How driverless cars will change car ownership forever


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"Fast-forward 20 years. Driverless cars coast around every street in the country without a human driver behind the wheel. They've reached market saturation — the technology is as commonplace as cruise control is today.

How driverless cars will change car ownership forever

The rise of self-driving cars leads to a host of questions, of course, but for the moment let's focus on just one: Will you still be able own a car? Would you even want to? I mean, why buy when you can take an autonomous pod everywhere for far less?

Thing is, the answer to that question isn't a simple yes or no. But finding the answer is rooted in trends happening right now.

Companies like Lyft have partnered with General Motors to incentivize people out of car ownership with sweetheart rental deals, which may actually work. On the flip side, high-end carmakers — at least the ones I've spoken to — don't see car sharing as a part of their future business.

When looking at the picture of car ownership in the driverless era, several scenarios become apparent.They range from outright ownership to pay-per-ride transportation (AKA "mobility as a service") with a few options in between. With that in mind, let's start at the top and work our way down.

1. Full ownership
Today, aside from a few current car-sharing programs, the vast majority of cars are used only by their owners, and not shared, at least not in a structured way. Even after the widespread implementation of driverless tech, the direct-sales business for top-end brands like Bentley, Lamborghini and Aston Martin won't change. Right now, the average car sits unused 94% of its life. Likely, a Bentley sits idle even more than that — probably nearing the 99% mark, as the average Bentley buyer owns around nine other vehicles in addition.

To the luxury car buyer, there's nothing more luxurious than owning a $400,000 car that you virtually never use — whether it drives itself or not. Moreover, there's nothing luxurious about sharing a car. Even with the introduction of autonomous driving (something Bentley has said it is working on), the ownership model will likely never change.

But it will shrink. Ownership in all other parts of the market will likely drop considerably, as the following models expand and take hold.

2. Fractional ownership
At the launch of the CT6 sedan, I chatted with Cadillac President Johan de Nysschen about the how the brand will tackle car sharing and autonomy.

Speaking broadly, de Nysschen imagined a world in which luxury brands like Cadillac would offer not just a traditional sales model but rather a brand-wide subscription model. He likened this to a model already offered in the private jet market called fractional ownership.

In the world of jets, fractional ownership means you buy equity in an aircraft brand rather than buy a single jet. Of course, the price you pay depends on how much you intend to use the jet. However, the benefits of fractional ownership over outright ownership are many. For example, maintenance, fueling, hangar costs and other private jet ownership headaches are handled by the brand, rather than the customer.

Every morning an autonomous Escalade could arrive at your home and drive you to work.
De Nysschen hypothesized that Cadillac could implement a similar system. For a nominal monthly fee, every morning an autonomous Escalade could arrive at your home and drive you to work. If you were feeling sporty on a Saturday morning and wanted to do some track driving, however, you could — with a touch of a Cadillac app — order up an ATS-V to take you to a nearby racing circuit.

Of course, just like with fractional jet ownership, fractional car fee scales would increase with the amount you intend to use the brand vehicles.

This way, you're not just investing in a single vehicle but rather a brand as whole. Along with not needing to insure, park or maintain the car, you also wouldn't have to worry about fueling it — a benefit de Nysschen hypothesized Cadillac would put into effect for customers even before autonomy becomes prevalent.

The model has some clear benefits. Not only does it give the fractional owner flexible access to a fleet of vehicles, but it still allows the customer to invest in and identify with a single brand. In other words, you'll still be able to one-up your neighbor.

High-income neighborhoods of the future, just like today, will be still lined with Mercedes-Benzes, BMWs and Cadillacs. Instead of being rooted in single vehicles at individual residences, however, the latest and greatest company offerings will simply roll into your driveway on a daily basis.

3. Own + share
The next level isn't so much as a step down from fractional ownership as a step sideways. That's because I see it also suiting luxury buyers, but those who are a bit more tied to the traditional car ownership concept. I call it the "own + share" level.

For this example, let's use Volvo as the brand and the XC90 as the vehicle, since it will likely be one of the first fully autonomous cars sold to customers. When it goes on sale, you'll likely still be able to go into a dealership and get a lease on a $55,000 Volvo XC90 full-size SUV and drive it away (or rather, have it drive you away).

However, instead of letting the car sit idle in your driveway at night or your parking structure at work, you'll be able to opt into a Volvo car-sharing program. Or, the program might not be manufacturer-affiliated — ride-sharing companies like Uber and Lyft may end up handling programs like these.

Think of it in the same way as leasing a condo in Aspen that you don't use much of the time. You still own the car, but when you're not using it, it's autonomously driving and chauffeuring people around. Intriguingly, this model is already being implemented — sans autonomy, of course.

BMW is running one in Seattle right now called ReachNow that offers chauffeur-driven services, valet vehicle delivery service, short- and long-term rentals as well as peer-to-peer car sharing. Now, imagine the cars could drive themselves, removing human drivers from the equation altogether.

This would be a happy medium between brand fractional ownership and full-blown car sharing. People who feel — for whatever reason — tied to owning a car still can. However, when they're not using it, the car is out there making (or saving, depending how you look at it) money that can counterbalance the costs of ownership like fuel, insurance and maintenance.

4. Mobility services
We're finally down to the market where the majority of city-dwelling Americans will likely find themselves: mobility as a service. This includes the newly founded Maven from General Motors and Ford's FordPass app.

While both offer different services, both aim for the same goal: to monetize getting people from A to B without having to sell them a 3,000-pound lump of steel.

That means — for a monthly fee — a mobility service app will get you where you need to go, whether that's utilizing a shared car, hopping in a Lyft (a part of GM's Maven), or riding an electrified Ford-branded bicycle to the train station (a pilot mobility solution tested by Ford).

Unlike fractional ownership or own + share, these services will be less about investing in a car, brand or quietly competing in an automotive cold war of one-upmanship with your neighbor. Instead, they'll be about getting you places as efficiently and cheaply as possible, but still a step or two above public transportation.

Unlike the brand-driven fractional ownership, since Maven won't be sexier in any way than FordPass (I assume), these services will be made and broken not by branding but by customer experience. They'll also be driven by price. Think about it the way some people choose Amazon Prime over Hulu.

5. Pay per ride
We now come to the bottom rung of future mobility: pay-per-ride companies like Uber or Lyft. However, if you consider them in another light, these companies could be at the top of the pyramid, too, because — based upon current company models — they're a great equalizer. Everybody uses them.

Regardless, these companies will likely operate similar to self-driving cars as they do with human-driven vehicles. The biggest difference being that Uber and Lyft will own the cars, rather than utilizing privately owned vehicles. Heck, Uber is rumored to have ordered $9.6 billion worth of Mercedes S-Class sedans.

However, as I suggested above with own + share, pay-per-ride companies could employ privately owned driverless cars, but I suspect the best business plan will be for the companies to own their own vehicles.

Whether Uber and Lyft own the cars or draw on private self-driving fleets, you'll still be able to call up a car to your location and for a fee get to where you want to go.

General Motors and Lyft Inc. announced a long-term strategic alliance to create an integrated network of on-demand autonomous vehicles in the U.S.

Intriguingly, Lyft CEO Logan Green told me he imagines diversifying the ride experience in the future — beyond simply phasing in autonomous cars. Green envisions themed Lyft ride options. For example, Bostonians on the way to a Celtics game could opt for a Celtic-themed Lyft Line. Along those lines (pun intended), people could also choose a singles-themed ride coordinated with, for example.

Though Uber and Lyft might one day offer subscription services in addition to the pay-per-ride model, I suspect paying as you go will dominate, which could be the cheapest option for those who don't need a regular mobility plan.

No longer the headline
Although I laid these examples from a most- to least-expensive structure, at least for the foreseeable future, these options will be available at all pricing levels.

By that I mean Chevrolet will likely continue to offer competitively priced (albeit autonomous) Silverado pickups to customers in rural Oklahoma, for example. That's because a car-sharing or a mobility plan like Maven simply isn't feasible when your nearest neighbor is 20 miles down the road.

Additionally, Bentley might well offer a fractional ownership plan in addition to its traditional bespoke sales model. Elite customers could desire a ground mobility plan similar to their private air travel experience.

Broadly, this all demonstrates that, although the mechanics of self-driving cars dominate headlines today, it's the world after autonomy becomes commonplace — when driverless tech isn't the headline anymore —- that will prove truly intriguing.

In this era, many more of us will be able to cast aside the idea of investing in a car for the next 11 years. Rather, we can just think about where we want to go and what we want to do we get there".

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