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The Future of Transportation Economy

Snapshot: As a mode of transportation, cars have come a long way. It's expected that soon a tipping point will come and the Transport Economy would witness unprecedented changes. We have a look at possible changes that may come in a few years from now.

It’s a fact that petroleum based products would not last long, and there exists a need to shift towards alternative fuel and technologies. Biofuels like Ethanol based petrol and biodiesel may only solve problems to some extent. It’s also expected that fully autonomous vehicles and businesses around them would reshape drastically. So here’s what all may happen in coming 15-20 years.

Fuel options & Technologies 

Commercial production of ethanol started in the year 1975 and one of the countries that have reduced its dependence on fossil fuels significantly is Brazil. It started producing Ethanol commercially in the year 1975 and more than 55% of the cars in the country use Ethanol. The biofuel is one of the best ways to transition and to reduce dependence on petroleum products, but for the simple reason that the same land can be used to produce food for ever-increasing population makes it a less viable option in the long run. 

Ethanol produced from Corn and Sugarcane is first generations of biofuels are paving way for the second generation where scientists are working in labs to re-engineer yeast and other bacteria to produce fuel or other chemicals from glucose etc. This should become major source of alternative fuels and take the burden off from land to some extent.

A photo voltaic car i.e. car powered directly from Solar energy is hardly an alternative since the energy density of the Sun is enormously less, and not only that, in bad weather Sun fails to function as a standalone powering system. Ford C-Max which is on sale in the US is perhaps the best example of what actually works. A supplementary two litre IC engine can power the car in case there isn’t enough charge or Lithium ion batteries run out of juice. Touted as practical solar cars are hardly practical on their own without a secondary power source. 

Petrol and diesel hybrids that rely on really efficient IC engines along with a mix of electric energy and are expected to remain popular until electric cars become more practical and also more affordable. The newer generation IC engines will help transition smoothly to an all electric future and are expected to remain popular until solar energy farms, wind farms and other facilities trying to capture full potential of non-renewable sources of energy produce surplus and cheap electricity. Another reason that would keep Hybrids relevant for many years to comes is that the infrastructure required for an all-electric car may not achieve deeper penetration level making travel beyond a certain point impossible, while hybrid cars would be seen as a flexible alternative due the existing infrastructure and fuel stations. Recent advancements in IC engine technology and power train further make a case for the long future of the Hybrid technology.       

The biggest challenge that automotive industry faces today is that of increasing efficiency, while simultaneously reducing the pollutants level coming out of the tail pipe. An electric car does not pollute but it displaces the source of pollution. And it would do so until we remain dependent on fossil fuels for energy. The challenge is forcing the manufacturers to constantly innovate and adopt electric alternatives in some measures. The governments are also encouraging the manufacturers by providing incentives. Therefore, an all electric future to an extent is dependent on its own evolution as technology which would make it more viable and abundant supply of electricity that would sustain it. Till that time, the Hybrids are expected to play a key role.    

Evolving Businesses

Cars are increasingly becoming connected and creating more data than ever. As cars start to communicate with intelligent infrastructure (V2I) and other cars (V2V) they are expected to become technology aggregators. Software dependencies are already overwhelming and as cars become part of larger mobility network, the digital technology is expected to further change the economic model of businesses. Real-time road data should improve the efficacy of sales and marketing, and user behaviour is expected to become most useable and lucrative data for companies.

Tremendous value shifts are expected with the decrease in personally-owned vehicles. It’s expected that car manufacturers and businesses would become more focussed on offering end-to-end mobility solutions.

As cars become autonomous and do way with conventional IC engines, it’s expected that existing car manufacturers would face competition from disrupters, mainly the technology companies like Google, Uber etc. that have nothing to lose by foraying into mobility business.

An autonomous car may never crash and should ideally make road accidents a thing of the past. Therefore, auto-insurance businesses and traffic enforcement are expected to release lot of locked value. Efficient last mile delivery should make physical stores redundant. Simultaneously it should make cargo and freight carriers more efficient.      

Cars as personal aspiration product - Ownership Change

There’s a linkage between affluence and car ownership. In societies that have recently become affluent, cars are rather seen as a status symbol, a way of showing one’s success.

With individual ownership one also buys a responsibility of maintaining a car. Concerns like these and available of alternatives like car-sharing services are expected to defy the idea of car ownership. We can already see the disruption that car sharing service like Uber has created, pay-per-use businesses are expected to change dramatically with autonomous driving technology and with increasing connectivity. Businesses around self-driving cars and ride share are expected to grow further as users get flexibility of experiencing different cars which also lets them multitask.

It’s expected that more users would be willing to give up the idea of car ownership. There are many forces that would influence the evolving ecosystem though, public attitude, employment changes and government regulation would be the most significant ones. However it’s expected that more companies would foray into car sharing services and buy fleets of autonomous cars and cars that users can themselves drive.

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