Ride hailing has become the new standard in how people book a taxi. It’s convenient and fast, you open an app on a phone to summon a car which picks you up within minutes. No money changes hands at the end of the journey, the app takes care of charging the passenger and crediting the driver. Anyone with a car and some spare time can sign up to provide a taxi service to make some additional income.
The automatic exchange of fare removes potentials of price disputes; something taxi drivers are pleased with. Both parties get to rate the other, this 5-star rating system allow the ridesharing service to maintain a quality standard. The technological evolution of an old industry has brought about significant improvements to the quality of the service. Since Uber, one of the largest ride hailing services launched in the UK, the number of private hire vehicles increased by 25%. Ride hailing is also sometimes referred to as ride sharing which generally means the ride is shared between customers. The app aggregates journeys on similar routes and offers the ride for a reduced cost if the customers agree to sharing the ride. This cuts down on the number of cars on the road.
There is a wave of technological revolution around the corner that promises to completely change the industry. Stage 5 autonomous vehicles that don’t require a driver to be behind the wheel. Removing the driver from the process slashes the cost of each ride. The car will be available 24 hours a day, constantly traveling from one customer to another and only needing to stop to refuel. Cities will change to adapt to this new paradigm as parking spaces disappear to the outskirts of the cities. John Zimmer, CEO of ride hailing service Lyft predicts that in 5 years’ autonomous ride hailing will be ubiquitous in cities “and by 2025, owning a car will go the way of the DVD.” Transportation will work more like Spotify, a low-cost subscription to a ridesharing service instead of upfront capital and ongoing maintenance cost of a personal car.
This all looks good for the customer, the ride hailing company and the city landscape. The utopia sounds great but is there not a greater disparity in the distribution of wealth by adopting the tech?
With a large network of autonomous taxis working under a ridesharing service like Uber, the wealth that today is generated by thousands of taxi drivers will be concentrated with a handful of companies that provide ride hailing services. Those companies become ultra-rich, perhaps not too different from the automotive giants of the bygone decades. This is a trend that more autonomous systems will intensify. A study in 2013 examined the probability of computerisation for 702 occupations and found that 35% of workers in Britain had jobs at high risk of potential automation. The figure was as high as 47% for the US (the difference is due to higher number of employment in creative fields in Britain that are less susceptible to automation). The disparity in wealth distribution has a great potential for negatively impacting society at large.
History has shown as automation takes one job it creates new opportunities of employment in the process and changing landscape. When transportation moved to modern cars from horse carriages there was a similar uncertainty as horse related jobs declined. But the increased efficiency and convenience of cars also started new industries. One example being fast food chains that arose to serve motorists and truck drivers. There will be new jobs tomorrow that we don’t envisage today. Some will come about from the change in industries others will be to support the machine where it lacks certain skills. Perhaps concierge services in autonomous busses or delivering the package from the car to the flat on the 3rd floor. As ATM’s became more common in the 80s, the number of tellers at the banks decreased. But the efficiency and cost savings from an automated system meant the number of bank branches rose by 43%. The reduced cost of running a branch allowed the banks to open more branches and hire more staff in roles such as sales and customer service.
Some say the change this time around is on a much bigger scale, affecting a greater proportion of industries. Elon Musk for example envisages governments will have to start paying Universal Basic Income as automation takes over more jobs. Bill Gates thinks a tax on robots could be the solution to funding such initiatives. Taxing a robot that takes away a job in manufacturing could for example pay for jobs that humans are better at, like looking after the elderly and teaching children with special needs.
A different ride hailing network
There is another model for a ride hailing network that gives people more control and allows them to be part of the service. Tesla, the maker of electric cars, plans to have a fully autonomous car in the market by the end of the decade. The cars sold today already come with all the hardware capabilities and would only need a software upgrade to turn on the feature. The “Tesla Network” will offer a ride hailing service in a similar manner to the others on the market. The difference being the cars will not be owned by Tesla itself but purchased by individuals who can “add them to the Tesla fleet” to offer rides while they aren’t being utilised by the owners. The car earns an income for the owner which can go a long way towards subsidising the cost of ownership, even making a profit in some cases. Tesla of course takes a cut for providing the service but according to Musk the “majority of the revenue would go to owners.”
What’s over the horizon?
A new world.
As autonomous vehicles become available in the market, ridesharing services will start to take advantage and the cost of rides will drop. The drop-in cost, potentially below that of public transport, will increase the use of ride hailing and decrease vehicle ownership. Initially that will increase jobs to keep up with the demand but over time that will fall as autonomous vehicles become abundant.
The change in human and goods mobility will cause the city landscape to change. Roads give way to wide footpaths, parking lots give way to community green areas, traffic lights become an icon of historic transport. The way we plan cities will no longer be around cars but around people.
New industries will rise up to take advantage of the added convenience. Same day deliveries become more prevalent or small enterprises or even regional governments running mini ride hailing services using something like the Tesla Network. The jobs lost to robot cars are replaced by another that capitalises on the convenience provided by the machine.
Almost every industry will get a dose of automation, some will be impacted more than others. Some will disappear while others transform. Other industries will also follow a similar path to automotive mobility, of seemingly huge job losses but they will also gain jobs in new fields unimaginable today. They should also consider innovative approaches like the Tesla Network that divides the revenue share and empowers people.
Of course, as some have predicted not every job taken will be replaced by something new. Advances in Artificial Intelligence are expected to reach human intelligence by the end of the century. Which surely will take work off our hands. Shorter working weeks will divide work across the population. But governments should consider offering a Universal Basic Income to the cover the shortfall in incomes, even Barak Obama entertained the idea in an interview in Aug 2016 “whether a universal income is the right model…. that’s a debate that we’ll be having over the next 10 or 20 years.”
There will be more free time available for everyone, binge watching Netflix will only be fun for so long. People will start pursuing purposes that aren’t tied directly to money. As Musk said “People will have time to do other things, more complex things, more interesting things. Certainly, more leisure time.”
The way people use cars is expected to change drastically over the following decade. This means car manufacturers are also going through some drastic change. The CEO of Ford refers to his company as an automotive and mobility company. Personal vehicle ownership may not completely disappear but won’t be the focus of future transportation. If the cars are autonomous and continually driving passengers around, they’ll rack up far more miles than most cars do today. Today an average car is only driving 4% of the time, an autonomous car will be driving all day long. This will mean cars will need repairing or replacing more often. If the objective of the company is now to provide mobility, then the design of the car shifts strongly towards remanufacturability and easier upgradability. Data capture through the life of the car will become an integral part of the design and manufacturing process.