Report claims that driverless cars will lead to 40% reduction in US sales

Article by Andrew Christian, on May 25, 2015

Mass-market auto manufacturers may have to significantly reduce output within the next 25 years because shared driverless cars will lead to a 40% decline in U.S. sales, according to Barclays Plc analyst Brian Johnson. In a recent report titled “Disruptive Mobility,” he says that families will have only one car and this will cut down vehicles ownership rates by nearly half.

He believes that since the car will transport each member of the family, the mileage of driverless cars will be twice that of existing cars. For large-volume automakers to survive, they will have to “shrink dramatically,” Johnson wrote. He estimates that GM will have to cut 68% of its North American production while Ford will have to reduce by 58%.

As the technology for self-driving cars advances, auto executives have been talking about them more. Boston Consulting Group predicts that by 2025, the market for autonomous technology will increase to $42 billion. By 2035, this will make up about 25% of worldwide auto sales. In a report that came out last April, the group said that partially autonomous cars will be available in large numbers by 2017.

Johnson goes on to say that the auto industry will be upset because of this shift to driverless cars. So far, GM and Ford have not commented on this report. Johnson calculated that when majority of vehicles don’t require a driver, annual auto sales in the U.S. will drop by around 40% to 9.5 million. There will also just be fewer than 100 million cars on U.S. roads, standing for a 60% reduction.

Johnson cited horses as an example. When the automobile arrived, the population of horse carriages declined sharply. Automakers have been overhauling their business models to prepare for a world wherein humans will be crowding in large megacities within the next 20 years. It may be necessary in the future to have driverless cars that move in harmony so that people and goods will be transported efficiently and safely.

Johnson anticipates that there will be four vehicle categories. The first group is comprised of traditional cars and trucks that individuals drive for work or in rural regions. The second group consists of “family autonomous vehicles,” which individuals own and which are shared by one family. The third group is of “shared autonomous vehicles” or “robot taxis” that can be summoned by smartphone.

The fourth is of “pooled shared autonomous vehicles” that can transport many passengers, similar to a van or a bus. For each shared vehicle on the road, nine traditional vehicles are displaced. Every pooled shared vehicle would replace up to 18, according to Johnson.

Since the driver is taken out of the equation and he represents the biggest cost in a taxi ride, a private ride in a standard sedan will cost 44 cents per mile on average. Meanwhile, a shared ride in a two-seater costs 8 cents. These are much lower than what customers now pay for an UberX car of $3 or $3.50 per mile. A ride on an UberPool vehicle currently costs $1 to $1.50 a mile.

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