How AVs will change the world for carmakers
The most forward-thinking automakers today are gearing up for a real sea change tomorrow. When autonomous vehicles (AVs) are at last on the road every day, technology-friendly car manufacturers will stretch into a new role: fleet operators. In a future where people would rather pay for mobility services than buy or lease their own cars, AVs will be a natural fit for rental fleets. (In fact, in some cities ride-sharing already dominates the share of wallet for transporting people.) That should be plenty of motivation for manufacturers to boldly jump into fleet management.
The aviation model: manufacturers to carriers
This new hybrid of carmakers and fleet operators has a time-tested precedent in the aviation industry. There’s always been a select group of companies that design and manufacture airplanes, like Boeing and Airbus, and a much more diverse layer of airline carriers above that foundation. The manufacturers sell their planes to the carriers; the carriers use those planes to provide their customers with airborne transportation.
When carmakers follow that model in the age of AVs, they’ll move into the carrier domain, operating fleets of shared vehicles. Manufacturers that welcome advanced technology and invest in innovation are the ones most likely to embrace the hybrid manufacturer-carrier model. BMW, Daimler, JLR, and Tesla are all steadily implementing new features and functions, like innovative ways to locate electric charging points and manage a vehicle’s interior climate prior to passenger getting into the vehicle. This would go a long way once their fleet is autonomous.
Manufacturers not in the same league as the industry leaders will have a harder time evolving into the hybrid model. The catch is that manufacturer DNA and carrier DNA are fundamentally different. That’s because the non-BMWs and non-Teslas of the world are rarely oriented around information technology, while IT is the life’s blood of most carriers.
However, if any corner of the automotive industry is really threatened by this new model, it’s the OEMs. Some OEMs are bound to be left behind and commoditized as mere vendors of vehicles—doomed to lose every bit of profit they once enjoyed as prices for “just vehicles” drop to painful new lows.
The third layer: agents
There’s another layer above airplane manufacturers and airline carriers: the agents who sell airline tickets to travelers. This is a changing landscape, too. For instance, Expedia, a digital agent once focused solely on booking flights, now bundles a whole range of online services for travelers—flights plus hotel reservations, rental cars, and even lunches. It’s evolved into Expedia 2.0.
Google Maps is one example of how the agent concept could translate into the automotive model. Google is collaborating with Fiat Chrysler Automobiles to ensure that FCA’s self-driving vehicles will have the built-in ability to offer directions and alternative routes by the time autonomy becomes a reality.
Other automotive giants are following a similar path toward providing mobility services—i.e., Toyota has invested in Uber, and General Motors in Cruise. In time we’ll see even more disruption in the industry along the lines of Expedia 2.0, such as mergers between car makers and service providers.
A matter of trust
By 2025, tens of thousands of AV fleets will be operating, according to industry experts, and there could be hundreds of thousands of AV fleets on the road by 2030. That promises enormous opportunities for automotive companies to make their mark as manufacturer/carrier hybrids.
But there’s an essential challenge they’ll need to meet first, and that’s building trust with customers. After all, hybrid companies and their customers will both be early adopters of a dramatically different way to get around. OEMs should think about how they best leverage their brand equity to create the best segue into their new business.
With trust earned, car makers will manage fleets more effectively than ever before, and customers will climb in and out of autonomous vehicles all day without a second thought.