Uber and Lyft may be taking the world by storm today, but some experts believe their run will be shortly ended by the technology they are rushing to embrace: self-driving cars.
“Several car companies have said that they think Uber and Lyft are only here for a short period of time, because when they move to autonomous they don’t think they need an intermediary between them and the customer,” said Randy Rowe of Green Courte Partners, an expert in urban real estate who has been studying the potential impact of self-driving vehicles on real estate investment.
Rowe believes autonomous cars will wipe out billboard advertising and challenge the self-storage industry, transform retail, office space, and street design. But those changes won’t necessarily be driven by the ride-sharing companies we think of today.
That’s because autonomous vehicles will also challenge car ownership, the two-cars-in-every-garage concept that has sold so many cars in America. It will make little sense to let your car sit idle 95 percent of the time, depreciating—as most cars do today—when it could be on the road, earning its keep.
When that idle time vanishes, fewer people will need cars of their own. One study found that Ann Arbor, Michigan, home to 120,000 cars, could be more efficiently served by 16,000 autonomous ones.
Automakers will have little choice but to move from car sales into the space pioneered by Uber and Lyft.
“Instead of buying a car you’ll sign a contract,” Rowe said, at a Chicago forum sponsored by DePaul University’s Chaddick Institute.
“You’ll get a certain number of points in a year, and if you order a sports car for that morning it costs you that many points, if you order a van for the family trip to the mountains it costs you that many points, and when you have your four-door sedan for your normal stuff it’s a different price,” he said.
“So then you’ll have a relationship with them [carmarkers] where they will provide whatever the suitable vehicle is, on demand, and they believe there is no reason for anybody to be between them and you.”
Ford is already rebranding itself, Rowe noted, as a mobility company rather than an automaker.
This week, Uber CEO Travis Kalanick admitted Uber may be at a disadvantage.
“Of course, we can’t do it alone,” Kalanick wrote Tuesday in an announcement of a new partnership with Daimler, which has invested in several Uber competitors. “Auto manufacturers like Daimler are crucial to our strategy because Uber has no experience making cars—and in fact, making cars is really hard. This became very clear to me after I visited an auto manufacturing plant and saw how much effort goes into designing, testing and building cars.”
In the partnership, Uber agrees to let Daimler vehicles use Uber’s ride-sharing network. But what happens to Uber when Daimler doesn’t need that network anymore?
Lyft CEO John Zimmer has predicted that most cars on the Lyft network will be autonomous by 2021, but what if those cars have a network of their own?
I reached out to Uber and Lyft for comments on this story. Neither responded. If they do, I’ll add their comments below.
“There’s going to be a lot of battle in the capital markets and by all these players to try to get control of the customer,” Rowe said, “and it’s going to be interesting.”