What it is: Ride-sharing services and self-driving cars will likely lead to a reduction of car ownership.
At one time, the Big Three auto makers in Detroit made and sold most of the cars in the world. If you didn’t like what Detroit made, tough. You had no choice. Then other countries started making quality cars and importing them into America. Suddenly the Big Three auto makers had to compete and they failed miserably once cheaper, better built, and more fuel-efficient imports from Toyota, Honda, and others showed that people wanted something other than what the Big Three auto makers were offering.
Now that the Big Three auto makers have settled into the reality of competition from other countries such as Japan, Korea, Germany, and possibly China eventually, they have to face a new reality. In the future, fewer people will buy and own cars. Instead, ride-sharing services will buy a handful of cars and use self-driving vehicles to pick up and drop off passengers cheaply and conveniently. That will impact parking lots, car dealers, and the Big Three auto makers who depend on car sales to make the bulk of their income.
Ride-sharing services still need cars, but the huge problem is that they’ll buy fewer of them and many people don’t want the hassle of buying and owning a car when ride-sharing services will eventually be so much easier and cheaper to use. Skip paying for a car, insurance, and maintenance and you suddenly have a huge amount of spare cash to spend on ride-sharing services with plenty of spare change left over.
So when rumors of the Apple Car first appeared, people thought that meant an electric car from Apple. What that really might mean is self-driving technology from Apple. Rather than sell Apple Cars to individuals, Apple will likely sell them to fleets of ride-sharing services instead.
If you think only that the future will be exactly like the past, you’d expect the Apple Car to be sold to individuals. If you believe the future will drastically change compared to the present, you’ll realize that the Apple Car will be part of the ride-sharing, self-driving revolution. Apple will likely use the Apple Car as a mobile platform for people to work and enjoy music, videos, or even e-books while they ride comfortably to and from their destinations.
The future is not car ownership, and that will negatively affect the Big Three auto makers. Don’t expect General Motors to get another government bailout to survive. General Motors won’t be able to move into the self-driving, ride-sharing service industry fast enough to make a profit while still supporting a business model dependent on selling cars to individuals. Think of how Kodak failed to adapt to digital photography and that’s the likely future of the Big Three auto makers in Detroit.
With companies like Apple and Tesla experimenting with self-driving cars, it’s probable that the next car revolution will take place anywhere but Detroit. The Big Three auto makers are too entrenched in selling cars to individuals. Eliminate this and the Big Three will get caught flat-footed just like they froze like a deer in the headlights when fuel-efficient Japanese imports flooded the market.
If you want to see an example of clinging to the past leading straight to failure, study Sears, Blockbuster video, Nokia, the Yellow Pages, Radio Shack, and Borders Books. If you want to see an example of the future, look to any company creating products not for today, but for tomorrow. Those are the companies that will thrive.