We’ll give you a hint: they’re driverless. With the autonomous revolution already underway, we’re looking at how self-driving vehicles will change the fundamentals of the entire transportation industry. When it comes to the future of fleets, we’re revving up for both the challenges and the benefits that will come from automation.
The New Normal
Ever since the turn of the 21st century, we’ve been bracing ourselves for change when it comes to our experience with cars – an experience that’s been, for the most part, mechanically consistent since the first automobile hit the market. In the past ten years, we’ve seen significant disruption in the transportation industry with the rise of new mobility services that are challenging the way we think about getting from place to place. Let’s look at how our experience with cars is shifting in regard to two major axes of change: from exclusive-use to shared-use and from driver-driven to autonomous.
- Exclusive-use, driver-driven. Currently, 88% of Americans own a car. This is the second-highest percentage in the world following Italy. Cars have become such a significant part of our economy that people are actually used to owning them despite the financial burdens that come from car ownership, including insurance, parking, maintenance, and repair costs. When we say “exclusive-use,” we mean these owners use their cars for their own needs – whether that be for their daily commute to work, their next grocery store run, or their annual family road trip. And in all of these instances, the owner is also the driver operating the vehicle. The owner drives, parks, and maintains the vehicle entirely on his own watch and dime. However, with today’s generation prioritizing affordability, convenience, and instant access, consumer sentiment is changing around whether or not car ownership is actually worth it.
- Shared-use, driver-driven. We’ve seen shared-use models come to life through ride-hailing services like Uber and Lyft and car-sharing services like car2go and Turo. In both cases, there’s still a driver operating the vehicle, but the use of the vehicle is shared rather than exclusive. With Uber and Lyft, car owners operate as drivers for passengers looking for rides on-demand. By allowing their personal cars to be the means by which they can offer the service, these drivers are allowing their vehicles to become part of a shared-use network. With car2go, customers can grab any nearby car from the company’s fleet of available vehicles for on-the-go rental. With Turo, independent car owners can actually list their vehicles for other people to rent. These car owners make their vehicles accessible to a larger, shared network, but rather than acting as the driver, they’re letting the customer take the wheel.
- Exclusive-use, autonomous. Here’s your privately-owned, exclusive-use autonomous car conveniently parked in your driveway. The difference between this car and the car in your driveway right now? You’re not the driver anymore – you’re the passenger. While this may seem like the dream, we need to face a reality. Although today’s experimental vehicles are modified versions of ordinary cars, the autonomous vehicles of the future won’t need steering wheels or pedals. These vehicles will come in all shapes and sizes, and the most efficient design may prove to be pods capable of carrying eight people. Rather than work everywhere, these pods will initially operate within well-mapped and geographically limited urban areas. To that point – will the autonomous vehicles of the future really ever be exclusive-use? We’re not sure, but if anyone can make it happen, we’re looking at Tesla.
- Shared-use, autonomous. For a combination of technological and economic reasons, the first self-driving vehicle you ride in will be shared, not owned. When shared-use vehicles become fully autonomous, transportation-as-a-service will be in full force. Look at Google’s Waymo, “The World’s Most Experienced Driver.” A self-driving ride-hailing service. While the service is currently only available in Phoenix, Google has big plans for expansion into more cities. Right now, we’re still in the testing phase, but car ownership as we know it will soon completely pivot into a shared-use, autonomous network involving big players. Some of the 52 different companies that have been approved by the California Department of Motor Vehicles to test autonomous vehicles on the road include Apple, Waymo, Tesla, Ford, Honda, BMW, Nissan, Intel, and Uber. This is the future autonomous fleet. This is the new normal.
The Autonomous Fleet
Fleets are groups of vehicles owned or leased by a business, government agency, or other organization. When we think about today’s fleets, we think about service companies, sales representatives, retail deliveries, and municipal employees. These fleet drivers navigate busy cities amongst the hustle and bustle of people, cars, and traffic as they weave between multiple appointment destinations a day, having to find and pay for city parking at each stop. However, with autonomous technology on the rise, we’re thinking about how today’s fleets will be impacted. What happens when we eliminate the need for the driver? As cars did in the 20th century, autonomous fleets will redefine retail and reshape cities, as well as introduce a convenient new form of shared-use mobility to consumers.
Acquisition. Who will own the autonomous fleets of the future? Just as we’ve seen Uber and Lyft take over every major city’s ride-hailing market, we expect private operators to enter the autonomous fleet space aggressively to claim their stake. There is no doubt that the cost of acquiring a fleet of autonomous vehicles will be much higher than that of traditional vehicles. Autonomous vehicles require a significant amount of computing ability and sensing equipment, making the upfront investment a hurdle for fleet operators to consider. While autonomous fleets will likely be owned privately by big technology players like those mentioned earlier (i.e. Apple, Waymo, Tesla, etc.), they will be required to cooperate with municipalities, the public sector, and each other.
Operation. When we eliminate the driver from the equation, how will fleets operations be managed? While the initial cost of converting a fleet to autonomous technology will be high, the costs of operating that fleet will be lower. Autonomous fleets will be tailor-designed, electric, self-parking, and optimized for total cost per mile. If all (or a percentage) of the cars on the road are autonomous and operated by different private companies, there will need to be a centralized database that knows where all of these cars are at a given point in time to ensure efficiency for cities and safety for passengers. Aggregated data will play a major role here. Whether these vehicles are in motion or parked and waiting to be dispatched for their next passenger, they will need to communicate with one another.
Maintenance. Progressive companies in the transportation space are planning to purchase fleets of autonomous vehicles in the coming years. Without traditional drivers to cover the maintenance costs, it will become the responsibility of the company to maintain the vehicles. Maintenance will involve new, highly-skilled technical work to successfully care for the reams of software on board. In addition, we expect these autonomous fleets to be electric, and that will require all parking infrastructure to support charging. To fully enable autonomous fleets, operators will need to invest significantly into the necessary infrastructure that will allow these vehicles to seamlessly acquire a charge and get serviced.
As we prepare for disruption, there is much more to the autonomous fleets of the future than simply removing the need for a driver. Much of their impact is a consequence of the fact that they will be shared, not owned. The demand for synchronization between operators will only heighten as we get closer to a fully shared-use economy.