For most of the last century, the automotive industry has focused on developing more powerful, comfortable and fuel-efficient vehicles for drivers. But over the past decade, automakers have begun asking a much more exciting question: What if we didn’t need a driver at all?
Whether it is scary or exciting to you, the transportation revolution has begun! Driverless cars are on the horizon, and the implications of this technology will greatly impact just about every industry you can think of, including real estate. As a broker in Los Angeles, which is home to the world’s worst traffic congestion, it’s my business to think about how driverless cars will affect my clients — and real estate at large.
The transportation revolution will affect the housing market in five surprising ways:
Automakers will increasingly find themselves in a complicated relationship with ride-hailing companies such as Lyft and Uber. The latter will be competitors but also customers. In the next few years, sales to drivers for Lyft, Uber and others will almost certainly offset declines in car purchases by users of the services. As shared mobility services expand, auto manufacturers will likely start producing customized vehicles for ride-hailing companies — even as their own mobility services compete head-to-head.
Today, Lyft and Uber have almost no hard assets and are essentially internet-platform companies. Managing and owning vehicles clashes with their current business model. But once level-5 driverless cars come on the scene, they will have little choice. It appears inevitable that they will embrace a new business model that involves ownership of vehicles. A huge part of the success of demand-responsive, app-based ride-hailing companies will be their ability to profit as proprietors of capital, which will mean owning and operating a fleet of automated electric cars. So just as self-driving cars have pulled Detroit into the Silicon Valley game, the power of fleet ownership will likely force ride-hailing companies into partnership with manufacturers.