually give up their cars and just choose to use these types of services entirely. And for seniors who, as they age, become less enamored with driving and navigation or for health reasons cannot drive anymore, the ability to call an autonomous car to pick them up and deliver them to a doctor’s appointment or take them shopping will be a big deal.

Another way to think of this is how autonomous driving vehicles can deliver a form of mass transit without having to build an expensive infrastructure. Most suburban areas have homes spread out and a walk to a store or medical clinic is very far away. Today taxis and busses fill some of these needs but a point-to-point solution delivered by autonomous vehicles might be a better solution for many.

I am beginning to believe that someone like Uber, Lyft, Hertz, or Avis could be the gateway for getting these cars to the market faster. Of course, there will be many individual users who will buy them but they will be expensive — those who could afford them may have to be high wage earners. Yet, people of all walks of life would want to have access to them, so a dual market of one-to-many and one-to-one could develop quickly with most people using a fleet service well before they could afford to buy them for themselves.

While it is inevitable that someday everyone could own an autonomous car, I suspect the business model around a shared, one-to-many approach for getting these types of vehicles into the market sooner rather that later is the way the majority of people will use them once they get legal clearance. This way, the masses can have the virtue and convenience of an autonomous car even if they can’t own one themselves.

Published by

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

5 thoughts on “Is the Best Business Model for Autonomous Vehicles One-To-One or One-To-Many?”

  1. I’m incredibly curious to see who does the actual purchasing of the vehicles. Does your city buy them as a way to offset the revenue lost from traffic fines? Does your apartment building buy them and include access to the cars as part of your rent? Does your job give you access to them as a perk? There are so many angles.

    Personally, I love driving, but I’ll gladly give my driving myself if it means I get to spend an extra 60 to 90 minutes each day doing something other than avoiding the teenagers on the road who text and drive at the same time.

    1. Too early to tell although Uber says they will buy and own the 500K they purchase and it appears that Ford will do the same with the Lyft partnership. But I suspect this will evolve once they are available for some type of fleet purchasing….

  2. To remove the emotional charge that is always there when talking about cars, just look at another market: doing laundry.

    There are several approaches:
    1) use your own washer/dryer
    2) take your stuff to the laundromat
    3) take your stuff to the cleaners

    All three approaches are currently used. Approach 3 works if you are willing to pay (ie. equivalent of a taxi). Approach 2 makes sense if you life in a small apartment and don’t have much laundry (ie. equivalent to renting a car). Approach 1 is best if you have space and loads of washing (ie. living in the suburbs with kids).

    For 2 and 3 it makes perfect sense to share, as currently happens for laundry. In situation 1 sharing makes less sense: a) the higher purchase price is a hurdle, b) immediate availability carries a premium, c) time savings are negligible in most case where the drive is short and parking plentiful.

  3. great thing is, nobody has to choose. Both suppliers and users can go for a full sale mode, a full as-a-service mode, or something in-between (buy but rent out specific time slots; rent but ensure availability for specific time slots; go pure on-demand with different service levels/wait times; be able to swap out for a larger model for holidays…).
    With the US’s love for unfathomable usage plans (see: mobile), I’m sure there will be lots of fun to be had trying to decipher usage contracts.

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