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Example: Displacing the Auto Industry

Here’s an example of technological improvement that has the potential to wipe out a major industry that employs millions.

It’s an improvement that also:

  • Reduces costs to the end user.
  • Enables people make a living on their physical assets, rather than the hours they work.
  • Destroys demand in a major industry.

The innovation is simple.  It’s car sharing services like Lyft and Uberx.

A recent study by Alix Partners (a market research company) found that car sharing systems have already (!) displaced the purchase of 500,000 cars in the US.  Their findings get even more interesting.

When they looked at the impact of car sharing systems in ten major cities, they found that every car sharing “fleet” vehicle currently displaces the purchase of 32 (!!) car purchases/leases.

Project this forward ten years.  Add in networked, driver-less cars.  How many cars do we need?   Not many.

JR

PS:  There’s also been a pretty amazing shift in attitudes re; consumer lifestyle with the arrival of Gen Y.   It started with a lack of financial resources due to the lost decade after we hit peak jobs in 2000.   That financial pain accelerated with the financial crisis.   It became permanent behavior with the arrival of online alternatives to consumerism and a willingness to trust/use networks to get things done (i.e. car sharing systems).   So, increasingly, Gen Y doesn’t buy.

PPS:  Some analysts will claim, wrongly, that if we don’t buy as many “things” as previous generations did, it’s a sign that we’re in decline.  That’s idiotic.  From a progress standpoint, it’s easy to see that if you can avoid buying a car you are better off across a wide variety of measures.

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Discussion — 8 Responses

  • Chris February 5, 2014 on 10:13 am

    As an old guy, I had trouble believing your post – until I read the PS. That is certainly a plausible explanation, though it’s seen less in rural areas. When the next ranch over is a three miles drive, and the nearest town is 25 miles away, you tend to own your transportation. Even so, the effect can be seen in rural areas. Fewer farms and ranches own all the equipment they need for seasonal activities like harvest – they contract with companies to bring in the specialized equipment and crews for the week or two needed. And your PPS makes sense – the fewer copies of things needed by society, the more efficient use it is making of them.

    Reply
    • John Robb Chris February 5, 2014 on 3:03 pm

      Chris. Definitely works better in urban areas. As you point out, there are different, but similar dynamics in rural areas. JR

      Reply
  • Burgundy February 6, 2014 on 6:08 am

    But aren’t Lyft and Uberx just stop gap methods. Like most industrial systems they require a mass market, everyone everywhere doing the same thing like sheep (eg. pouring into the cities in the morning and pouring out again in the evening). Such services are just a symptom of the failing industrial system/bureaucracy rather than new ways of living.

    Now re-purposing, self-servicing, repairing and manufacturing parts for existing vehicles in a maker like fashion would strike me as more appropriate. Especially if the vehicles where then made available to the community for its own use. For example, dead vehicle no longer of any use to owner, donates it maker group, who puts it back on the road as a shared resource. Any money made from hiring vehicle gets reinvested in to other maker projects.

    Creating local economies using innovative techniques, removing sheep like tendencies and cutting unnecessary travel would be far more creatively disruptive.

    Reply
  • John Galt III February 6, 2014 on 7:34 am

    There’s a tensor formulation for that.

    Reply
  • Burgundy February 6, 2014 on 8:06 am

    Vertical farming explained: how cities could be food producers of the future
    http://www.theguardian.com/science/2014/feb/06/vertical-farming-explained-erik-murchie

    I believe the technological system is generally deterministic and so signals its future in advance. If enough of these signals can be picked up, it gives a snapshot of our potential future. A bit like a monte carlo simulation. We are then accustomised to the new realities through the numerous forms of media that shape our world view. So we are seamlessly led into our altered reality without any sense of future shock.

    Climate change is going to turn our world upside down. Its already systematically destroying our infrastructure and soon the means of feeding ourselves. Having passed a threshold the speed of change is accelerating and the impacts growing. Which brings us to the article above. What is it telling us about the future?

    Reply
  • phish February 6, 2014 on 1:59 pm

    slight tangent: had a thought after reading the article about how 2 trends are developing in the digital world in perfect parallel —

    one being trust networks (lyft, airbnb, et.al) and the other being “zero trust” networks (bitcoin, etc.)

    where i believe it will get interesting is when those 2 developments begin to merge together and create spawn that will have more utility & value than the both of them put together but operating separately.

    Reply

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