“It saddens me to say it, but the auto industry is on an accelerating change curve. We are approaching the end of the automotive era. For hundreds of years, the horse was the prime mover of humans and for the past 120 years, it has been the automobile. Now we are approaching the end of the line for the automobile because travel will be in standardized modules. The end state will be the fully autonomous module with no capability for the driver to exercise command.” —Bob Lutz
Last week one of the most influential and respected names in the car world loudly predicted that within twenty years car ownership will cease to exist. Bob Lutz persuasively argues that because of rapidly emerging technologies the automobile is doomed to become a shared utility. Lutz’s bold statement came on the heels of Waymo’s announcement that the Google subsidiary is launching a pilot program of driverless services in Arizona. An autonomous and ownerless Uber-like “podmobile” future could have far-reaching implications—and sooner than most think. We have previously written about the potential impact on the real estate market. Dealerships and insurance companies may see their existing business models turned upside down. How the collector car world might be impacted by Lutz’s vision is anything but clear. His persuasive argument deserves attention because Lutz is considered by many as the ultimate “car guy.” Lutz brought us, (among other landmark vehicles) the BMW 6-series and the venomous Dodge Viper. He has authored numerous automotive books. He has been an influential fixture in the car world for decades and has held key positions at GM, Ford, Chrysler, and BMW. When Lutz speaks, people listen.
I forwarded Lutz’s Automotive News article to friends and contributors of Turtle Garage to solicit some feedback. The email chain included Jonathan Sierkowski, J.R. Amantea, Dean Laumbach, Keith Martin, and Scott Coleman. I wanted to get a perspective from my cadre of trusted experts. Jonathan, J.R., and Dean are the next generation of respected advisors and dealers in the collector car world. Keith is the publisher of Sports Car Market magazine and celebrated TV host of What’s My Car Worth. Scott owns and operates Contemporary Motor Cars, a highly successful family-owned Mercedes-Benz dealership in New Jersey. As I expected, Lutz’s statement caused a maelstrom of educated commentary—with varying degrees of opinions on the subject of autonomous vehicles and how they will impact the collector car market.
Keith Martin: “In my opinion, the change to autonomous will come far faster than anyone (except Lutz) is predicting. The economic imperatives are just too powerful.”
J.R. Amantea: I’ve been talking about this with clients for some time that there will come a time when we won’t be able to drive our prized possessions on the road or will need certain permits to allow us to drive them on certain days.
I have already seen the change in purchasers discerning choice to really finding the rarest model/spec of the car they are looking to purchase. They really need “pedigree”, rarity and documentation, these have been the common denominators with all of the purchasers I have worked with this year; more so than in previous years. Run of the mill cars/models have drifted downward at an accelerating rate.
Keith is right in seconding Mr. Lutz, as the technological changes in society period are happening at a rapid rate. Look at the phone for example, Palm came out with the PDA in the 90’s, that was laughed at and it was cumbersome, 10 years after that, Apple came along with the iPhone 10 years ago and look at how rapidly the way we communicate has changed. I would bet that all of us are reading/writing this email via our phone.
I think cars that will have upside today are the cars that implement the most technology, such as these HyperCars. It is our job to keep the previous generations of collector cars at the forefront and to educate the younger generations on how important they are. I think a major part of educating them is going to be by having driving focused events to drive in these classics, albeit in a controlled environment, as most kids today will never know what a manual transmission is. Once they experience them, rest assured the car bug will catch them like it has us and they can have their own “aha moment”.
It’s going to be a very important time for the classic car industry over the next 5–8 years.”
Jonathan Sierkowski: “If this comes to pass it means cars make another step into the art category (except for millionaires on the race track). Driveability becomes less of a factor in value and it’s more about rarity and authenticity. People will continue to focus more on provenance, separating the Real McCoys from those cars simply made “in the school of…” At least with the era of vehicles I am focused on.”
Dean Laumbach: “I truly believe that Henry Ford would have turned over in his grave if he read this article.
Today’s smartphones are full of features that take away the manual features that give us complete control over the functions. Siri has been out for years now, and I would estimate that my daughter is the only person on earth I know who uses it regularly. See this link for an intriguing story on the lack of users of Siri.
Lutz’s predictions are drawn from his experience in the field which only leads you to believe that he has a certain amount of credibility in his “crystal ball.” I for one never believed in Nostradamus, and until I see some form of overwhelming acceptance for autonomous vehicle usage, I will forever remain a skeptic. I believe that in the automotive field the technological advances we see in the next 10 years will be game changers, however, just like all technology, the reliability of that technology will be a major concern. Which is my concern …
I would not want to be the insurer on the first generation of autonomous vehicles without some very lengthy disclaimers. Even then, the casualties of this new technology’s “glitches” will make for some very interesting stories on CNN.
Uncharted grounds !!! The makers of cars, motorcycles, bicycles, skateboards, and roller-blades all had the foresight in knowing that serious injury could result to users of their products, however, it was their discretionary use of their product which would determine liability.
As for the collector car market….
Sellers must keep in mind that the demographics of today’s collector car buyers are changing.
I have no fear that the market will see any loss of value in higher quality original documented low mileage European automobiles that appeal to today’s buyers.
I know it is a cliche, but ‘The creme always rises to the top’ and in the world of original low mileage and pristine European collector cars, recent sales (documented and otherwise) will support this quote.
In my opinion, top dollar restored cars regardless of level of restoration will see some serious softening.
I am a bear in hibernation on anything built in the United States. My opinions are built on hands-on experience, and I am personally a fan of vintage Cadillacs.”
Scott Coleman: Scott made an interesting point about the “real world” practicality of the Uber-like autonomous pod with the following scenario: “You summon a car to pick you up. The last person that rode in it was smoking a cigarette and left McDonald’s wrappers on the floor and the car was a mess. Maybe good for the masses but the average person will not deal with it.”
The future of the automobile is very uncertain but certainly very exciting! We look forward to charting the changes and providing useful and interesting content on the many important topics unfolding in the automotive world. The investment implications are far-reaching. Check back at Turtle Garage as we plan to follow these changes closely. We have a deep inventory of content and ideas that will be published in the months and years ahead.
Bob Lutz reprinted from Automotive News, November 5th, 2017:
It saddens me to say it, but we are approaching the end of the automotive era.
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.
Now we are approaching the end of the line for the automobile because travel will be in standardized modules.
The end state will be the fully autonomous module with no capability for the driver to exercise command. You will call for it, it will arrive at your location, you’ll get in, input your destination and go to the freeway.
On the freeway, it will merge seamlessly into a stream of other modules traveling at 120, 150 mph. The speed doesn’t matter. You have a blending of rail-type with individual transportation.
Then, as you approach your exit, your module will enter deceleration lanes, exit and go to your final destination. You will be billed for the transportation. You will enter your credit card number or your thumbprint or whatever it will be then. The module will take off and go to its collection point, ready for the next person to call.
Most of these standardized modules will be purchased and owned by the Ubers and Lyfts and God knows what other companies that will enter the transportation business in the future.
A minority of individuals may elect to have personalized modules sitting at home so they can leave their vacation stuff and the kids’ soccer gear in them. They’ll still want that convenience.
The vehicles, however, will no longer be driven by humans because in 15 to 20 years — at the latest — human-driven vehicles will be legislated off the highways.
The tipping point will come when 20 to 30 percent of vehicles are fully autonomous. Countries will look at the accident statistics and figure out that human drivers are causing 99.9 percent of the accidents.
Of course, there will be a transition period. Everyone will have five years to get their car off the road or sell it for scrap or trade it on a module.
The big fleets
CNBC recently asked me to comment on a study showing that people don’t want to buy an autonomous car because they would be scared of it. They don’t trust traditional automakers, so the only autonomous car they’d buy would have to come from Apple or Google. Only then would they trust it.
My reply was that we don’t need public acceptance of autonomous vehicles at first. All we need is acceptance by the big fleets: Uber, Lyft, FedEx, UPS, the U.S. Postal Service, utility companies, delivery services. Amazon will probably buy a slew of them. These fleet owners will account for several million vehicles a year. Every few months they will order 100,000 low-end modules, 100,000 medium and 100,000 high-end. The low-cost provider that delivers the specification will get the business.
These modules won’t be branded Chevrolet, Ford or Toyota. They’ll be branded Uber or Lyft or who-ever else is competing in the market.
The manufacturers of the modules will be much like Nokia — basically building handsets. But that’s not where the value is going to be in the future. The value is going to be captured by the companies with the fully autonomous fleets.
The end of performance
These transportation companies will be able to order modules of various sizes — short ones, medium ones, long ones, even pickup modules. But the performance will be the same for all because nobody will be passing anybody else on the highway. That is the death knell for companies such as BMW, Mercedes-Benz, and Audi. That kind of performance is not going to count anymore.
In each size vehicle, you will be able to order different equipment levels. There will be basic modules, and there will be luxury modules that will have a refrigerator, a TV and computer terminals with full connectivity. There will be no limit to what you can cram into these things because drinking while driving or texting while driving will no longer be an issue.
The importance of styling will be minimized because the modules in the high-speed trains will have to be blunt at both ends. There will be minimum separation in the train. Air resistance will be minimal because the modules will just be inserted into the train and spat out when you get close to your exit.
The future of dealers?
Unfortunately, I think this is the demise of automotive retailing as we know it.
Think about it: A horse dealer had a stable of horses of all ages, and you would come in and get the horse that suited you. You’d trade in your old horse and take your new horse home.
Car dealers will continue to exist as a fringe business for people who want personalized modules or who buy reproduction vintage Ferraris or reproduction Formula 3 cars. Automotive sport — using the cars for fun — will survive, just not on public highways. It will survive in country clubs such as Monticello in New York and Autobahn in Joliet, Ill. It will be the well-to-do, to the amazement of all their friends, who still know how to drive and who will teach their kids how to drive. It is going to be an elitist thing, though there might be public tracks, like public golf courses, where you sign up for a certain car and you go over and have fun for a few hours.
And like racehorse breeders, there will be manufacturers of race cars and sports cars and off-road vehicles. But it will be a cottage industry.
Yes, there will be dealers for this, but they will be few and far between. People will be unable to drive the car to the dealership, so dealers will probably all be on these motorsports and off-road dude ranches. It is there where people will be able to buy the car, drive it, get it serviced and get it repainted. In the early days, those tracks may be relatively numerous, but they will decline over time.
So auto retailing will be OK for the next 10, maybe 15 years as the auto companies make autonomous vehicles that still carry the manufacturer’s brand and are still on the highway.
But dealerships are ultimately doomed. And I think Automotive News is doomed. Car and Driver is done; Road & Track is done. They are all facing a finite future. They’ll be replaced by a magazine called Battery and Module read by the big fleets.
The era of the human-driven automobile, its repair facilities, its dealerships, the media surrounding it — all will be gone in 20 years.
The companies that can move downstream and get into value creation will do OK. But unless they develop superior technical capability, the manufacturers of the modules, the handset providers, if you will, will have their specifications set by the big transportation companies.
The fleets will say, “We want a module of a certain length, a certain weight, and a certain range.”
They will prescribe the mileage and the acceleration and take bids.
Automakers, if they are smart, may be able to adapt. General Motors sees the handwriting on the wall. It has created Maven and has bought into Cruise Automation and Lyft.
It doesn’t want to be the handset provider. It wants to be the company that creates the value and captures the value, and it is making the right moves to be around when the transition occurs.
I think probably everybody sees it coming, but no one wants to talk about it. They know they will be OK for a few years if they keep providing superior technology, superior design and have good software for autonomous driving.
So for a while, the autonomous thing will be captured by the automobile companies. But then it’s going to flip, and the value will be captured by the big fleets.
This transition will be largely complete in 20 years.
I won’t be around to say, “I told you so,” though if I do make it to 105, I could no longer drive anyway because driving will be banned. So my timing once again is impeccable.
Reprinted from Business Insider, November 6th, 2017:
Bob Lutz is a former Marine who worked for Ford, General Motors, Chrysler, and BMW, usually as the resident “car guy” — a product guru who could guide the bean counters toward automotive glory and gruffly greenlight amazing machines.
Now semi-retired, Lutz is partnered with designer Henrik Fisker at VLF Automotive, a maker of exotic, burly, and very expensive supercars. But he continues to freely offer his thoughts on the car business. He’s both expressed admiration for Elon Musk and taken shots at Tesla’s business. And he’s tried to stay on the cutting edge of transportation.
But his latest salvo is a big one, particularly coming from a car guy’s car guy. Writing for Automotive News, he argues that 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,” he said. “Now we are approaching the end of the line for the automobile because travel will be in standardized modules. The end state will be the fully autonomous module with no capability for the driver to exercise command.”
So there it is. The man who gave us the Dodge Viper has effectively surrendered. And he thinks a change will come faster than anybody expects, largely because of self-driving cars taking deadly human drivers out of the picture, reducing roadway fatalities to basically zero. In 20 years, we won’t even be allowed to drive ourselves any longer, unless we’re rich and have access to private race tracks for our vintage Ferraris.
It would be hard to take such a grim prophecy seriously if you’re a motoring enthusiast. But this is Bob Lutz we’re talking about and he knows whereof he speaks.
The transition will devastate automakers and car dealers, he opines. The winners will be managers of gigantic autonomous podmobile fleets — “Uber, Lyft, FedEx, UPS, the U.S. Postal Service, utility companies, delivery services,” Lutz thinks, as well as Amazon.
I’m personally a bit skeptical, mainly because I don’t know if the political or financial will is in place to remake our roadway infrastructure for fleets of podmobiles that will travel in trains at over 100 mph. But when Lutz speaks about cars, it’s worth it to listen.
Reprinted from Automotive News November 6th, 2017:
Waymo, Google’s self-driving car affiliate, is testing self-driving vehicles without safety drivers in Arizona and plans to offer driverless rides to the public in the next few months.
During a keynote speech at the Web Summit conference in Lisbon, Portugal, Waymo CEO John Krafcik showed a video of the company’s test vehicles driving on Arizona roads without human supervision. He said the vehicles are able to operate within the Phoenix area without requiring predetermined routes or other outside help.
“This wasn’t just a one-time ride or a demo,” Krafcik said. “What you’re seeing now marks the start of a new phase for Waymo and the history of this technology.”
Other manufacturers have been running self-driving test vehicles on public roads in California, Michigan, Pennsylvania, Arizona and other states, but those all have human operators behind the wheel. Waymo said it has been running driverless vehicles in Arizona, where law does not require self-driving vehicles to be supervised by a safety driver, since mid-October.
Waymo demonstrated its driverless vehicles to media and analysts in October, operating seven-minute rides in its private testing center in Atwater, Calif. The company also unveiled its user interface technology, which includes a row of buttons for passengers to start their ride, pull over and call for help, and two screens displaying the car’s route, actions and 360-degree vision.
For the past eight months, Waymo has been operating a self-driving ride-hailing pilot for select residents in Chandler, Ariz. Krafcik said the company plans to expand the range of the driverless vehicles to an area of 600 square miles — roughly the size of greater London — and allow members of its test pilot to ride without safety drivers in the next few months.
“Since the beginning of this year, our early riders have been using our fleet — with a test driver at the wheel — to go to work, school, soccer practice and more,” he said “Soon, they’ll be able to make these trips in a fully self-driving car, with Waymo as their chauffeur.”
When Waymo was spun out from Google in December, Krafcik said the new company was exploring a variety of business plans to commercialize its self-driving technology, including ride-hailing, trucking and logistics, public transportation partnerships and licensing to automakers for private vehicles.
During his speech, Krafcik said the company had landed on ride-hailing as the initial service to introduce its automated driving platform to the public.
“Because we see so much potential in shared mobility, the first way people will get to experience Waymo’s fully self-driving technology will be as a driverless service,” Krafcik said.
In the past year, Waymo has inked partnership agreements with Lyft, Avis and AutoNation, which could bolster its efforts to deploy, manage and maintain a growing vehicle fleet network. The company operates 100 Chrysler Pacifica minivans retrofitted with its self-driving technology via a partnership with Fiat Chrysler Automobiles, with 500 more vehicles in the works.
“Having more people experience fully self-driving vehicles early is valuable,” Krafcik said. “It will let us learn about how people want to use this technology — and those insights will inform our future work.”
Reprinted from the Los Angeles Times November 7th, 2017:
Waymo, the self-driving car company created by Google, is pulling the human backup driver from behind the steering wheel and will test vehicles on public roads with only an employee in the back seat.
The company’s move — which started Oct. 19 with an automated Chrysler Pacifica minivan in the Phoenix suburb of Chandler, Ariz. — is a major step toward vehicles driving themselves on public roads without human backup drivers.
Waymo — owned by Google’s parent company, Alphabet Inc. — is in a race with other companies such as Delphi, General Motors, Intel, Uber, Apple and Lyft to bring autonomous vehicles to the public. The companies say the robot cars are safer than human drivers because they don’t get drowsy, distracted or drunk.
Waymo has long stated its intent to skip driver-assist systems and go directly to fully autonomous driving. It said the Waymo employee in the back seat won’t be able to steer the minivan but, like all passengers will be able to press a button to bring the van safely to a stop if necessary.