Adam Jonas and the End of Automobile Ownership
Apr 10, 2015
Morgan Stanley analyst Adams Jonas sees two trends, one technological and other sociological that are about to totally disrupt the $10 trillion dollar mobility industry.
Adam Jonas is a respected securities analyst for Morgan Stanley. He's their Managing Director and Leader of Global Auto Research. When he talks about things like car loan bubbles, people listen.
Recently, as reported in the Los Angeles Times, he's been thinking about the impact of autonomous cars, pictures of some early prototypes are displayed below, and what he's come up should send shivers down the spin of every car executive on the planet.
Two trends are about to have a major disruptive impact on the automotive industry: autonomous driving technology and the shared economy, both given impetus by an aging population and resource constraints.
The graphic below, created by Jonas, illustrates his thinking. The quadrants show the shift from private ownership to sharing (left to right) and human control to computer control (bottom to top). Quadrant 1 is today's ownership model: private cars, human control. For 100 years we've used this model to build a many-trillion-dollar industry, virtually all of it dependent on cheap resources (metals, rubber, oil) and easy credit.
Within the last decade, we've seen the growth of the 'Shared Economy' from Netflix DVDs to Uber and AirBNB. That's Quadrant 2. Now we have Delphi's Audi SQ5 autonomously driving 99% a 3,400 mile trip from California to New York. Tesla is promising to introduce the same capability soon, followed by Nissan and Cadillac. Then there's Google and probably Apple. Hitachi has demonstrated its funky little robotic car (see below) and the English city of Milton Keynes has decided to forego building mass public transit, choosing instead to rely on the autonomous Pathfinder pod below.
As reported by the Times, Jonas is warming, “The auto industry is a century-old ecosystem being ogled by outside players hungry for a slice of a $10-trillion mobility market. Many want in. It’s just beginning. And it won’t stop.”
He notes that automobiles are the most "under-utilized" asset on the planet. Cars costing tens of thousands of dollars sit unused 23 hours of the day, slowly depreciating in value as the elements also take their toll.
"We believe it's the most disruptable business on earth," he says.
What he envisions happening over the next several decades is nothing short of a revolution as driverless 'taxis' roam our streets day and night, 24 hours a day, ready to be summoned by cellphone call with transportation costs falling to as low as 25¢ a mile, less than half to cost of operating a private car today and 1/10th the cost of a conventional, human-operated taxi cab.
It's likely to be a time when only the rich can afford to own a private car, but it's also a time, observes the Times' Jerry Hirsch, when, "Finally, huge new swaths of real estate -- former parking lots and garages, at homes and businesses -- would be put back into more productive commerce."
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