To kick off IPMI 2019, we heard from Larry Burns, the former Vice President of Research and Development for General Motors, on how the parking industry is transforming with the rise of autonomous vehicles, electric vehicles, and “Transportation as a Service” companies. See below for the recap.
A 133 Year Journey
It’s been 133 years since the first automobile hit the consumer market in 1886. Today, there are over 1.2 billion cars on the road worldwide. Mechanically, cars haven’t changed much since invention. However, in the past five years, technology and innovation have made a significant impact on the evolution of these vehicles and the evolution of consumer expectations surrounding them. We’ve seen a rise in autonomous vehicles like the DARPA Urban Challenge and Google’s Waymo, a rise in electric vehicles like Tesla’s Roadster and Model S, and a rise in “Transportation as a Service” companies like Uber and Lyft.
The convergence of these technologies has led to an inevitable shift in the way we’re doing business. We are moving away from an “Age of Automobiles” and moving toward an “Age of Automobility.” In the Age of Automobiles, we sell vehicles, gasoline, insurance, and financing. In the Age of Automobility, we sell miles, trips, experiences, and accessibility. Automobility relies on moving both people and goods, through both exclusive-use and shared-use vehicles, for both long-haul and local trips. This transformational opportunity will be fueled by technology.
Better Transportation Experiences
The Age of Automobility changes our experience from human-driven to autonomous and combustion-powered to electric. Oil-based energy will turn into diverse energy, and we’ll start thinking of the transportation space as less “Vehicle as a Product” and more “Transportation as a Service.” General-purpose vehicles will become tailored vehicles that create compelling experiences for passengers. We will stop thinking about how to optimize for vehicle costs and more about how to optimize for cost per mile.
In the United States, 26% of people live in urban environments, 53% live in suburban environments, and 21% live in rural environments. In the Age of Automobility, we will be able to provide access to all of these populations. Regardless of geographic constraints, a passenger’s experience with transportation will become reliable, affordable, convenient, productive, and personalized. Supporting infrastructure, such as parking, energy, maintenance, and operations, will need to enable the transition for providing greater access to underserved populations.
Profound Societal Impact
Our reliance on cars has led to some serious side effects – vehicle fatalities, oil consumption, traffic congestion, air pollution and climate change, land use, cost, and delays, aging and costly infrastructure, and unequal accessibility. According to Burns, through the Age of Automobility:
- Over 30% of global roadway facilities could be eliminated.
- Oil demand for transportation could be reduced by over 80%.
- People who cannot own or operate a car could have enhanced accessibility.
- Climate change and air pollution impacts of transportation could be mitigated.
- Substantial amounts of land/structures used for parking could be repurposed.
- Roadway throughput could be increased significantly.
A Mature Age of Automobility
As the Age of Automobility matures, nearly all trips will be supplied by transportation services using autonomous electric vehicles. Passengers will subscribe to a service and pay for exclusive use of vehicles either by 1) trip, hour, day, week, month, or year(s), 2) miles, or 3) experiences. The transportation service market will have differentiated segments, and customer experience, service quality, and cost per mile will be the bases of competition. Operational excellence will be essential, and integrated systems will “choreograph” the movement of people and goods across all modes.
Eventually, vehicles will be owned and managed primarily as fleets. Service operators will optimize lifetime fleet utilization and cost. Vehicles will be tailor-designed, electric “ultimate riding machines” that are optimized for total cost per mile. According to Burns, saving $0.01 per mile results is saving $30 billion per year in the United States.
The Age of Automobility will disrupt many industries: transportation, automobile, freight, energy, finance, insurance, retail, healthcare, real estate, and parking.
Who will win and who will lose?
The winners will be consumers, society, autonomous driving system leaders, stakeholders in electric vehicles, strong transportation service brands, excellent transportation service operators, innovative experience designers, proactive long-haul and local truckers, innovative parking suppliers, e-commerce leaders, and proactive governments.
The losers will be automobile manufacturers, suppliers, and dealers who don’t “pivot,” stakeholders in human driving systems, stakeholders in combustion powertrains, people who drive for a living, hourly or salary autoworkers, oil companies, gasoline station operators, car and truck insurance companies, traditional rental car companies, traditional parking suppliers, and brick and mortar retailers.
Implications for Parking
How will parking be impacted by the Age of Automobility?
According to Burns, parking will become a more sophisticated business with a broader portfolio. While industry fundamentals are changing, parking will continue to play an important role as it is key to delivering compelling mobility experiences. The industry will be both dynamic and uncertain with new players – both public and private – and new relationships, new designs and standards, advanced data and analytics, repurposed assets, and complex economics. Parking will play a role for exclusive-use fleets, shared-use fleets, and local delivery fleets. Higher vehicle utilization could lead to significantly less demand for parking. However, higher travel demand will counteract this effect.
In the Age of Automobiles, vehicle drivers park as close to their destination as possible until they want to go elsewhere. In the Age of Automobility, a vehicle parks autonomously at the optimal location for the passenger and waits at a parking location until dispatching for the next passenger. We’ll have to repurpose parking structures, garages, lots, and street side, and we’ll have to rethink houses, apartments and condos, shopping centers, and offices to accommodate for these changes.
While the parking industry is ripe for disruption, the industry still faces uncertainties:
- Who will own and manage parking in the future given its important role in the automobility value chain?
- Where are the best places for future vehicles to wait before they serve their next passengers?
- What services should be supplied at future parking sites?
- How should these sites be designed?
Innovation is still in its infancy from a design, technology, and business perspective. With the changes we’re anticipating, there are clear opportunities for energy, cleaning, maintenance, and package drop-off. As major players in this industry, we have a lot to prove. “This kind of opportunity happens once in a century opportunity,” says Burns. “We’ll need to deeply understand what is possible to make it happen.”