Cars are the most under-utilised asset and the solution is already in the works

There are currently 270 million cars in circulation within the US, and 35 million in the UK. Put together, and taking an average car to be £15,000, we are looking at an asset bank of £4.5 trillion pounds, or around the size of the Federal Reserve’s current asset holdings.

Yet it is quite possibly the most under-utilised asset in the entire world. A car has an estimated utility of 5%, given they spend 95% of their time parked.

Currently the domestic car market is in true transition, with companies like Uber and Tesla turning consumer behavioural thought on its head. We are seeing a distinguished movement from a must-have-a-car mindset to a precaution and consideration over the cost:utility ratio, the environmental impact and a shared transportation option. The transformation of the automobility sector is now growing into an entirely new category; MaaS [Mobility-as-a-Service].

According to Fujitsu’s future projections, a shared car environment will have a utilisation rate of above 50%. So let’s take stock and realise the current situation at hand.

Tesla

Elon Musk, the 21st century’s answer to Thomas Eddison, makes bold claims; So bold that many in Wall St. believe him to have made a career solely out of making bold claims and not delivering on them. However, contained within the white factory walls are the claims of a ‘million-mile battery’, which would see a car last for 74 years and would put an end to the fast fashion, disposable nature of the current automobile market. If true, and filed patents might deem it so, we could be on the verge of a true end to the endless supply lines and wasted utility of the family 4x4, or the city-dwellers two-door hatchback.

The future for batteries cannot exist solely within the cars which use them for much longer, given the sheer weight and size of batteries which will have to become fruition to rival the ‘normal’ car’s range, which would leave the future electric-driven automobiles, ships and planes as humungous batteries on wheels, water and clouds. Instead it seems Tesla’s theory revolves around a centralised ‘hub’ battery which boast decades of life span, which then dock said automobile through electrifyingly quick recharging.

The data above also shows that people are not just buying into Tesla’s master plan but buying into the physical capital too. As Tesla’s sales skyrocket, other manufacturers across the US and beyond are being halted. The evidence is suggesting that not only is the industry transitioning, but consumer behaviour and attitudes are following suit.

Uber

Despite all of the latest trends and Tesla’s increasing market share, one simple behavioural change which is set to disrupt the entire way we think of cars is upon us: Ownership.

Uber, it seems, has figured out not just a reimagined taxi industry, but is in the process of solving transport utilisation. In years gone by, buying a car meant speed, freedom and convenience. Increasingly, consumers believe it to now be a wasted asset sitting in idle space.

What Uber is doing, distant and also coupled with their exploits in the taxi industry, is converting consumers towards a completely anonymous car-sharing system, whereby the days of owning an asset to sit on the drive seems a waste, compared to the ease and simplicity of using a car as merely a simple A to B utility. It seems an easy prospect to understand, and perhaps this is the beauty of the model, but the more we become accustomed to instant transportation to anywhere we choose at the touch of a screen, the more omnipresent the uselessness of a physically owned car becomes.

A future roadmap [pun intended]

So, what does this mean for the car industry in the next 5 years and a prediction of an implosion of the car industry as we know it?

For city dwellers, it seems a simple enough proposition to both revolutionise and scale. The thought of having a car for movements around cities and their mega-city siblings now seems increasingly absurd given the ride sharing and cost-effectivness of systems such as Uber, the existing framework of public transport (Becoming an equally interesting modernising trend) and the possibilities of an all-electric car rental scheme which are popping up across the streets. Connected mobility is a hugely beneficial trend as cars become less a material possession and more a system of transportation.

The dawning of electrifying the infrastructure under our feet and the robotic minds of new age cars could mean vehicle automation is not far around the corner, and which is prompting some academics to believe we may each have bought our last car. Although a possibly absurd leap, with many particularly in Europe and the UK still comfortable in the status quo of convention, this new age of self-governing, autonomous automation might be the solution everyone needed.

Picture this; As you step out of your home ready for a solid Tuesday’s work [post-Covid-19], you press a call button on your now bezel-less, digital handset, which summons a taxi from down the street from the localvehicle docking station. It arrives and you step into an open chamber where there is a desk, snacks and facilities to make breakfast. As you prepare your porridge, a call comes through the speaker system with your first meeting. You sit down on the sofa, porridge in hand as you speak into the high definition camera towards your meeting room and the electronically scanned in personal, all in the self-same cabins and taxis as you. You have lost no time in the day to commute, you enjoy pleasant working conditions and you can step out straight into your office having expelled no emissions. Your taxi docks at the nearest station and charges on the grid mega battery in 5 minutes or less.

This is not nearly a ‘back to the future’ like prediction, but something very close to becoming reality.

For countryside dwellers, who have even less appetite for change, the system of autonomous taxis and digitally scanned in meetings is distant from the reality of most lives led. However the future is as bright as the city, as large family 4x4s and vans for transporting kit around becomes a rent-by-hour planned activity, with only the necessary trips needed for the rented ‘van’ accommodating this. The cars become the centre of the village system with a docking station and central battery hub situated in the village green and are called on command. For daily run arounds, small two-door electric vehicles are part of a neighbours syndicate to increase utilisation from the 5% we currently enjoy to a 50% utility of a shared system.

Truthfully, the possibilities of the automation of the vehicle is endless, and with forward-thinking engineers coupled with continual investment rounds and shareholder backing, companies like Uber and Tesla hold the key to this future, whether you like it or not.