I wrote in 2015 about the consumer electronics show (Las Vegas) and auto show (LA) in the U.S. which had generated speculation about a major growth in auto industry. Separately, the well-known consulting company, McKinsey & Company had released a report, entitled Disruptive Trends That Will Transform the Auto Industry, written by Paul Gao, Hans-Werner Kaas, Detlev Mohr (Director of Hong Kong, Detroit, and Stuttgart Office respectively) and Dominik Wee (Principal in the Munich office) and contributed by nine other McKinsey staff. That report was signaling an ‘automotive revolution by 2030’ stimulated by four disruptive technology-driven trends: diverse mobility, autonomous driving, electrification and connectivity, so claimed. As a typical good consulting report, this long article made perceptive observations on the rise of technology that has disrupted other industries and so will the auto industry. That report pointed out the shared mobility (for example, Uber model), connectivity services (telecommunication and computing supported services), and feature upgrades will bring as much as 30% more business revenue in addition to its traditional auto-units growth which was estimated to be at 2% considering the changing business model for new cars (increasing demand) and consumer behavior shifts (decreasing demand).
The above study report touched upon an important fact that automobile consumers in the cities will have changing individual mobility behavior because of multiple modes of transportation modes available, thus preferring to have car services rather than car ownership. E-hailing (Uber) have already demonstrated some success, demanding ten percent of new cars as shared cars in 2030 and possibly making cities replacing countries as the most relevant segment to determine mobility behavior and scope of automobile revolution. This paradigm shift to "mobility as a service" will change and force the auto industry and new players to compete on multiple fronts as well as to cooperate in exploiting the technologies to realize advanced driver assistance system (ADAS) to auto-auto (self-driven AA cars) and to focus on software based differentiation in new features. The new companies Tesla, Apple, Google and Uber are new players and Chinese car manufacturers will have a significant role. However, the old report did not answer my title question where the auto mobile revolution will take place, in the U.S., Europe or China?
The automobile industry has sustained a steady growth since the invention of gas engine by Gottlieb Diamler (1885) and a gas fueled car by Karl Benz (1886), although combustion engines were invented many centuries ago. Gasoline has dominated the auto industry as the principal fuel. Fossil fuel was plentiful enough to support car growth. Over the 130 years of automobile history, from 30 car manufacturers producing 2500 cars in 1899, it went through mass production process introduced by Henry Ford (1913) eventually resulted in the domination of the US Big three in car manufacturing post WW II. However, by 1980, Japan had become the no. 1 car manufacturer. In the past three decades, more competitors entered the industry; by 2011, the ranking has changed to be China (14.5M), Japan (7.2M), Germany (5.9M), S. Korea (4.2M), India (3M) and U.S. (2.5M) with China becoming the largest automobile market and producer today. That explains why Tesla would have its factory built in Shanghai expecting the electric automobile revolution to take place more likely in China not in the U.S. or Europe?
The diminishing supply of fossil fuel and its carbon emission creating global warming are causing the disruption of auto-industry by the rapid technology-driven trends.The U.S. used to be the number one contributor to carbon emission, now China has become the number one. With China’s 1.4 billion people moving upward economically, it puts a tremendous pressure on the demand for cars. If China ever let her population to own 2-3 cars per family like the U.S. does, the consequences is unthinkable. So China is very much motivated to do something about it as seen by her effort in electric bus application in her cities and exporting abroad. It is a good thing that China is conscientious about environment. The COVID-19 pandemic may have added a serious impact on city dwelling and created a somewhat unpredictable preference of using crowded public transportation over Uber like services, but in either case going electric is quite certain.
China has had foresight and made significant progress in her national high-speed rail infrastructure in many parts of China and developed advanced mass transit systems in her major cities. However, the mobility problem remains as a challenge. What will China do? Will China seize the new automobile revolution and develop a holistic solution to solve the mobility problem of her vast city-urban population? In the following, I present an 'imagined' government-supported plan regarding a technology-driven Auto Industry Revolution. The plan is more visionary than the McKinsey report with challenges in implementation. However, if any country could implement this plan, it would be China, judging on her success on mega-projects in the past, The essence of the plan is as follows:
1. Twelve major cities in China are selected to participate in this Horse-Dragon (HD) Plan covering a total population of 0.2+ billion. Without this plan, the population may need 10 times more cars (one hundred million).
2. The city 'shared-bicycle' model is elevated to automobiles between mega-cities after a mathematical analysis. Citizens with valid ID can take out a HD car from a depot station and return to another depot station in the same or other city. Depots are designed with fully automated parking, maintenance and service system functioning 24 hours per day easily accessible from mass transit.
3. The process of reserving a car and return a car is done with smart phone. Commuting routes are automatically matched and offered with priority.
4. The HD cars are designed with most advanced technologies providing navigation and driver assistance (ADAS) moving to all electric within one decade.
5. Citizens can purchase car service contract based on miles to be driven and time to possess the car. A fee algorithm is worked out based on a sophisticated model of efficient utilization formula and all HD cars are self-insured with self-fault detection system (accidents will be auto-recorded by a “black box” camcorder to be used in forsurance settlement).
6. Governments of the participating cities will design highways with designated HD priority lane(s). Central government will implement such highways between the participating cities.
7. Car models are provided by manufacturers meeting government specifications, modular design with parts standardized and replaceable at all depot stations by trained technicians. Different models will satisfy different private car needs for pleasure, business and vacation requirements. Car reservations can specify model and accessories needed including boats, bikes, camping and fishing equipment etc) with 12 hours notice.
8. All car maintenance will be performed by technicians at car depots. Car owner must bring the car for maintenance according to specified schedule.
9. Private car manufacturers, electronics and technology companies, appliances, auto parts and online service companies, can bid to participate in the HD enterprise. The total number of depots (about twelve thousand) will provide 3 million employment self-supported by the enterprise using a modified McDonald franchise model..
10. The first trial of the plan will start at Guangzhou and Shanghai before 2024. The net savings is an ultimate reduction of cars needed from 100 million to 10 million (conservatively based on HD cars driven 20 hours/day vs private cars driven 2 hours/day).
Although the above plan is speculative, the technological trend and post-pandemic social change are likely to kick off such an automobile revolution with huge economical benefit than the 'City Bycicle' revolution.