Editor’s note: This piece marks the Sightline debut of Daniel Malarkey, our newest Sightline fellow. A Seattle native, Daniel will be writing about issues of infrastructure, technology and energy with a view towards sustainability. You can read his full bio here. Additionally, you can view his February appearance on Q13’s newscast here in which he speaks about the future of autonomous electric vehicles. 

Ford Motor Company recently had news for investors: Ford was “evolving to become the most trusted mobility company”; not a motor, car, or truck company but a “mobility” company. Ford says its future now is in “smart, connected vehicles, including autonomous and electric vehicles and digital services to thrive in [the] emerging transportation operating system.”

If the nation’s second-largest car company doesn’t see a future as just a car company, then maybe we all need to hit the refresh button and let a new view of transportation for Cascadia snap into place.
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Wait, what? The nation’s first mass-market car company signals to investors that revenue growth will come from selling mobility services provided by autonomous electric vehicles rather than selling cars? If the nation’s second-largest car company doesn’t see a future as just a car company, then maybe we all need to hit the refresh button and let a new view of transportation for Cascadia snap into place.

Like a slow-loading picture in a web browser, large but indistinct pixels have been emerging on the screen for some time. Now the resolution is improving and the image is clear: our transportation future is autonomous, electric and shared. At some point in the next 20 years, a majority of the passenger miles in urban areas will probably be delivered by on-demand, autonomous, electric vehicles owned by fleet operators rather than individuals.

This model, in which people stop buying transportation by the vehicle and start buying it by the trip, is known by some as “Transportation as a Service” or TaaS. Other terms used include ACES, for “automated connected, electric, and shared” or AEVs, for “autonomous electric vehicles.” We use the term TaaS for its echos with Software as a Service (aka cloud computing) and for the emphasis it brings to providing mobility for people. Self-driving technology will also transform how goods are moved through our region, but the biggest potential changes to people’s daily lives and the built environment will come from TaaS.

As this new picture for urban mobility grows crisper, leaders in Cascadia have started to take a fresh look at the future. They need all of us to bring our values, our enthusiasms, and our concerns to set the hues, contrasts, and transparency of the transportation vision that’s emerging. The private companies that will own autonomous electric vehicle fleets will rely on public roads owned by all of us to deliver their service. By picking the right mix of public policies, we can take this new technology and create a transportation future that is clean, uncongested, affordable and accessible to all.

Car guys, futurists, analysts, and academics agree

There is surprising agreement among automotive analysts that autonomous electric vehicle fleets will play a key role in providing urban mobility in the future. ReThinkX, a San Francisco think tank, and the Institute for Transportation Studies at UC Davis issued reports to this effect in May 2017. In November 2017, former GM Vice Chairman Bob Lutz, a self-proclaimed “car guy” and climate change skeptic, penned an article in Automotive News that begins:

It saddens me to say it, but we are approaching the end of the automotive era… The end state will be the fully autonomous module with no capability for the driver to exercise command. You will call for it, it will arrive at your location, you’ll get in, input your destination and go to the freeway.

This perspective is what prompted Ford to issue its strategic update to investors in October. Ford and GM’s year-over-year car sales were flat for 2017, but GM’s stock is up 32 percent while Ford’s is stuck where it began the year. GM’s multi-billion dollar investments in autonomous and electric vehicle technologies have started to pay off; the company is keeping pace with rapidly evolving technologies and business models. Without a reset, Ford will be left behind.

Of course, GM is responding to the competitive threats posed by multi-billion dollar investments by Google (now Waymo), Tesla, and 42 other companies licensed to test autonomous vehicles in California. Recent announcements about the capabilities of autonomous vehicles in urban settings indicate that “Level 5”—fully autonomous—vehicles, could come to market soon.

In late November, the New York Times reported on riding in GM’s autonomous electric Bolt in San Francisco with no human intervention. GM also announced that it plans to offer TaaS services in several major US cities beginning in 2019. Not to be outdone, Google’s Waymo announced that it would offer a pilot of robo-taxi service with no drivers in parts of Phoenix this year. Self-driving technology can’t yet handle every urban road circumstance: Reuters reported a taco truck flummoxed the GM vehicle on a test ride, and a human needed to intervene. But it is close.

Better and cheaper will win, sooner or later

When new products are better and cheaper, we drop the old and embrace the new. In 2000, Kodak had sales of $14 billion and profits of $1.4 billion; twelve years later the venerable company was bankrupt. Digital photography was better and cheaper than film. In 2007, Apple introduced the iPhone. It was better and cheaper than owning a separate cell phone, portable music player, digital camera, and wireless web browser and also created something entirely new: a web-connected mobile platform for specific software applications. Smartphones are now ubiquitous.

Consuming transportation services from a fleet of autonomous electric vehicles promises to be better than owning a car. Self-driving cars could pick riders up within five minutes of a request and deliver them to their destination without the need to find parking or pay for it. Travelers could read, chat on the phone, or take a nap instead of driving. In contrast to individual ownership, riders would never have to think about refueling, parking tickets, cleaning, maintenance, unexpected repair bills, car insurance, or where to store their vehicle.

The high utilization of fleet vehicles, falling battery prices, and lower maintenance costs for electric vehicles will each push the price of TaaS down, possibly way down. Cabs in cities working two shifts can rack up more than 90,000 miles per year while personal vehicles average a little more than 11,000. Given the durability and low operating costs of electric vehicles, fleet operators will be able to spread their capital costs over many more miles than can individual owners. James Arbib and Tony Seba, authors of the ReThinkX report, estimate 2021 service costs at 6.8-24.5 cents per mile. The midpoint of that cost range—15.9 cents—is less than a third the average cost of individual ownership in the United States, which is estimated as 54.5 cents by the Internal Revenue Service.

Better transportation services at less than a third the cost of car ownership! If those predictions come to pass, TaaS will generate substantial benefits to Cascadia’s households:

  • The average family could save $5,600 per year on transportation, according to Arbib and Seba (page 17).
  • According to research done by Pew Charitable Trusts, low- and middle-income people spend a larger share of their income on transportation than do higher-income people. So reductions in costs from TaaS would function like a progressive tax cut, providing more relief in percentage terms to those at the lower ends of the income distribution.
  • Low- and middle-income households would also benefit from reduced exposure to the cost of unexpected car repairs, the most frequent financial shock that upsets family budgets.
  • Elderly, disabled and low-income people would have markedly improved options for travel compared with what they have now.
  • Automobiles would not kill and injure as many people as they do now because autonomous vehicles will have much lower accident rates than vehicles driven by humans.

Original Sightline Institute graphic, available under our free use policy.

Although many analysts agree that autonomous electric vehicle fleets will eventually meet most of the demand for mobility in urban areas, they differ on how quickly it will happen. Tony Seba and James Arbib at ReThinkX believe it will happen fast: “by 2030, within 10 years of regulatory approval of autonomous vehicles (AVs), 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals.” The team at the Institute for Transportation Studies at UC Davis, as well as other observers, think broadscale adoption of autonomous electric vehicle fleet services will take at least a decade longer and their share of passenger miles will depend on supportive public policies.  

Cascadia could reap huge benefits

If TaaS works as predicted and if Cascadia embraces it, the region would not just get improved, low-cost transportation but a bounty of social benefits including cleaner air and water, land freed from parking cars, and improved economic competitiveness.

  • The transition of personal trips to electric fleet vehicles within a decade would result in the electrification of travel at a pace beyond even the most aggressive forecasts that assume our existing model of individual ownership. Wood Mackenzie, a global consultancy to the petroleum and energy industries, recently increased its global forecast of electric vehicles in operation in 2035 to 100 million, at which time its analysts estimate those vehicles will reduce petroleum demand by one to two million barrels per day. However, global production is now close to 100 million barrels per day so this forecast implies EVs would only displace 2 percent of the current petroleum production levels in 2035. But if we instead believe that TaaS will precipitate a fundamental shift from individual ownership to fleet ownership, then the pace of electrification will happen much faster than the petroleum analysts think.

    Public and private owners of parking in the Puget Sound region may soon confront the happy prospect of converting an amount of land 50 times the size of Vancouver’s Stanley Park for new uses.
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    With plausible forecasts for a conversion to Transportation as a Service, Cascadia could have more than 50 percent of our travel miles delivered by electric vehicles in 2035, not 2 percent. Transportation is Cascadia’s leading source of greenhouse gas  (GHG) emissions. With our mostly hydro-electric grid, the electrification of travel could drive big drops in both GHGs and the criteria pollutants that contribute to smog and respiratory ailments.

    TaaS would also free up land by making parking spaces unneeded. Each vehicle in an urban area typically requires four or more parking spaces for storage. As individuals get rid of their cars and replace them with TaaS, space now devoted to parking will become available for alternative uses. For example, residents of the Puget Sound region own about four million registered vehicles. Should the Puget Sound region achieve just half of the optimistic forecasts for TaaS adoption, 40 percent of those vehicles could leave the region by 2035 because they are no longer needed to provide transportation.

    That shift could liberate close to 50,000 acres of land with a value of well over $65 billion today. One can argue the underlying assumptions in this estimate. But public and private owners of parking in the Puget Sound region may soon confront the happy prospect of converting an amount of land 50 times the size of Vancouver’s Stanley Park for new uses.

    Those new uses could transform our urban areas for the better:

    • Selected streets could convert to exclusive bikeways because curb lanes are no longer needed for storing cars.
    • Parking could convert to green space, improving surface water management, creating new opportunities for carbon sequestration, and reclaiming space for public use.
    • Parking garages in cities—housing for cars—could give way to apartment buildings—housing for people, increasing the supply and limiting upward pressure on rents.
    • Garages in single-family homes could convert to accessory dwelling units, increasing the supply of affordable housing. (Of course, a large share of garages in single-family homes are already used for everything but car storage.)

    Cascadia consigns between 10 and 20 percent of its urban land to parking that has a higher and better use. Early adoption of an efficient, low-cost transportation system that frees up land for housing and employment would also increase Cascadia’s economic competitiveness relative to other regions around the world.

    Much of the employment in the region depends on the success of our businesses producing goods and services for export. To the extent that we develop a more efficient transportation system and urban form, our region’s companies will have a cost and recruiting advantage relative to their competitors in areas that don’t embrace this change. If we can lead other regions in the shift to TaaS, our economy will continue to grow and do so without increasing the environmental burden of a petroleum-driven transportation sector.

    Autonomous electric vehicle fleets could not only improve the lives of Cascadia’s people as consumers of transportation but also as workers, inhabitants of the built-environment, and organisms that breathe.

    As with any big change in an industry, TaaS would not be all sunshine and roses. In part 2, I lay out the downsides of TaaS and how to avoid them.

    Part 2: Your Car of the Future is No Car at All