Who will own the future of transportation?

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Autonomous vehicles are often painted as a utopian-like technology that will transform parking lots into parks and eliminate traffic fatalities — a number that reached 1.35 million globally in 2018.

Even if, as many predict, autonomous vehicles are deployed en masse, the road to that future promises to be long, chaotic and complex. The emergence of ride-hailing, car-sharing and micromobility hints at some of the speed bumps between today’s modes of transportation and more futuristic means, like AVs and flying cars. Entire industries face disruption in this new mobility world, perhaps none so thoroughly as automotive.

Autonomous-vehicle ubiquity may be decades away, but automakers, startups and tech companies are already clambering to be king of the ‘future of transportation’ hill.

How does a company, city or country “own” this future of transportation? While there’s no clear winner today, companies as well as local and federal governments can take actions and make investments today to make sure they’re not left behind, according to Zoox CEO Aicha Evans and former Michigan Gov. Jennifer Granholm, who spoke about the future of cities on stage this month at Disrupt SF. 

Local = opportunity

Evolution in mobility is occurring at a global scale, but transportation is also very local, Evans said. Because every local transit system is tailored to the geography and the needs of its residents, these unique requirements create opportunities at a local level and encourages partnerships between different companies.

This is no longer just a Silicon Valley versus Detroit story; Europe, China, Singapore have all piled in as well. Instead of one mobility company that will rule them all, Evans and Granholm predict more partnerships between companies, governments and even economic and tech strongholds like Silicon Valley.

We’re already seeing examples of this in the world of autonomous vehicles. For instance, Ford invested $1 billion into AV startup Argo AI in 2017. Two years later, VW Group announced a partnership with Ford that covers a number of areas, including autonomy (via a new investment by VW in Argo AI) and collaboration on development of electric vehicles.

BMW and Daimler, which agreed in 2018 to merge their urban mobility services into a single holding company, announced in February plans to unify these services and sink $1.1 billion into the effort. The two companies are also part of a consortium that includes Audi, Intel, Continental and Bosch, that owns mapping and location data service company HERE.

There are numerous other examples of companies collaborating after concluding that going it alone wasn’t as feasible as they once thought.

That doesn’t mean there won’t be losers in this new mobility revolution or that partnerships will guarantee success. Inevitably, startups will run out of the cash needed for this capitally intensive undertaking; cities will fail to develop policy that encourages innovation without creating new problems around congestion, transportation deserts or safety. Publicly traded companies, notably automakers, will miss opportunities as they try to appease shareholders. And people, who live in these cities and work at these companies, will either be a part of building this future of transportation or be displaced by it.

“I know that Michigan wants to own this and I know that Silicon Valley wants to own this — and so a good bit of healthy competition is happening,” Granholm said. “But really the places where this is going to go fastest and furthest are places where you’ve got people like me who are policymakers who are not freaked out about the technology, who are not afraid to experiment, who are not afraid to adopt policies that allow for the technology to be on the streets.”

But an openness to experimentation is just one spoke in the wheel; workers, and the companies that employ them, are critical components as well.

From automakers to service providers

Automakers, all with venture arms and R&D labs, are pouring money into technology, namely automation, electrification and connectivity. These companies are also tinkering with the traditional automotive business model of producing and selling gas-powered cars, trucks and SUVs. Shared mobility, a jargon term that includes, car, electric scooters and bikes, have suddenly become part of the business model with varying degrees of success.

How high are the stakes? There are some 278 million cars globally on the road today, according to IHS. That number is expected to plummet as low as 45 million once autonomous vehicles take over, according to Granholm, who is now a professor at UC Berkeley.

“This technology (AVs) is hugely disruptive, it’s disruptive for the OEMs, it’s disruptive for the oil industry,” said Granholm, who is now a professor at UC Berkeley. This is prompting CEOs to make “critical investments in the technology that will allow them to be not just builders, but service providers,” she added.

The transition from gas and diesel-powered vehicles to electrified ones is a present-day example of the automotive industry’s evolution. These companies are still building cars, trucks and SUVs. However, there have also been forays into service.

For instance, Electrify America, a subsidiary of Volkswagen Group of America that was created as part of a settlement with the U.S. government over the diesel emissions scandal, owns and manages an electric vehicle charging network.

Other automakers developing autonomous vehicle technology are also experimenting with the service side of their eventual robotaxi businesses. Rental car companies are snapping up mobility startups — Avis Budget Group acquired Zipcar in 2013, for instance — and are aiming to take on the fleet management side of AVs.

As this transition continues, concerns from workers are already cropping up. The United Auto Workers Union, which has been on strike with GM since September 16, have raised concerns about the move towards electrification.

Pay, benefits and the status of temporary workers are the primary drivers of the strike. But there are concerns that the move towards electrification — which will be the go-to power source for AVs — will affect workers because electric vehicles require fewer parts and are easier to build. The UAW has said the shift from gas to electric engines could lead to a loss of 35,000 jobs over the next few years, according to a research study conducted by the union and recently noted by CNBC.

New jobs created

Evans notes that the development of AVs is already new jobs. Teleoperation, in which a human interacts with an AV and can take over if necessary, is a new class of job, she said, describing it as the “call center of the future.” More new jobs will be created,  both Evans and Granholm said.

“AVs used in ride-hailing services will need to be charged and cleaned. There has to be a fleet management system that will require workers,” Evans said, adding that there will be many more types of jobs that will come out of AV development and deployment.

Zoox is already seeing this bear out. The company has added 80 new jobs in San Francisco in recent months. Many of those are for safety operators, people who sit behind the wheel of the vehicle, along with other non-engineering jobs.

“We’re still at a very early age of testing,” Evans said. “So you can imagine that if you have thousands and thousands of vehicles, the operation around that for Zoox is what I call success [in terms of job growth]. That can easily overtake your R&D operation in terms of just sheer numbers.”

“It is very rare that technology disrupts and displaces in a way that it’s net negative from a job perspective,” she added.

There is research that backs up those claims. James Besson, an economist and author of “Learn By Doing: The Real Connection Between Innovation, Wages and Wealth,” studied the affect that computers, software and automation had on 317 professions between 1980 and 2013. He found employment grew faster in areas that used computers more.

Cities empowered

This evolution from human-driven personally owned cars to fleets of robotaxis will not only affect manufacturers and its workers.

“The future transportation will be defined, I think, by the tension between these private fleets of autonomous vehicles and the cities within which they operate,” Reilly Brennan, a founding general partner at Trucks VC, told TechCrunch in a recent interview. 

This tension is what has, in part, driven Trucks VC’ investment strategy. For instance, Trucks VC has backed self-driving shuttle startup May Mobility in part because of its approach with cities.

As much as that company is about technology, one of the fundamental parts of its business involves permitting and talking to cities, Brennan added.

Cities like San Francisco have learned from the challenges created by ride-hailing and more recently, scooters. And they’re more empowered than ever. Getting on the ground floor with cities will be a critical factor in which companies survive.