“Tap here & you get your car”, tweeted Elon Musk in response to a family member of a Tesla customer who got held up due to delay in issuing Contracts.
What did Elon say?
“We’re trying to get rid of contracts completely. Should just be “tap here & you get your car”. Then, if you don’t like it for any reason, just return it like any other product,” wrote Tesla CEO Elon Musk
We’re trying to get rid of contracts completely. Should just be “tap here & you get your car”. Then, if you don’t like it for any reason, just return it like any other product.
— Elon Musk (@elonmusk) July 23, 2018
Though at first glance, Elon’s statement may look like he is talking about completely changing standard industry practices, in reality, he is just reflecting the state of auto industry across the world.
Change are perish.
As “ride hailing and ride sharing services” spread around the world with able technological help, people are now summoning their ride with a click of a button.
It’s still expensive compared to direct car ownership, but only if you are a driver who piles on the miles everyday. If you don’t, having a monthly payment running in the hundreds of dollars makes no sense, when you can spend a fraction of that for hiring your rides. Not to forget the I need to wash my car and when will I visit the service center part.
Personal car ownership is already coming down across the world. “According to a new study by Michael Sivak and Brandon Schoettle at the University of Michigan Transportation Research Institute, the percentage of people with a driver’s license decreased between 2011 and 2014, across all age groups. For people aged 16 to 44, that percentage has been decreasing steadily since 1983.”
“It’s especially pronounced for the teens—in 2014, just 24.5 percent of 16-year-olds had a license, a 47-percent decrease from 1983.”
Taxis have been there for ever. But smartphones that are hooked to the internet at all times were not.
Technology has completely changed the dynamics of the Taxi industry. No one yells Taxi on the road anymore, they just fire up the app.
Uber is now available in more than 400 cities around the world, GM has made a significant investment in Lyft, an on-demand transportation company. Didi Chuxing in China and Ola in India have attracted billions of dollars in investments and carry millions of people from point A to point B, every single day.
Urban migration is real and it’s happening fast. Owning a car in a crowded city- Easier said than driven. Unless you love traffic lights.
Automakers and Technology companies are racing each other to build cars that can drive themselves. If they succeed, it will dramatically reduce the cost of taxi services, causing personal car ownership to plunge across the world. It will be many years before that happens but it will happen nonetheless.
Auto companies know the looming risks attached with advancing technology. They know that unless they change the current order of business, they will be wiped out.
Volvo took things a step further and launched a subscription service, Care by Volvo. No maintenance, no down payment and no direct ownership, just a monthly fee and you have a car to use. Sounds familiar. Yup, that’s how a lot of new smartphone plans work.
“Toyota’s Lexus brand is testing payment plans that let people subsidize the purchase of pricey cars by renting them through a service called Getaround. BMW , meanwhile, is experimenting with shared rides through its Reachnow service. “
Tesla wants car owners to rent out their “self-driving” cars when not in use. Not there yet, but when ever their cars can drive themselves, that’s what they want to do. Now they want to take things further and productize Tesla car ownership, pick up at the store and drop back or trade in at moments notice.
What’s the difference between this and renting a car, you may ask? Not much.
In fact, its more or less the same. It’s just a long term hire. Welcome to the age of subscription. On demand service
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Sources:
Declining Driving License: Atlantic
Toyota, BMW: Ride sharing
