Friday, November 17, 2017

Is Bob Lutz Correct? Is the Entire Car Industry Really Doomed?

Following up on yesterday's Former GM Vice-Chair Lutz: "'Everyone will have 5 years to get their car off the road or sell it for scrap'".

From The Drive, Nov. 13:

Is the Entire Car Industry Really Doomed?
Bob Lutz drops a nuclear bomb on everything we know and love. But is he right?
Last week, Bob Lutz—former vice chairman and head of product development at GM, veteran of Ford, Chrysler, BMW & Opel, father of the Dodge Viper, and the automotive world’s most honest man—published a flamethrowing op-ed targeted titled “Kiss The Good Times Goodbye.” It echoes all the arguments of the Kool-Aid drinking mobility “experts” and everyone in Silicon Valley betting fortunes on the end of human driving as we know it. And not just human driving. Dealerships. Car magazines. Brands. If you believe Lutz, everything we know, love, or hate is utterly doomed by the arrival of self-driving cars.

Is Lutz right?

I’ve been saying the same thing as Lutz since 2015, with one crucial difference. I think it’s all over in 50-70 years. Lutz? Twenty.

That’s a big difference. If this had come from some idiot on LinkedIn whose bio said “Change Agent” or “Radical Disruptor,” I’d answer with customary wrath. But this is Bob Lutz, who delivers insight even when he misses the target. Also, the Dodge Viper wouldn’t exist without him. He’s a true car guy, and has nothing to gain by repeating the self-driving agenda. His argument deserves real analysis.

Let’s dissect this line-by-line.

“Everyone will have 5 years to get their car off the road or sell it for scrap”
By Bob Lutz
It saddens me to say it, but we are approaching the end of the automotive era.

To suggest the “automotive era” is over suggests a binary change, as if everything is going to flip, very, very quickly. Lutz is obviously a fan of Malcolm Gladwell’s The Tipping Point. I’d argue that we’re approaching the end of the beginning, which started with the Darpa Challenge back in 2007, and probably ended this week with Waymo’s announcement that they were removing the human monitors from their test vehicle fleet in Phoenix.

The auto industry is on an accelerating change curve. For hundreds of years, the horse was the prime mover of humans and for the past 120 years it has been the automobile.
Was the horse ever the prime mover of humans? Not for the humans who didn’t have horses. The horse metaphor is very popular, but it’s not really accurate. At peak horse, the majority of humans in the world had never owned, leased, financed or rented a horse, let alone ridden one. In the United States, cradle of car culture, peak horse occurred just over 100 years ago, when there were approximately 20 million horses in a human population of just over 100 million. Today there are approximately 323 million humans in the United States. Human driven cars? About 274 million, with an annual turnover of 17 million. The average vehicle's lifespan is 11.5 years. Even if 100% of cars sold starting tomorrow were capable of Level 4 self-driving, it would take 16 years to get to 100% ubiquity.

Sixteen years from today.
And the tech doesn’t work yet except in limited conditions, even now. In fact, it doesn’t even work in limited conditions. Thank you, Navya.

A lot has to happen to meet Lutz’s timeline. A lot that technology can’t solve, which is human nature. Fortunes have been lost betting against it, and culture is as powerful as the tides. Both can shift, but nothing can force them.

Now we are approaching the end of the line for the automobile because travel will be in standardized modules.

Lutz is describing what I call the Autonomotive Singularity, which will manifest the day after the last person with the option of using a steering wheel chooses not to. Hold your horses, because Lutz is skipping over everything in between now and then. You know, the part where people still have choices. People like having agency over outcomes, or at least the sense of it. Human driven car sales are at an all-time high. Cars aren’t merely transportation, but transformation. People don’t just buy cars because they need to get from A to B, and even when they do, they’re willing to pay extra for personalization as an extension of self, which the zero-agency standardized module does little to address. Luxury pods? Sure, but those are statements of wealth. The id requires more. It requires agency and control over machines as a statement of power, and Lutz’s Wall-E scenario will be Kryptonite to anyone who can afford to avoid it. Right now, that’s everybody....