Today’s cars are mostly owned by individuals. As companies like Uber push for sharing the car, we enter an era of multi-modal transportation which includes small vehicles rather than just mass transit. The reason to keep owning a car individually is likely to be either as a luxury item, a classic vintage item, or a necessity for areas not covered by shared mobility networks. We can assume that largely speaking individuals will not own cars.

Originally written in 2018

Who Owns the Car?

If individuals don’t own the cars, who does? We need to look at ride sharing like any other investment asset class. It’s likely it will operate similarly to the airline industry. Investors will finance the leasing of vehicles that ride sharing companies require, expecting a return on investment comparable to other assets in the portfolio. For 90 million new vehicles sold per year, assuming 80% would be shared, and an average of $30,000 per vehicle — since it’s unlikely these vehicles will be high end, but that they will be need to have “smart” technology increasing their cost — that’s 2 trillion dollars invested, per year. At equilibrium, that’s 26 trillion dollars of capital required to finance the ride sharing car pool. It’s a very large number, but not unfeasible since if the asset works, there is enough money (I would estimate the airline industry requires 9 trillion dollars in airplane). Financial leasing companies will own most cars, manufactured by OEMs, operated by humans or AV software, and managed by ride sharing companies.

Back to today, individuals and corporations own their own vehicles. The auto OEMs have a personal relationship with the owners in order to provide warranty, service and repair the car. But OEMs today are removed from the car. Even when they provide a service in the car, such as navigation, telematics, post-collision repairs, or traffic light countdowns, the percentage of consumers signing for these services remaining in single digit percentages for new vehicles. So it’s fair to assume that today, once a car leaves the factory, it looses it’s connection with the OEM. It’s not an asset they own currently.

What happens then between now and the time when leasing companies own most cars, does the role of the OEM change? How many cars are owned by ride sharing companies? How many models of cars are made?

Who Owns the Map?

The high cost of building maps has reduced the industry to handful of players that can pay for maps: Google with ads, Apple with devices, and HERE with cars.

It took a long while for car OEMs to finally decide to partner start building maps, under HERE. And even today, they are not building maps using the assets they should use to do that, the cars themselves, but costly surveying processes. Since they don’t own the car, they need to use expensive means.

The need to provide increasing precision, coverage and freshness for AV/ADAS applications will make it even more prohibitive to produce maps. We need to think of maps as layers, with the base layer being revisited every quarter, and then each layer provides additional content at increasing freshness. Each layer opens up new applications, but the cost of creating such layer becomes exponentially more expensive. At the limit, the cost of the real-time layer is extreme. The number of applications that can justify that cost will be extremely limited, probably not even the three players that exist today, and the extremely expensive surveying processes will only be affordable to a very few.

To produce maps in the future that are economically viable (due to freshness requirements) to support AV/ADAS applications one needs to leverage the cars themselves. In the future of cars being owned by leasing companies and managed by ride sharing companies, it’s these ride sharing companies the ones that will have the card to be able to monetise the data on the road.