Automotive & transport

Are we auto immune yet?

Many people are asking the question whether we have reached ‘peak car’. Looking outside our window now, we would have to say “no way”, with parked cars lined up, snake-like, along every inch of available road. But if you analyse the statistics, ask the town planners, or look at cities like Lyon, Helsinki, London and Munich, they have a more inspiring story to tell.

Since 2007, the trend for vehicle miles travelled (VMT) to outpace both population and jobs has plateaued and started to fall. This is true across all industrialised countries. But while the statistics are convincing, not everyone believes the trend will continue.

Fans of the ‘interrupted growth’ idea – those with an investment in having cars - say this trend down simply mirrors the world economy and, as soon as the economy picks up, growth in cars will too. In the US, VMT did indeed rise by 0.4% in 2013 and 1.7% in 2014.

Proponents of public transport, bicycles and walking, believe the car is losing its appeal because of fundamental changes in society, especially the digital revolution. Young people, for example, are certainly more interested in owning smartphones than they are in having – or even driving – cars. So who is right?

One frequently overlooked reason for decline of the car is saturation. Statistical models created in the 1950s and 60s predicted a saturation point for cars. In 1974, an official prediction by the UK government was that cars would reach saturation point around 2010, which now seems eerily accurate.

A new book, Peak Car: The future of travel, by David Metz, predicts saturation of “daily travel demand”. This is not merely travel in cars, but limits on the need to travel at all.

Metz believes we are in the “fourth era of travel”, starting with hunter-gathering, then settled communities, then the railway era, and fourth, no growth in per capita travel. He claims our “travel time budget” is roughly an hour a day. As we have gathered speed, whether on trains, planes or buses, it has become increasingly easy to stay on budget. Cars do not necessarily make us any faster and, in many cases, slow us down.

Many people in cities have everything they need close by. Some 80% of urban Brits have three supermarkets within a 15-minute drive; residents in one Sydney suburb have two supermarkets within a 10-minute walk.

Demand for cars at both ends of life is falling. Young people, whether through disinterest or lack of employment, are rejecting ownership of cars and the ageing population will gradually stop driving. One reason for driving – shopping – is becoming less important too. As online shopping becomes increasingly attractive and, in some cases, necessary, there is less need to go anywhere. Germany, for example, saw a 20% increase in retail spending online last year.

More people are getting the broadband speeds they need, not just to shop, but to work at home. In the UK, there was a 13% increase in people working at home between 2007 and 2012. Think of all those commuting hours saved.

Rather than debate the cause – economic or societal - it is worth watching to see where the smart money is going. Who is spending to support private cars and who is spending to support public transport?

In Sydney, for example, the car still rules and the government is clearly committed to building motorways, not railways. But the trend is completely different in Helsinki or Lyons: see New cities, no cars, below. It is hard to imagine how our old ways could continue, with rapid increases in world population and digital technologies, and so many thriving examples of a turning point in the way we are planning our cities.

New cities, no cars

Did you know your car sits outside, idle and losing value, for 96% of its life? It’s a sobering thought, given how much it costs to run, and all the hidden costs to the community or environment. Given that most cities are full of cars, what would they look like without cars?

A few nifty expressions describe this post-car environment: ‘mobility-as-service’, ‘mobility providers’, ‘new mobility’. The question is not so much what you own to get around, but all the different methods you might use to do it, depending on the need. It does not involve owning anything. The city of the future is full of services for the city dweller, not things.

One example is Lyon. This is a city full of bicycles, thanks to its decade-old Velo’v bike-sharing scheme. According to Gilles Vesco, “Digital information is the fuel of mobility… [maybe even] 50% of mobility”. This is why, in a sense, the smartphone is the way to ‘mobility-as-service’. Lyon encourages cycling, electric cars and ride-sharing and, as a result, the number of cars has dropped 20% in the last decade, even without a congestion charge. Car parks alongside Lyon’s two rivers have now gone, replaced by human parks. Who would have thought?

Another example is Central London, which has seen a 30% drop in traffic in the past 10 years. Certain suburbs, like Waltham Forest and Hackney, are proud of their achievements in reducing car use. Hackney, which calls itself the greenest Council, has 90% of developments underway that include no provision for cars (but must be no more than 3 minutes’ walk from a car-sharing bay). Already, more than 15% of residents commute to work by bike and 65% of households do not own a car.

Another buzzword, ‘agglomeration’, is at work in Helsinki because of a projected 50% increase in population by 2050. This means mainly highrise building, key arteries into the city replaced by boulevards, and lots of cycle lines. People will not need a car: everything they do need will be close by on foot or by public transport.

Already there is a minibus service, Kutsuplus (“Call plus”) whose routes are based on the bookings they get on the day, not by standard routes followed every day. The city will be multi-polar – lots of smaller hubs within the city, rather than just one place where people work or shop – to reduce congestion.

Chief executive of Intelligent Transport Systems (ITS), Finland, coined the expression, “mobility as a service”. He says people will use smartphones to check micro-travel news, find car-club cars or bikes, check for parking spaces, ring Uber drivers, or find shared rides. This type of information may well be 50% of mobility. It is also interesting that what was once private transport is becoming public transport.

Some of the changes are happening at street level. In England, there is the DIY Streets scheme, where local residents decide how cars will affect their own streets and how much parking they want there. In Mumbai, the Equal Streets movement began closing 4 miles of a main road each Sunday morning, so residents could move around freely and in peace without cars.

In spite of these incremental changes, some authorities, like the UK Department for Transport, still think there will be an increase in cars. Car manufacturers are obviously concerned for their future and are looking for ways to meet the need for mobility-as-service, as well as continuing to produce cars to sell. BMW’s backing for DriveNow, a car club, is designed to get younger drivers interested in BMWs before they are ready to buy one later in life.

Cars will become part of the internet of things. They will become hubs of connectivity, providing all the information the driver (or one day, just the car) needs to drive safely. They will also become sources of data for advertisers, revealing where people drive and how often, what they listen to in the car and where they go for holidays.

Instead of buying cars, we might have a monthly contract with a mobility supplier. One consultant predicts 16 major mobility suppliers will enter this market, get to know your mobility needs, and work to supply a package that exactly meets them. Once you become a mobility customer, you may then become the focus of marketing activities for other types of service.

The car, whether it is function or status, will no longer be important. Cities can and will flourish without them. It’s the personal data from your smartphone or travel methods that will count.

Why dynamic pricing is not Uber the top

The times when you most want to fly are probably the times when everyone else wants to fly too – weekends, public holidays, midsummer – and you expect to pay more at those times. This is called ‘dynamic pricing’ and airlines, hotels, even movie tickets have been using it for years. So when Uber, the start-up car service, charged New Yorkers up to eight times more for a ride during a snowstorm, why was there was a storm of protest?

Uber calls it ‘surge pricing’ and it’s the same as dynamic pricing – when demand is high, prices rise. People protested, perhaps because anything more than three times the normal price is psychologically over the top. But more likely it is because they did not think Uber, as a nifty young start-up – should be behaving like a corporate.

A similar backlash happened when Coca Cola considered making Cokes in a vending machine more expensive on hot days. The idea was quickly abandoned.

Dynamic pricing works well for airlines because they can sell tickets cheaper in advance and then charge more nearer take-off date when ticket inventory is lower and demand is less price-sensitive. It works well for hotels that have extra rooms that they would rather sell at a discount than have empty. Herein lies the difference. People love a discount – but they don’t like price hikes. So it is better to advertise cheap Tuesdays, happy hours (Lyft does this), cheap airline tickets, than it is to suddenly put the prices up. Either way, it is still dynamic or surge pricing.

In the taxi industry, prices have historically been regulated or fixed. Uber came in with a different pricing model. Its algorithm, created in 2011, is the company’s best asset because it finds the price that will attract drivers. In 2012, it increased the supply of drivers by 70-80%, thanks to surge pricing.

So while surge pricing may well make some rides more expensive, it also increases the number of people who can get a ride when they need one. Once again, it all comes back to the power of the market, whether you’re a casual start-up or a stitched-up suit.

Plugging away at electric cars

You might think, if we can make a car fly, we can surely drive with electricity, rather than petrol. The market so far says differently: electrics and plug-in hybrids make up only 0.7% of light vehicle sales in the US and only 3% of drivers in the UK. The main problems are ‘range anxiety’ – where the driver is terrified of running out of power – and the lack of operational public charging points. (Plus, no doubt, a little bit of vested interest in keeping up petrol sales.)

Elon Musk, the entrepreneur who created the Tesla Model S, claims his car is faster than the Ferrari 458, McLaren MP4-Asc and most Porsche 911s. It goes from 0-60mph in 3.1 secs. Not only that, it has retractable door handles, central touch screen, remembers your personal profile, and will soon be able to park itself and stay in lane without your help. The Tesla has three battery options, of which the highest takes you 310 miles without charging. All for a mere $US65,000.

Musk knows it is not enough to rely on the green or cool customer to buy these cars and he wants to sell a mass-market car. The Model 3 will enter production in 2017 and will cost about half: $US35,000. BMW, VW and GM are all developing mass-market electrics due to come out in 2018, which Steve Levine, commentator, calls the “industry’s moment of truth”. This is when we will discover whether people want to buy and drive electric cars.

Charging continues to be a bugbear, especially in London, where 75% of parking is on the street rather than in a garage. Drivers of electric cars have only 1,500 charging points spread over 900 terminals on 300 sites in London and it is common for 40% of them to be ‘out of service’. Drivers who are already experiencing ‘range anxiety’ are likely to panic.

Bollore has taken over the infrastructure network, Source London, aiming to more than quadruple the number of charging outlets to 3000 by 2018. However, it has to deal with each Borough separately and only four have signed up for its services so far. Bollore owns the Autolib network in Paris, which runs 3,000 electric vehicles that are served by 871 charging stations. The scheme averages 10,000 rentals a day.

This begs the question whether people need to own an electric car at all or whether it is better to run a network of rental electric cars. As long as there are sufficient charging points – and no possibility of running out of power halfway to the beach/in-laws/conference – cities at least are ideal for electric rentals.