Much has been said about the imminent arrival of autonomous cars in the mass consumer market, always pointing out that this will help reduce fatalities from road accidents, something that should be applauded since they annually total more than a million fatalities worldwide, with 94% of cases due to human error, such as driving after consuming alcohol or drugs, texting, falling asleep, or simply being distracted by something else. However, this will drastically change various market logics, both here and around the world.
In Argentina, we still remember the debate over the irregular entry of Uber into the local market, enraging taxi drivers while conquering its users with initially lower prices. Although this discussion is relevant in a specific context, we should ask ourselves what will happen when autonomous mobility finally arrives in the transportation industry. Perhaps, for once, we can get ahead of events instead of always chasing them. Autonomous vehicles not only threaten the jobs of taxi drivers or chauffeurs; in the United States, there are already autonomous trucks[17] that have completed their routes and tests efficiently[18]. Waymo, a company owned by Alphabet (the American multinational that controls the giant Google), has already traveled over 20 million miles, or 32 million kilometers[19], in tests with its autonomous units. Not to mention Tesla, which, no matter how you look at it, is the main dominant player in this field, currently with semi-autonomous vehicles that have collected data from over 3 billion miles or 5 billion kilometers[20] with its autopilot function, although it would be a mistake to define this company solely as an automaker since Tesla is also dedicated to robotics, clean energy generation, solar panel construction, and the development of its own software and hardware.
To provide one more example in the passenger transport sector, we can mention the famous black taxis of London. There, to drive one of these special taxis, drivers must pass an exam that involves rigorous preparation as they must be able to memorize about 25,000 street intersections and routes[21], without being allowed to use satellite map aids, while today all of us, just like Uber drivers and other similar applications, can access that information and more with just a few clicks on our smartphones. This exam is passed by only one in five people who take it, and on average, people study between 2 and 4 years to achieve it. That is practically the same as earning a university degree. Seen this way, we can recognize that sometimes AI will not annihilate our jobs but rather complement us, just as a GPS does today with a taxi driver or an Uber driver, but that is temporary and, therefore, not what we are discussing here.
Just as years ago we talked about Software as a Service (SaaS) or the Software as a Service industry, we now need to start talking about Mobility as a Service. What do we mean by this? The systemic change that is occurring, and which we are experiencing day by day, in the transportation industry and whose consequences will generate something unprecedented for consumers, workers, and thousands of businesses around the world.
Uber started in a small apartment in 2009 and in just 7 years managed to conduct more trips through its platform than the entire taxi industry in New York[22]. The explanation for such a result is simple, and it is the same reason why Mobility as a Service will conquer our streets: the economy. In the words of Mary Barra, CEO of General Motors, “the automotive industry is going to change more in the next 5 or 10 years than it has in the last 50″[23].
If you were born in the 90s or before, you probably dreamed of your first car. That was your gateway to the adult world. You saw having your own car as a sign of freedom, responsibility, and even status. Today, the urbanized world shows us streets and roads congested with traffic, while high levels of CO2 are generated, which significantly affects our ozone layer. All this happens while the usage time of our cars does not exceed 5% according to various studies such as the one conducted by the RAC Foundation[24] in England.
The report was published in 2012 based on an estimated 27 million vehicles in the British territory at that time. The numbers from their report were compelling: those 27 million cars carried out a total of 25 billion trips a year, suggesting that each car made 18 trips per week, with the average duration of each being about 20 minutes. This establishes that an average car remains in motion for 6 hours per week, while the other 162 hours of the week, it is at rest, i.e., parked. If you have a car and do not work as a transporter with it, I invite you to do your own calculations.
We can confidently say that in a few years, it will be normal to ride in autonomous and electric vehicles, requested at a very low price through an application like the ones we can use today to call an Uber, instead of having to shell out thousands of dollars for a new car, plus fuel, insurance, license plates, and other taxes. This makes it possible for future young people, in 15 or 20 more years, not only to not dream of owning a car but also not needing to get a driver’s license. In fact, according to a report by Kelley Blue Book, in July 2022, the average cost of a new car in the United States was over $48,000[25], and the useful life of these for their buyers is 71.4 months, or almost six whole years[26], which allows us to amortize the total value of the vehicle over that period at a cost of $670 per month or $8,000 per year, excluding, of course, what can be recovered from its sale. I leave the costs for fuel, license plates, insurance, and maintenance to the reader, although according to averages obtained from various sources, it is likely that one consumes about a thousand dollars annually in fuel.
Without going any further, in 2025, 15 electric and autonomous minibuses will be deployed in the streets of eight European cities to offer an on-demand, door-to-door transport service that users can request through an application, unlike traditional buses, these vehicles will not have predefined routes. The service of this pilot project called ULTIMO[27], will operate 24 hours a day in cities in Germany, Norway, and Switzerland, thanks to an investment of $55 million from various public and private organizations following a previous pilot project in Geneva, Switzerland, conducted during 2020.
In this way, we now give way to Mobility as a Service as one of the most drastic changes we will see in the transportation industry during this century.
The most important shift posed by Mobility as a Service is precisely about vehicle ownership. Why own a car and pay the respective expenses that come with it when we don’t use it more than 95% of the time? With Uber or any other application in the sector, we can have a car at our doorstep or office in a matter of minutes.
In one way or another, Uber already allows us, in different countries, to rent on-demand cars, bicycles, and scooters. They even have a commercial branch dedicated to food delivery. Uber expanded quickly. Perhaps too quickly, as this voracious expansion was not free; on the contrary, the company’s finances have been suffering since its inception, and its returns on investment seem low.
Let’s talk a bit more about numbers. In the United States, 3.5 million people work driving vehicles[28]. In Europe, 10.8 million people work in the transport sector[29]. In Argentina, the truck drivers’ union had 73,000[30] affiliated members in 2010, and currently, the number could be above 200,000[31]. Meanwhile, the bus drivers’ union has 70,000[32] members, and in the City of Buenos Aires, there are more than 38,000[33] taxi licenses, although the actual number of circulating taxis today is estimated to be less than half. Autonomous transport will displace taxi drivers, truck drivers, bus drivers, train and subway drivers, and even the thousands of people who today work precariously for many door-to-door delivery companies that allow us to buy various items online, generally associated with food delivery ordered through apps. Are we starting to see the problem?
It’s a long way off! you might respond. “I hope,” would be my answer, followed by a resounding “No.”
In reality, it’s not that far off. In September 2017, I attended a conference organized by Harvard students in Australia, where I had the opportunity to speak with Damian Kassabgiel, then Director of Public Policy for Uber in the Asia-Pacific region.
There, Kassabgiel gave a very convincing presentation on Uber’s services and their positive impact on society through job creation, reducing our environmental impact thanks to their ride-sharing option, which in turn reduces the number of cars on our streets, easing traffic chaos, lowering the chances of accidents, and a long list of positive actions that made it impossible to resist the company’s advance.
When he finished speaking, everyone present in the room wanted to ask him the same thing.
“What are Uber’s plans regarding the development of autonomous vehicles?” finally asked a young man from India.
Kassabgiel resumed his speech, sounding proud, and told us they were estimating it would take “ten years to have a fully autonomous fleet.”
As a reflex to his response, everyone in the room quickly looked at each other and rushed to ask what would happen to their current workers then.
First, and I add this myself, let us remember that those who work selling their mobility service through Uber are not Uber employees per se. There is no binding contract with an agreed fixed salary[34]; therefore, they are nothing more than strategic partners who have no rights against Uber, so the employment relationship can be unilaterally terminated by the company whenever it deems necessary.
Second, going back to the words of a now nervous Kassabgiel, hesitating as when you don’t want to tell the truth, he told us that “more jobs will be created for engineers.”
No one doubted that, engineers are among those best positioned for the silent revolution that is approaching ever closer.
What will happen to all the drivers who are now Uber’s strategic partners? They will not have unemployment insurance or retirement contributions from Juan Carlos Uber[35]. Not only that, but generally, those who drive for Uber or similar apps do not do it to kill time; they do it out of necessity, in many cases as their profession and only source of income. What is next for these people when they fall out of the system? Have we already thought about the fact that fewer people will be going to private vehicle workshops? That those dedicated to car repair independently are also about to see their income source disappear, and that this will impact the income of those who provided them with goods or services, be it a factory, a kiosk, or perhaps even their health insurance?
Let’s not forget that in early 2020, once the pandemic broke out, Uber laid off more than 3,500 salaried employees, not their “strategic partners,” in a video call lasting less than 4 minutes[36]. I repeat, we are not talking about drivers but salaried white-collar workers. In fact, a recent McKinsey survey indicates that 36% of American workers categorize themselves as independent, working in temporary, goal-focused jobs, demonstrating the extent to which the gig economy has penetrated[37]. Extrapolating the survey results gives us that more than 50 million people in the United States fall into this category.
Having said that, it wouldn’t surprise me if Uber goes down in history as one of those giants that disappeared and remains only as a collective memory, like Altavista, Blockbuster, or Netscape. Tesla could be the one to checkmate Uber at its own game. Yes, Tesla, from Elon Musk, who announced in late November 2020 that the update of their cars to a 100% autonomy level was not far off. In fact, to gauge Tesla’s exponential growth, we cannot fail to mention that Herbert Diess, Chairman of Volkswagen’s Board of Management, set as a priority for the 2021-2024 period what he dubbed “Mission T,” which consists of nothing less than reaching Tesla’s competitiveness levels by 2024[38]. Yes, Volkswagen, the 85-year-old company with over 600,000 employees and whose cars flood our streets. To compare, note that in 2022, Ford lost $22,000 for each of the 96,000 electric vehicles it sold[39], while Tesla made a profit of $9,500 for each of the 1,369,000 it sold[40].
Let’s now assume that this is delayed, or let’s be certain that the change won’t happen overnight; 10 years is nothing. Even if for some reason this is delayed 20 or 30 years, it’s still not enough time to create the necessary safety nets for all the people who could fall out of the system if we don’t address the problem properly. I honestly doubt it will take 20 years to see the adverse effects of this technology, as during my trip to Chicago in June 2019, employees at Uber’s headquarters told me they plan to start testing the autonomous taxi service with a significant fleet of cars by 2024. These are car-robots that will work for this company 24 hours a day, only stopping to recharge their batteries and if they need technical maintenance.
Exponential growth is hard to understand because it challenges our cognitive abilities. Faced with this, some people become blind, believing it’s more about fast growth, when in reality exponential growth means something grows faster and faster over time, and that’s what’s happening in the field of Artificial Intelligence. As humans, this is not something we typically see in our daily lives. In fact, according to an experiment published by psychologists Wagenaar and Sagaria in 1975[41], when we try to predict an exponential process, we tend to underestimate the result by a factor of 10. Viewed this way, it’s no wonder one feels surprised by the speed of the changes we live through. Such may be the case of someone who 4 decades ago had to communicate with a central operator to ask to be connected with another person to make a phone call, while today they can not only connect with another person with a click but literally access all human knowledge with a few clicks on a computer that fits in the palm of their hand. Our ability to predict change trends seems correct; however, we keep getting the speed of these changes wrong, and that’s what can make the labor transition for the masses difficult. This is a central problem.
As for Uber, if it wants to stay competitive, it must invest, and invest well in research and development, or it will fall off the map, just as GrubHub, which for a long time was the king of online food orders in the United States. However, GrubHub abused its fees towards restaurants, which end consumers did not directly perceive, and this ultimately facilitated the migration of food establishments to other delivery apps, also causing user migration, resulting in its market share plummeting from 70% to 18%[42] in a matter of years, leading to the sale of its operations to Just Eat. It wouldn’t be surprising if soon, we see people buying Tesla vehicles, deciding to put their car-robots to work as autonomous taxis during the hours they don’t use them personally, generating extra income instead of seeing their cars lose value day by day while spending 95% of their time parked.
Tesla began in 2021 offering its full self-driving service based on a monthly subscription for those who own one of its vehicles. I repeat, the problem is not whether the trends we are predicting come to pass sooner or later. The issue is that it will happen, although probably, as Wagenaar and Sagaria maintain, it will happen earlier than we think.
[17] Cabezas García, S. (2019). The first autonomous truck to cross the U.S. with perishable goods. Video. Diario de Transporte. Accessed on June 15, 2021, at https://diariodetransporte.com/2019/12/el-primer-camion-autonomo-que-atraviesa-ee-uu-con-mercancia-perecedera-video/.
[18] Heilweil, R. (2020). Networks of self-driving trucks are becoming a reality in the US. Vox. Accessed on June 15, 2021, at https://www.vox.com/recode/2020/7/1/21308539/self-driving-autonomous-trucks-ups-freight-network.
[19] Nieva, R. (2020). Waymo driverless cars have driven 20 million miles on public roads. CNET. Accessed on October 30, 2020, at https://www.cnet.com/tech/tech-industry/waymo-driverless-cars-have-driven-20-million-miles-on-public-roads.
[20] Fridman, L. (2020). Tesla Vehicle Deliveries and Autopilot Mileage Statistics. Lex Fridman. Accessed on October 30, 2020, at https://lexfridman.com/tesla-autopilot-miles-and-vehicles.
[21] Rosen, J (2014). “The Knowledge, London’s Legendary Taxi-Driver Test, Puts up a Fight in the Age of GPS.” The New York Times, Accessed on March 6, 2021, at www.nytimes.com/2014/11/10/t-magazine/london-taxi-test-knowledge.html.
[22] Muoio, D. (2017). New York riders use Uber more than taxis for first time. Business Insider. Accessed on December 2, 2021, at https://www.businessinsider.com/uber-taxis-new-york-ridership-2017-10.
[23] DeBord, M. (2015). General Motors CEO Mary Barra: “We’re going to disrupt ourselves, we are disrupting ourselves, we’re not trying to preserve a model of yesterday”. Business Insider. Accessed on March 14, 2021, at https://www.businessinsider.com/general-motors-ceo-mary-barra-were-going-to-disrupt-ourselves-we-are-disrupting-ourselves-were-not-trying-to-preserve-a-model-of-yesterday-2015-10.
[24] Barter, P. (2013). “Cars are parked 95% of the time”. Let’s check!. Reinventingparking.org. Accessed on June 15, 2021, at https://www.reinventingparking.org/2013/02/cars-are-parked-95-of-time-lets-check.html.
[25] Kelley Blue Book. (2022). New-Vehicle Prices Set Record in July 2022, According to Kelley Blue Book, as Inventory Improves Year-Over-Year and Luxury Share Remains Elevated. Accessed on February 13, 2023, at https://mediaroom.kbb.com/2022-08-10-New-Vehicle-Prices-Set-Record-in-july-2022,-According-to-Kelley-Blue-Book,-as-Inventory-Improves-Year-Over-Year-and-Luxury-Share-Remains-Elevated.
[26] Kelley Blue Book. (2012). Average length of U.S. Vehicle ownership hit an all-time high – Kelley Blue Book. Accessed on February 13, 2023, at https://www.kbb.com/car-news/average-length-of-us-vehicle-ownership-hit-an-all_time-high/.
[27] Geneva Will Soon Have 24 Hour Self Driving Bus Service. (2023). World Economic Forum. Accessed on January 25, 2023, at https://www.weforum.org/videos/driverless-buses-are-now-en-route-to-geneva.
[28] Economics and Industry Data. (2021). American Trucking Associations. https://www.trucking.org/economics-and-industry-data.
[29] Eurostat. (2021). Almost 29 transport workers per mil people in the EU. Eurostat. https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20210923-2.
[30] De la Calle. E. (2012). CGT: How many members does each union have? Agencia Paco Urondo. Accessed on February 5, 2022, at https://www.agenciapacourondo.com.ar/sindicales/cgt-cuantos-afiliados-tiene-cada-gremio.
[31] With a single list, Hugo Moyano will be re-elected for the eighth time at the head of Truckers. Infobae. (2019). Accessed on February 5, 2022, at https://www.infobae.com/politica/2019/09/20/con-lista-unica-hugo-moyano-sera-reelecto-por-octava-vez-al-frente-de-camioneros/
[32] “The UTA under scrutiny for managing $1.2 billion in affiliate contributions.” Mundo Gremial. 2022. Accessed on February 6, 2022, at https://mundogremial.com/la-uta-en-la-mira-por-el-manejo-de-1-200-millones-de-aportes-de-afiliados/.
[33] Calderado R. (2022). Taxis in emergency: why in CABA circulates 60% fewer vehicles. Télam. Accessed on February 6, 2022, at https://www.telam.com.ar/notas/202202/582497-taxis-caba.html.
[34] States like California and New York in the United States have passed laws requiring Uber to hire its drivers permanently and guarantee them a minimum wage, so this may change, but Uber’s original business model is as described, where drivers are strategic partners and not employees.
[35] Fictional name, satirizing that iconic character of the 90s that Alfredo Casero popularized on Argentine TV with his character Juan Carlos Batman in his show Cha Cha Cha.
[36] In 3 minutes, Uber laid off 3,500 employees via a video call. Infobae. (2020). Accessed on June 15, 2021, at https://www.infobae.com/america/mundo/2020/05/21/en-3-minutos-uber-despidio-a-3500-empleados-a-traves-de-una-videollamada/.
[37] Freelance, side hustles, and gigs: Many more Americans have become independent workers. (2022). McKinsey & Company. Accessed on April 18, 2023, at https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth/future-of-america/freelance-side-hustles-and-gigs-many-more-americans-have-become-independent-workers.
[38] Rapier, G. (2020). Volkswagen to race Tesla with “Mission T” led by Porsche race engineer. Business Insider. Accessed on December 2, 2020, at https://www.businessinsider.com/volkswagen-tesla-mission-t-porsche-race-engineer-audi-diess-board-2020-12.
[39] Isidore, C. (2023). Ford to lose $ 3 billion from EV sales to consumers this year. CNN. Accessed on March 25, 2023, at https://edition.cnn.com/2023/03/23/business/ford-ev-losses/index.html.
[40] Bleakley, D. (2023). History in the making: Tesla may deliver biggest moment in car industry since Model T. The Driven. Accessed on March 25, 2023, at https://thedriven.io/2023/02/26/history-in-the-making-tesla-may-deliver-biggest-moment-in-car-industry-since-model-t/.
[41] Sagaria, S., & Wagenaar, W. (1975). Misperception of exponential growth [Ebook] (pp. 416-422). Accessed on September 29, 2021, at https://doi.org/10.3758/BF03204114.
[42] Curry, D. (2021). Grubhub Revenue and Usage Statistics (2021). Business of Apps. Accessed on June 15, 2021, at https://www.businessofapps.com/data/grubhub-statistics.