Electric vehicles, like the rest of the products emerging from the Green Economic Revolution, will win market share because they cost less.
An electric vehicle economy, sold through a mobility as service (MaaS) business model, is poised to reshape our vehicles and how we pay for them.
MaaS will deliver transformative lower prices by:
- Displacing fossil fuels with lower cost renewable electricity
- Reducing vehicle maintenance costs by displacing mechanical systems with electronics
- Reducing labor with autonomous driving vehicles
- Lowering consumer costs with digitally purchased incremental mobility services compared to vehicle ownership .
MaaS is project to be four to 10 times cheaper than owning a car.
Vehicles become consumer devices
Technology is driving a radical redesign of vehicles. Think horse and buggy vs. gasoline powered car. This is the scale of change that defines MaaS.
MaaS seeks to design vehicles as consumer electronics using these five technologies:
- 5G. 5G is the next wave of mobile connectivity. It has gigabyte speeds and bandwidth compared to today’s 4G’s megabyte speeds. 5G is projected for 2018 start-up. MaaS will use 5G to create real time convenience and efficiency between smart, autonomous vehicles and consumers.
- Artificial Intelligence (AI). AI will be the autonomous electric vehicle’s operating system and “steering wheel.” AI will autonomously steer electric vehicles from customer to customer and curb to curb. It will optimize for safety, on time performance and least cost.
- Digital commerce. Car loans will be displaced by cheaper, easier and more convenient digital payment for incremental mobility service. Think of Uber-like services supplying whatever you need (drones, SUVs, pick up trucks or non-emergency medical vehicles) through a digital payment system accessed through a smart phone or wearable device.
- Renewable electricity. Renewable electricity will fuel vehicles designed as consumer devices. It will be electricity because it is the preferred energy for consumer electronics. It will be renewable electricity because it will be cheaper than fossil fuels or fossil fuel generated electricity.
- Batteries. Batteries are on a downward cost curve driven by innovation and manufacturing economies of scale. Battery costs have already fallen 75% and are projected to win another 75% cost decline by 2030. Battery range is being extended even as their costs are declining. New generation battery technology is projected to offer 300 mile driving range with five minute recharging times.
California leading the world into the electric vehicle economy
A Silicon Valley auto manufacturer row has emerged. BMW, Ford, GM, Honda, Toyota and VW are just some of the auto manufacturers that have recently opened technology centers in Silicon Valley to design vehicles as consumer electronic devices. Their combined focus is to create autonomous electric vehicles that will anchor the mobility as a service business model.
California companies are already implementing MaaS business solutions. Uber is the global poster child example. But MaaS is now moving into niche transportation solutions. Veyo is using big data and predictive software to deliver lower cost, real time door to door mobility solutions in non-emergency medical transportation.
California is also implementing a renewable electricity system that will slash transportation fuel costs. Today, up to 40% of California’s grid supply comes from renewable energy. Most California solar power plants can recapture original investment in about five or six years. The cost to produce electricity after system payback is almost zero. That zero incremental price, combined with a growing supply of renewable energy, has caused California’s grid operator to charge negative prices (effectively paying generators not to operate) to curtail production.
California will use this glut of lower (zero) cost renewable electricity to fuel 1.5 million electric vehicles by 2030. California is building out a state-wide network of 10,000 recharging stations that will make cheap renewable energy available to electric vehicles.
California also has almost 5 million homes powered with solar energy. (That is 1.5 million more homes than all the homes in Georgia, America’s ninth largest state.) California homeowners pay for their solar system through electric bill savings. Thousands of these homeowners are now using their system’s electricity to recharge their electric cars for free.
These California examples portend the fossil fuel industry’s competitive question:
How can you compete with “free?”
What MaaS means to your state’s economy
Imagine your state without gasoline stations. What business would move there?
MaaS raises a similar state (and national) issue. Not having lower cost renewable electricity, and public policy supportive of autonomous driving, could be the 21st century equivalent of not having gasoline pumps during the 20th century. Yet, at such a time of disruptive technology change, too much of our public policy has a rearview mirror focus on preserving 20th century technologies, business models and jobs.
Rearview mirror focused public policies will harm our economic future. While tax policy influences economic growth, it is innovation and productivity that creates economic growth. Public policy that retards or blocks innovation and productivity also retards and blocks our country’s ability to achieve a 3% annual economic growth. The 21st century’s public policy imperative, if we are to have an economy strong enough to fund our national interests, is to support MaaS.
The second article in this two part series explores public policy steps our nation, states and communities must address to remain competitive in an electric vehicle economy enabled through a MaaS business model.