Why I’m Optimistic About the Future of Cars

I spent last week at CES and a couple of days this week at the North American International Auto Show in Detroit. In both cases, I spent a lot of time listening and talking to carmakers and others in the industry. What I’ve come away with from these two weeks is a lot of optimism about the future of cars for several different reasons.

Both the industry and outsiders are pushing change

The biggest reason I’m positive about the future is both the legacy industry players and newcomers and outsiders are pushing for change. There’s nothing more frustrating than seeing an industry where lots of good ideas are coming from outside and they’re all being squashed by the incumbents – we’ve seen this happen in the music industry, the PC industry, and we’re still seeing it in the TV industry. Though there has been some resistance in the past to the big shifts facing the automotive industry, almost all the major carmakers are accepting of the new realities and, in many cases, actively embracing the three big shifts: electrification, autonomous driving, and new ownership models.

The carmakers are actually engaging in their own efforts around autonomous driving and car and ride sharing. In the vast majority of cases, they’re also embracing electrification as one of several powertrain technologies. None of this is to say these companies will end up owning all of this themselves – at the very least, the disrupters from outside the industry and newcomers like Tesla have pushed the incumbents to innovate faster and they may well end up owning some of the end result too. But I heard from company after company about their investments and experiments in a variety of car and ride sharing models, even in urban mobility projects which don’t involve cars at all, such as bike and bus programs.

There is realism about challenges, at least behind closed doors

At both the shows I’ve attended in the last two weeks, there have been lots of high profile proclamations about the glorious future we’re all headed to, many of them with specific timelines attached. Looking at the headlines that result from these statements, it’s easy to despair at a lack of realism from many of the companies involved. Claims about fully autonomous vehicles rolling off production lines as soon as 2021 seem absurd on the face of them but, when you dig beneath the surface and talk to the actual engineers behind the technologies, you get a sense of nuance that’s often missing from those public proclamations.

What I found this week in particular was the carmakers are incredibly realistic about the very real challenges involved in bringing autonomous vehicles to market. There is definitely a headline-grabbing push to establish leadership in electrification and autonomous driving but those actually working on the technologies will tell you about all the complexities and challenges that exist. The real plans of the major carmakers around these topics are far more realistic about the actual timelines, which are much further out than the headlines would lead you to believe, at least for full-time Level 5 autonomous driving without geographic limits. When it comes to electrification, there are also far more sanguine views about the effect of current low gas prices on demand for EVs, the need for more charging infrastructure, and the limits of current battery technology. That realism is a good thing, because it means that, even as these companies embrace change, they’re going to do it in a way that prioritizes safety and the customer experience.

The future looks exciting

At the end of the day, I’m most optimistic because the future of cars looks generally very positive. Tesla has already shown us both the enormous potential for high-performance electric cars and for limited autonomous driving. I used Uber and Lyft extensively over the last two weeks and those services, and many others around the world, demonstrate the potential for far lower car ownership and more flexible mobility models. What I saw at NAIAS this week also reassured me we’re going to get great technology from the incumbent carmakers when it comes to all three of the major shifts, including increasingly high-performance electric and hybrid vehicles and assisted driving technology that helps pave the way for future autonomous driving technologies. We, and especially our children, are going to be able to drive (or be driven by) cars which are much safer, more comfortable, more connected, and better for the environment than the ones we drive today. The competition between the legacy industry and a whole variety of new players is pushing both sides to move faster in delivering that reality. That’s going to be good for all of us.

Published by

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

78 thoughts on “Why I’m Optimistic About the Future of Cars”

  1. We, and especially our children, are going to be able to drive (or be driven by) cars which are much safer, more comfortable, more connected, and better for the environment than the ones we drive today.

    The funny thing is that the exact same applies to what my parents would have said 40 years ago, comparing 1970s to today (except the connected part maybe).

    1. And it has indeed come true relative to 40 years ago.
      This is going to be a “continuous improvement” kind of thing.

    2. I think there’s a huge difference. 70s’ cars are still roadworthy today, and though not as cleansafe/comfortable/… aren’t utterly outclassed (and probably more reliable ^^). I’m not sure we’ll be able to, or want to, use today’s cars in 2060: will human drivers still be allowed ? combustion engines ? will there sill be gas stations ?

      1. I understand what you mean. I used to play a lot with old cameras 20 years ago, but since photography switched to Digital, I have not looked back. There are some innovations that change things so dramatically.

        However, the point that I want to make is that we have to realise how much better cars are today, compared to the 1970s. They are significantly safer (with good seatbelts, airbags and crashable bodies), they are much more reliable, much better with emissions and gasoline consumption. Therefore, if you really think that the next 30-40 years are going to revolutionise transport, more than the previous 40 years, you have to more imaginative than just safety and environment.

        1. Not only that, but the subjective quality of “experience” has a diminished delta between common and premium cars. My BMW lease is getting more difficult to justify. Not there yet, but a huge improvement in cars that cost 50% less.

          1. Excellent observation. I traded in a $55K BMW for a $33K Chevy Volt and all the features BMW charged extra for were included and better implemented. Stuff like keyless ignition, keyless entry, fold down back seat, etc.

        2. Just to add clarity, my point is that has been superb sustaining innovation in cars for the last 40 years. Electric vehicles and self driving cars even are probably just going to extend this. In particular, I do not expect tech to suddenly solve all issue that we have with current cars. You need to be more imaginative.

          To disrupt transport, I think we need to be more imaginative. The first question is whether or not transportation itself will be disrupted. Whether we really need to physically transport ourselves tens of kilometres to the workspace everyday. If so and if the need for transport itself is greatly diminished, this itself reduces the need to own a car. It changes the economics of public transport. We have to ask why we need to show up at work everyday, and think of how technology might help us accomplish this need without transportation.

          This is only one example, and if you widen your scope, there are many more points that should be discussed. I just find it totally unimaginative to focus on how self-driving cars could transform our lives, when neither cars nor even transport itself is the “job” that we ultimately need to get done.

          1. Adding even another example on how broadly we need to think if we want to discuss innovations in a 40 year span, remember that 40 years ago, we barely had fax machines. I remember seeing telex machines when I was small. We had secretaries to type our letters, which would be put in an envelope and sent out.

            Maybe a visionary at that time could have imagined that we would have mobile phones within the next 40 years. However, would they have predicted that we would actually almost never use voice on these devices, but instead send photos and text most of the time? Likewise, do we really need self-driving cars, or do we just need a way to send a digital representation of ourselves?

            This is what it means to imagine what the lives of our children may turn out to be.

          2. Information is more insubstantial, and less valuable, than people and goods, and thus, I believe, information-moving lends itself to more dramatic progress than physical-stuff-moving. That probably puts a hard ceiling on how much we can extrapolate / analogize.

          3. That is one way of thinking about innovation, and I do not totally disagree with your view. However, I think that the interplay between information-moving and physical-moving is much stronger and more significant than you imagine.

            For example, email and videoconferencing systems allow us to communicate reasonably well without being in the same room, and without having to move physical envelopes. For white-collar workers, the job is not to produce anything physical, but still the reason why they often have to go to the office is to coordinate the exchange of information between those who do.

            Furthermore, logistics is actually a very IT intense operation with information coordinating and managing the procurement, storage, and transport of goods. I would even argue that the real enabler of Amazon scale e-commerce is not the customer-facing websites, but actually how information technology has improved warehouse management, and also how IT has optimised the door-to-door delivery process.

            Therefore, although information technology innovation may precede physical-moving, I expect innovations in the latter to follow quickly and that there will not be a hard ceiling other than the speed of sound vs speed of light perhaps.

          4. I think the business model and ecosystem around cars will evolve more than the object itself. Not that the object won’t evolve, but cars driving themselves and not crashing will probably have a bigger… impact than butt coolers (since we already got butt warmers, that’s the next step right ? from heating to AC ?).
            My main question is drones. I’m not sure what percentage of trips is “last 10 miles”-ish. Things seem to be getting able to fly themselves about as fast as cars are getting able to drive themselves, and 10 miles seems to be a plausible range for drones. WIll stuff, then people, start to move out of cars into drones ?
            Or a combination, with delivery trucks harboring a fleet of drones for the last few miles/meters ?

            Side note: I read somewhere that commute time has been fairly constant over centuries. The faster we go, the farther we reach, whether on foot, horse, bicycle, car, train…

          5. I think we must make sure that we don’t confuse drones as a replacement for cars. Drones are potential replacements for delivery trucks, and this has the effect of reducing our need to travel to the local supermarket or shopping mall. Drones do not replace cars, but instead partially eliminate the need to physically transport ourselves.

            Second, drones are very likely to face serious regulatory issues in places where the population density is high. At the very least, I think it is overly optimistic to expect drones to be a universal solution; they will work in some places, but not where lots of people live.

            Third, drones do not necessarily solve the last-mile problem at all. I’m not sure how door-to-door deliveries work in other parts of the world, but in Japan, the fact that Amazon parcels do not fit in regular post boxes (and that post boxes are not secure and are unsuitable for pricy purchases) is a serious issue that affects the efficiency of delivery. That is, if their is no-one home and able to accept the delivery, the driver will have to take the parcel back and come back at a later time. In fact, it is totally possible that a post box innovation will be more meaningful than drones in the city context. In Japan, we do have IoT postboxes in some apartments, and also PO-box like systems in convenience stores to mitigate this issue but it is hardly enough.

            My point here is that although there is significant room for innovation in deliveries, it is very possible that drones will only make a peripheral contribution. The major issues are not necessarily in the actual physical transport, but maybe rather in coordinating timing. Keep in mind that email is more popular than voice, not because it is faster and cheaper, but because it is asynchronous. We currently do not have sufficient asynchronous delivery options when it comes to parcels that may contain valuable items, etc.

          6. The situation may be a bit more fluid than that.

            1- The French saying is “white hat and hat: white”, ie we’re seeing the same thing but labeling it differently. If drones diminish the need for car trips, in a way they’re competing with cars. Competition #1 is always “no-buy”.
            2 & 3- Indeed, drones present new safety issues and will need regulation. The hand-off issue may not be that untractable though: for individual homes, the mailman (et al) already just drop off most stuff even in absentia; for shared buildings, there often is some kind of concierge/superintendent; or the mailboxes could move from the ground floor to the rooftop, also solving the “collision” issue. I’m sure it doesn’t cover 100% of the cases, but probably the vast majority.
            4- I’d add a 4. The hardest thing about flying is the skill it requires (and the landing space ^^). Even today, small planes are cheaper than luxury cars (to buy, if not to maintain). Once you take the skills issue away via autopilot and the maintenance issue away via uberization, you’re down to device cost + energy cost vs benefits (mostly: speed). It’s not sure to happen, and is certainly a long way off, but we might get some kind of personal flying backpack at some point ;-p

            The asynchronicity isn’t a huge issue. unsecured drop-off, concierge/super, or coded locker – there’ll be an app for that.

          7. Assuming that the asynchronous delivery problem is solved and that you only have to visit a home one to deliver a parcel, one can make the following argument.

            If you deliver by drone via air, then you are limited to relatively light cargo. You will also generally target only one drop-off destination or one parcel per flight. This means that a) you will need a truck as a backup anyway for large items, b) more deliveries will not reduce costs because the ratio of necessary drones per delivery is constant.

            On the other hand, if you use trucks, a) you can deliver both heavy and light items in the same round, b) if the number of parcels to deliver increases, then cost per parcel decreases because you can deliver more per round.

            I don’t mean to say that trucks are better than drones or vice versa. My point is that tech is not always the best solution (it can sometimes be the worse), and yes an app for asynchronous delivery might actually be more important (we currently have some, but they are not yet good enough).

          8. The issue is probably not so much truck vs drone (a combination of both will surely prevail, I’m not up to debating the ratio yet ^^), but manned vs unmanned, and drones are much better at unmanned because they solve the last furlong issue.

          9. So does this you guys are optimistic, even if for different reasons from each other or the author?


          10. ;-p

            I’m not quite sure what “optimistic” means in a business setting, where there are by definition winners and losers. Was there cause to be optimistic about smartphones ? What are Palm, Nokia, … thinking about that optimism now ?

            I’m optimistic consultants will get some good business about the ITization of cars (devices, ecosystems, marketing…). Beyond that… I’m not even utterly sure that car+transport industries revenue as a whole will increase, only that it will probably be redistributed.

          11. The real disruption in the realm of parcel delivery will come when you get a delivery company that operates from noon to 8pm, that checks with you via SMS before it puts the parcel on the truck for delivery to determine what day and time will be convenient for them to attempt delivery, and then delivers the item at that hour. If you want them to deliver outside of their normal evening schedule, they charge a convenience fee. Don’t hold your breath for any of the incumbents to come up with this scheme.

          12. Parcel delivery when nobody is at home is a huge problem elsewhere as well. Here in Toronto I’ve started seeing private parcel lockboxes at grocery stores and other high traffic areas, where you arrange for your purchase to be dropped off and then unlock the locker containing your item with your smartphone app. Which doesn’t solve the fundamental problem, since the individual lockers are big enough for, say, a computer, but not for a big TV or a chair.

  2. I’m wondering about 2 things
    1- Wither Uber ? They’re losing money hand over fist (and it’s not really capacity-building à la Amazon)… It seems their play is to try and hold on until all competitors are dead and they can extract rent, and/or until they can replace the expensive meat behind the wheel with an AI. If others are getting ready to enter the market, Uber will just have… spent a few tens of billions to get a worthless headstart ?
    2- “Optimistic” for whom ? for “progress” in general (I kind dreamt about flying cars, but well…) ? for users (car use will probably become cheaper and available to previously-disqualified users ie kids, the handicapped, the very old… ) ? for OEMs (will the car market expand in volume ? in revenue ? do they have a leg up for what’s next or will they be Wintel’d/Androided ?), for non-users (will we get less congestion, pollution, accidents ?), for … ?
    I think insurance companies, repair shops, car park operators, and the oil industry are set to lose in any scenario ?

  3. Optimistic for 20-ish years.
    And, then, not so much.
    In 40-ish years, consumers will not buy/lease/own cars. They will subscribe to a transportation service.
    This means that car manufacturers will be selling vehicles to large organizations.
    This means the complete death of the car repair/maintenance industry (except for large fleet operations).
    Electric means the death of fueling stations.
    Parking lots will shrink.
    Garages will not be used for car storage. Unless, of course, you rent your garage to a transportation service company.
    Mass transit systems in most cities will collapse.

  4. “What I saw at NAIAS this week also reassured me we’re going to get great technology from the incumbent carmakers when it comes to all three of the major shifts, including increasingly high-performance electric and hybrid vehicles and assisted driving technology that helps pave the way for future autonomous driving technologies.”

    What impact does this have on Apple’s automotive ambitions and Project Titan? Sounds like they have their work cut out for them.

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