The Future Of Car Ownership

It's extreme to say of the future of car ownership is that there is no future. However, I'll argue that idea isn't too far out in left field.

Those with a finger on the pulse of the automotive industry will hesitantly nod their heads in agreement with a statement made by Morgan Stanley in a 2016 market report:

"We anticipate developments in the shared, autonomous, and electric vehicle space to be even more pronounced in 2016, with non-traditional tech/software firms aligning resources and strategies to potentially revolutionize vehicular transport." 

Why the change?

The feelings of freedom and independence that owning 4 wheels provided to the Baby Boomers before us have begun to dwindle. Millennials and the emerging Gen Z view life in a different lens than their parents did, believing that—when it comes to physical possessions—less is often more. For this generation, fulfillment is gained via experiences: dinner and drinks out, altruism, theatre, and exotic travel.

This culture shift has led to a change in the way Generation Y and Z think about what was once of life's joys, as well as one of life's guaranteed overhead expenses: cars. Car ownership and the act of driving are less often sources of pride for younger generations. For the Yuppie of 2016 (and beyond), car ownership is an avoidable expense, a means to an end.

Technology has furthered this trend by allowing car/ride sharing to be more convenient and seamless than ever, lowering some of the remaining barriers to entry for many generational holdouts. Thanks to Uber and Lyft, avoiding car ownership no longer leaves people waiting on rainy street corners to hail a cab.

Detroit, meet Silicon Valley

Advances in autonomous car technology will reduce many of the remaining pain points present in current car sharing services; a lack of instantaneous vehicle access in any location at any time of day. GM's $500 million investment in Lyft is one of a few recent stories that give us a glimpse of how car brands will move toward what I'll call the "new fleet mindset". This mindset is marked by 2 things: Pumping out hundreds of thousands of efficient, fully autonomous vehicles, and making them available for public use via some form of technological infrastructure. 

Faraday Future is another clear example of this market shift. This new, Chinese-backed auto brand is not only bringing their own autonomous electric car to market, they're doing it with the promise of revolutionizing the way people think about cars and car ownership.

Auto brands will increasingly begin rolling out products that were previously reserved for a press release from a company in Silicon Valley. Not only will we see advanced cars that can drive themselves and have nearly zero impact on the environment, but we'll also see advanced tech infrastructure (IOT anyone?), apps, concierge assistants, and other products that will require thinking borrowed from Google, Microsoft, and Apple.

The future

So what does the future of car ownership looks like? Simply put, the future of car ownership has room for a variety of competitors that will fall somewhere along the scale outlined below. Regardless of where each auto manufacturer is able to hone its competitive edge, all will have to adopt the new fleet mindset to a certain degree.

1. Ride sharing of autonomous pods (Uber and Lyft)

2. Car sharing of mostly plain, homogenous, autonomous vehicles (GM, Google)

3. Car sharing of brand-specific vehicles that offer a "feeling" to those who view the car as more than a commodity, but still want to avoid car ownership (BMW, Faraday Future)

4. True car ownership. Imagine if branded car sharing becomes long-term pipeline for eventual car ownership. Eventual car ownership would make sense as people age and move out of the city, have a family, and seek a higher level of autonomy.

Car companies will no longer be able to stay successful with award-winning models or brand affinity. In addition to those things, they'll need a technological infrastructure and proper business model to allow people to drive their vehicles without ever owning them.