By Peter M. DeLorenzo
Detroit. That this business is headed for The Abyss is no secret. The headlong rush into autonomous vehicles, connected vehicles, electrification and the blank check-writing going on in pursuit of all things AI will be the final frontier for this business.
Let me stress that word “final.” Because it’s clear that we’ve reached the end of the road as to the role the automobile and the auto industry have played and what they have meant to this country in particular for over a century. And the speculation as to where this business is headed covers the broad spectrum between absolute conviction of a promised brave new world of autonomy and electrification that’s allegedly almost upon us, and a massive hedging of bets revolving around the fact that for at least 80 percent of the country “the future” of transportation will pretty much stay the same for years and years to come.
And as with everything in our world these days, the factions are polarized, and this spectrum is demarcated by a canyon-like divide. This is particularly true for the future transportation zealots, who wholeheartedly believe in the promised brave new world brought upon by the radical transformation of our transportation system of the future. The kumbaya aspects of this for these zealots cannot be overestimated, either. To them it represents freedom from the “tyranny” of the automobile and automobile ownership. No longer chained to monthly payments and insurance costs, the future will be a trip fantastic unburdened by the hoary conceit of what the automobile and its role in our society has been, and it can’t come soon enough. Is there a large measure of irrational exuberance in all of this? Absolutely.
Yes, as I’ve stated before, I will concede that for the most densely populated major urban centers here and around the world and other idyllic enclaves - aka Silicon Valley - the notion of advanced mobility technology for advanced mobility technology’s sake is a major motivator, and a way to demonstrate advanced intelligence, artificial or otherwise. And I can see that the onslaught of these new technologies will have some very specific and valid uses and applications, whether people are ready for them, or not.
But remember, we’re talking select urban centers here. As for the rest of the country, much of the day-to-day realities of transportation life will largely remain the same, meaning the Internal Combustion Engine will prevail, with the attendant gasoline infrastructure intact. Because the fact of the matter is that the transition to full-on electrification in rural areas will be s-l-o-w, as in decades, and the notion of fully autonomous vehicles outside of the few major urban centers where they will dwell will pretty much be nonexistent. I will admit that this is not what the so-called transportation visionaries want you to hear, but this notion that a switch will get “flipped” and that we’ll all be chauffeured around in shiny happy autonomous cars overnight is a complete fallacy. That hasn't stopped the transportation futurists from doubling down on this notion, and squawking incessantly about it, however.
And that has made the growing dichotomy in this business more real, with the divide between the vision of what could be and the reality of what actually is getting more pronounced by the minute. Just last week the Ford Motor Company announced massive profits from the staggering sales of its industry juggernaut F150 pickup. That means real people buying real trucks are not going away overnight. In fact ICE vehicles are going to be the mainstay of this business for decades to come.
Yet Ford, while churning out the most popular vehicle on the planet is also, along with other car companies, planning for a day when car ownership as we know it becomes obsolete. How does all of this possibly get sorted out, and isn’t there a danger of it all going wrong for some of these industry players? Oh yes, very much so. Frankly, the ugly reality surrounding the ride sharing and autonomous vehicles “big idea” is that it is going to have a much smaller footprint than the future technology zealots would have us believe.
But in the meantime, this dance of duality is going to take its toll.
Now that these advanced technologies - electrification, autonomy, connected vehicles, ride sharing, etc. - have been brought forward and put on the table, they’re being dissected, researched, developed, invested in and promoted as the second coming of our transportation future. But devoting billions to what will prove to be a narrow part of the transportation equation is a dangerous game, one fraught with considerable peril. And to see auto companies spending huge amounts of money trying to straddle both sides of the equation is painful to watch, because some of them won’t make it. Mistakes and miscalculations are inevitable, and it will prove to be far easier to succumb to the vagaries of the market because of the wrong bets or the wrong roads taken than it will be to guess right and come out ahead. The car companies that will be most vulnerable going forward will be those that ignore the considerable cash that can be made over the next couple of decades selling traditional cars and trucks, because that’s where the real money will be made.
Some argue that we are on the precipice of a transformative mobility, one that will free us from the stifling binds of a moribund industry rooted in its past. And that’s all well and good, but this whole impetus is just getting started, and there is a long, long way to go.
In fact, all it really means is that we’ve only reached the end of the beginning, and the next dimension of this business will play out in decades, not years.
And that’s the High-Octane Truth for this week.