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Transportation shifts hit high gear

 In April 2020

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Opinion

By Dan Barkin

Tony Seba is a big thinker who talks to business leaders and policymakers about energy and transportation. Recently, he brought his PowerPoints to Raleigh to talk to 2020 N.C. Transportation Summit attendees.

Seba came to say everything is about to change, so buckle up. Attendees had heard this message before, but they live in the here and now. The guy whose engineers design Volvo trucks wasn’t likely to hear Seba, drive back to Greensboro and say, “Diesel’s dead to me. We’re going 100% electric starting tomorrow.”

But maybe some were struck by Seba’s old-timey horse slides. These were pictures taken more than a century ago, including one of New York City’s Fifth Avenue in the early 1900s. The road was full of horse-drawn carriages and one car. Then he showed a picture of the same road 13 years later. It was full of cars and just one horse.

“This is how quickly disruptions happen,” Seba said.

Gene Conti, a former North Carolina secretary of transportation, was still thinking about Seba’s horse pictures the week after the summit, reflecting that “in a very short time frame, that whole economy flipped.”
“The potential for this technological disruption to force major changes is there,” Conti says. “Technologies today are much more powerful than a horse to a car.”

Convergence of innovations brings big, disruptive change. Consider the current overlapping of the smartphone, massive bandwidth and the cloud. That is why Netflix, Uber and DoorDash are on your crowded home screen, next to Facebook, Twitter, Instagram and TikTok. Yeah, TikTok. Look it up.
Experts are occasionally wrong about the velocity of disruptive change. Experts hired by AT&T in the ’80s completely missed how fast cellphones would blow up long distance. Remember that when you hear that self-driving cars won’t make a dent until 2040 and that electrics won’t penetrate for another generation.

Seba, an MIT computer science and engineering grad, Stanford University MBA, and early Cisco Systems employee, said transportation will be disrupted fast. Electric vehicles may last three to four times as long as gas cars, making them irresistible to fleet owners. “Next year is the tipping point for purely economic reasons,” Seba said. “It won’t make any sense to buy gasoline cars.”

But electrification is just half of it. Billions are being spent on self-driving vehicle research and development and improving technology. By 2025, self-driving cars may be 100 times safer than human-driven vehicles, Seba predicted.

We are now at convergence junction again; strands of self-driving, Uberization and electric are coming together to make the case against gasoline and personal car ownership. Cars are our second-largest expenditure but sit parked 95% of the day. An on-demand fleet of autonomous electrics can run around town as long as there’s business.
The cost to the consumer of using this more efficient transport as a service will be significantly lower than private car ownership.

“The day that autonomous technology is approved, let’s assume 2021, … the cost per mile of [transportation as a service] is going to be up to 10 times cheaper than the cost of owning a car,” Seba said. So do you want to spend $40,000 to $50,000 over the next five years for a new car, or $100 a month for an Uber-ish, on-demand subscription — $6,000 over the same period — and a price that will probably fall over time with competition? Like if Starbucks decides to ditch some of its expensive real estate now serving as free coworking space for the one-cup laptop crowd and switches instead to a cheap ride-hailing service that sells lattes. (Seba mentioned this. I will bet a macchiato someone is thinking about it.)

If the uptake is as fast as Seba predicts, the gas taxes that fuel highway construction and maintenance will dry up. With a lot fewer cars, DMV fees will also shrink.

That is why NCDOT formed a commission last year to come up with ideas. NC FIRST is co-chaired by former Raleigh Mayor Nancy McFarlane and by Ward Nye, CEO of Martin Marietta, a Raleigh-based aggregates business. The commission is studying how our $7 billion-a-year transportation system is funded and the challenges to its business model.

The commission will make recommendations next year. It is looking at what other states are kicking around, including tolls, time-of-day or mileage fees, and sales taxes to fill the coming funding gaps. The principle underlying the gas tax and DMV fees is that users should pay for the roads. But an argument can be made that roads support the entire economy, so funding sources should be broadened.

In the new transportation paradigm, losers will be businesses built around personal car ownership. Airports — giant parking lots with jets — will need to adapt. So will owners of millions of square feet of parking. And car dealers? Insurance companies? Personal-injury attorneys? A shakeout is coming.

The winners: You and me. Seba predicted savings from transportation as a service will be $5,600 per family, an increase in national disposable income annually of $1 trillion — about $45 billion for North Carolinians. Those of you who drag work home from the office will get time to catch up if you can leave the driving to AI.

Other winners will be folks who now face great transportation challenges, such as the poor and the elderly. Yes, the winner’s circle should also include parents and grandparents. In the early 2030s, if Seba is right, my grandchildren — now 3 and 5 — will not get licenses and will not start driving their own cars, which is fine by me. We have a transportation system in North Carolina that experiences 1,400 fatalities annually.
I will be spared a cycle of worry like the one that began in the summer of 2002, when my daughter convinced the DMV that she was ready to climb into a Pontiac Grand Am (because I couldn’t swing an up-armored Humvee) and join thousands of inattentive motorists on Interstate 40.

That is worth another trillion, easy.

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