Automotive Brands & the Autonomous Vehicle Economy.

The autonomous vehicle business is one of the emerging businesses in the spotlight, where we can find thousands upon thousands of articles, blogs and research, but most are limited to a perspective of technology: “What these cars could do, how they could do it, safety, etc…”

Millions of dollars have been quickly invested, not only from Tesla, but from a large number of automotive companies. More than 52 companies already have been approved by the California Department of Motor Vehicles to test autonomous vehicles on the road, including Apple, Waymo, Tesla, Ford, Honda, BMW, Nissan, Intel and Uber.

The ride-sharing company, Uber, signed a framework agreement with Volvo to sell “tens of thousands of autonomous driving compatible base vehicles between 2019 and 2021” in November, according to a press release. These vehicles are manufactured by Volvo. The two companies have had a partnership since August 2016.

With locations in Los Angeles, Santa Barbara, Pittsburgh, San Francisco Bay area, Phoenix, Austin, Atlanta, Detroit, New York and Toronto, autonomous vehicles are running already on the road to test and improve technologies, re-define the in-vehicle experience and understand which impact they will have in the overall car-experience for humans.

The phrase “mobility as a service” (MaaS) weaves together the business models of ride-sharing companies, the ambitions of manufacturers like Ford and Tesla, and the broader turn to a service economy. Cars may increasingly come to resemble smartphones — not just lumps of hardware, but consumer experiences that we pay monthly fees to use, and whose functions can be changed remotely by software updates, as Tesla already does with some cars.

Some consequences of a diffused autonomous vehicles business system.

Subordinated car’s business disruption.

Self-driving cars aside, Car Washers says what really worries them is generational change. Younger people are, in growing numbers, rejecting not just car ownership but even the once-mandatory rite of passage that is getting a driver’s license. When they do buy cars, they don’t care as much about washing, maintenance or detailing.

Change in property values and creation of new local economies.

Since these cars are autonomous, and probably in many cases shared, the problem of parking a car could no longer be a problem anymore, since after dropping you off, the car can move anywhere for parking or just drive around waiting for you. All this can free urban space for parks, pedestrian shopping districts, housing, or urban farms. That could increase property values and create new local economies, including re-shaping cities and accelerating gentrification.

In Arizona, the city of Chandler, which has been working closely with Waymo, will let zoning authorities reduce parking space by up to 40 percent in anticipation of autonomous vehicles. De Blasio in New York, is actively increasing public space for car sharing vehicles.

Personal car vs collective car.

My car or our car? My family, my friends, my community or everyone? Plenty of car companies aren’t giving up on private ownership of vehicles, instead others such as Elon Musk foresee a Tesla Network, a “shared autonomy fleet” in which car owners can rent their vehicles out to others on their own terms — restricting access to friends and family, for example, or to certain hours of the day.

At that point what are you going to buy? A car? A mobility service for your circle of people or a mobility experience? Companies such as Volvo have launched a subscription plan for their new XC40 that extends the old and traditional lease solutions, with a more inclusive offer from Volvo Experience.

Rise of vehicle experience business vs maker business.

Sharing a car for a huge part of the market in any size of city, will become more convenient compared to owning a car (including business vehicles): No insurance to pay, no parking spots to pay for, no violation tickets, no garage required, no maintenance, affordability, etc…

At that point, the automotive market will be aligned to other markets and transform itself into an experience economy business model, where customers will not choose anymore a brand but the experience. Hopefully this will continue to match the car maker brands (but potentially not).

The competition in this space will explode. Today in a big city such as New York, 7 in 10 New Yorkers opt for Via, Lyft, and Uber only from an experience perspective (at the same level of cost for a single ride in a regular taxi).

Taxes

Should you continue to pay an “owner tax” for each vehicle, if you share it with others? The scenario, especially for governments could be terrifying. Millions of dollars of car-ownership tax could disappear and a new way to apply taxes must be defined.

In a recent talk Robin Chase, former CEO and founder of ZipCar, explained how in the near future tax should be applied, proportionally on the use of the public infrastructure for mobility. In this way a new form of taxes, more transparent, will be directly addressed from local to local infrastructure.

Insurance

Should we pay insurance for AI instead of the vehicle’s owner or riders?

New form of car-owner income. If your car can move totally autonomously, after having dropped off your kids at school, after dropping you off in the office, instead of going home, you can let your car provide rides to your local community, and monetize all this time, as an extra form of income. In a certain way, as we do now with solar panel generated energy, where we re-insert the surplus power into the infrastructure.

At that point, people could start buying autonomous cars to run personal car-sharing businesses, and again, here taxes should find a new way to frame the role of vehicles for personal use and business purpose.

What Automotive Brands should be in this scenario?

“Cars will not only be driverless, but also probably ownerless, at least in the customary sense.”

Who becomes the new customer of car maker brands? Car sharing companies? Or will the car sharing companies become, in a certain way, the new big competitors of automotive brands? Will this invisible line, which divides car makers and car-sharing businesses be too thin to force automotive brands to buy entire can-sharing companies (or the opposite)?

“Should Automotive Brands already start to re-shape their entire brand experience (and business) as an Experience provider and less as a product maker?”

What should be the new and next most relevant value in a car maker’s brand? Should it be the change in your life that the new experience can provide? Should it be the psychological safety about sitting in a car driving alone (by an AI)? Should it be all about this new form of AI, sitting in the driver seat? Should it be humanized? Or will car makers not change at all and tomorrow we will buy only AI for Cars independently from which car brand we choose to unlock the maximum experience in our mobility experience? (ie: you request a car from your local community sharing system, and when you walk in, your personal AI for cars takes over the entire car.)

“How to make automotive brands matter in this new scenario?”

I don’t have these answers at the moment, and I believe any bets on predictions will be wrong due to the incredible complexity of this business and scenario, but it will definitely be an exciting opportunity for companies focused on helping Make Brands Matter in the Experience economy age.