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The Next Car You Buy Could Be Your Last -- The Robo-Taxi Era Is Closer Than You Think

Forbes logo Forbes 23/04/2017 Joann Muller

General Motors is testing self-driving Chevrolet Bolt EVs for use in shared fleets. © Provided by Forbes Media LLC General Motors is testing self-driving Chevrolet Bolt EVs for use in shared fleets. General Motors is testing self-driving Chevrolet Bolt EVs for use in shared fleets.

If you live in a large city — and more and more of us do, according to U.S. Census data – you know what a pain it is to own a car. It’s difficult to find parking, and when you do, it’s expensive. Insurance rates can be outrageous too. Taxis and ride-sharing services are an option, but you don’t know the stranger behind the wheel and those fares can add up quickly.

By the end of the next decade, however, you’ll probably find that the cheapest, most convenient form of transportation is a shared, self-driving electric car, according to new research by the Boston Consulting Group.

The convergence of three trends — ride-sharing, autonomous driving and vehicle electrification — will drive down the cost of travel by as much as 60 percent, triggering a major shift toward self-driving robo-taxis in large cities, according to BCG. By 2030, the group says, a quarter of all miles driven in the U.S. could be in shared, self-driving electric cars.

The change is coming much faster than people realize, and will have a profound effect on consumers, cities and the automotive industry, BCG says. “For millions of Americans living in large cities, the next vehicle they purchase may be the last car they ever own,” said BCG partner Justin Rose.

There’s a reason electric vehicles haven’t taken off yet: the economics don’t make sense for individual owners, said Brian Collie, the head of BCG’s North American automotive practice. At 12,000 to 15,000 miles a year, EVs are still too expensive. But put them in service for 80,000 to 100,000 miles a year through ride-sharing, and the math suddenly makes more sense. Now take the driver out of the equation, and the cost per mile falls dramatically.

A typical Chicago consumer could cut her commuting cost by $7,000 a year by getting rid of her personal car in favor of a shared autonomous electric vehicle, BCG said. And it’s not just about putting more money in your pocket. With shared autonomous electric vehicles, BCG predicts 20,000 fewer traffic fatalities; 20 percent less pollution (well-to-wheel); 60 percent of urban parking spaces freed up for other uses; less congestion; better access to transportation for the elderly and disabled, and more productive time for passengers.

Not surprisingly, an explosion in shared electric robo-taxis would have big consequences on the auto industry. But BCG says that wouldn’t necessarily spell doom for carmakers. The group predicts more than 5 million conventional cars will be replaced by an estimated 4.7 million autonomous electric vehicles by 2030. The shift will begin gradually in the early 2020s and could accelerate with technology or pricing breakthroughs.

Tesla, BMW, Mercedes, General Motors, Ford Motor and Volvo Cars have all promised to produce fully autonomous cars within five years, most likely in urban car-sharing fleets. Others, including Delphi and Alphabet’s self-driving car unit, Waymo, are working on turnkey systems that can be installed on vehicles from other carmakers that aren’t developing their own systems.

“We’re still seeing continued experiments in trying to understand what is the right combination of technologies,” said Collie. “But the reality is the building blocks are all there.” With large pilot programs debuting in the early 2020s, “there’s no doubt the market is going to get there,” said Collie.

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