Transportation disruptors are obsessed with the wrong thing
In the summary, analysts articulate a series of themes and concerns that Morgan Stanley has been developing for the past two years, as the mobility landscape is transformed by Tesla, Uber, and others:
The 100-year-old auto industry business model is facing unprecedented technological disruption, starting with the very definition of the market itself - moving from "millions of units sold" to "a trillion miles traveled" annually by the global car parc. Shared, autonomous and electric mobility addresses many of the shortcomings of the current industry model, including low utilization (cars are used 4% of a day with an available seat-mile utilization of barely 1%) , consumption of finite resources (cars consume 500bn gallons of fuel per year, accounting for 45% of global oil demand), and public safety (roughly 3,500 traffic fatalities per day globally).
I've highlighted some salient language because it is, to put it bluntly, misguided. There are excellent reasons to create new, more ecologically benign drivetrains and to pursue greater vehicle autonomy to make roads safer. But the fixation of de-ownership and utilization rates overestimates the degree to which consumers in affluent regions want to do away with the cars and trucks.In the US and China, the two global auto markets that have seen the best growth - in the case if the US, growth and recovery - since the financial crisis, vehicle ownership has been booming. This has happened alongside the emergence of ride-sharing services such as Uber, suggesting that we're actually looking at parallel trends, rather than waiting for sharing to displace owning. At this point, Uber isn't disrupting the traditional auto industry; rather, it's undermining the taxi business.
In developing regions, car-sharing and ride-sharing may indeed gain a foothold and establish themselves as viable alternative to ownership. But in those parts of the world, ownership would be of small, low-profit vehicles typically, and in any case, many developing regions may be shaped by the emergence of mega-cities, where owning a car doesn't make much sense.
But in places like the the US, China, and Europe, ownership of vehicles doesn't appear to be losing ground. Some of these markets have seen flattening sales or trimmed expectations for growth, but no one seems all that hung up on the limited utilization of the pricey car they just bought. It a sign of affluence, after all, that you can afford to buy a car and use it only when convenient. An acceptable cost of doing business, if you will, as you get richer.
The trends that Morgan Stanley cites are intellectually intriguing and worthy of discussion and debate, but they run so counter to the current state of affairs that you'd need to have an abnormally long investment timeframe to even considering betting on them paying off.
What's more likely is that traditional auto sales, especially in Europe, will dominate economic activity in transportation. The status quo here is well-established and won't topple easily.