With the Consumer Electronics Show in Las Vegas just around the corner, Chief Economist Shawn DuBravac weighs in on the emerging mobility-on-demand market and shares his view on the role of data for customization.
The 50th edition of the Consumer Electronics Show is upon us: From January 3-8, 160,000 attendees are expected to descend upon Las Vegas to catch a glimpse of the latest technology that will shape our future. First held in New York in 1967 with 117 exhibitors and 17,500 attendees, the automotive area of this year's CES alone will feature 138 companies and 200,000 square feet of exhibition space. DW spoke with Consumer Technology Association (CTA) Chief Economist Shawn DuBravac about how traditional car makers could thrive in an on-demand, driverless future.
DW: What can the world expect of CES 2017?
Shawn DuBravac: CES has become a global stage for innovation. About one third of attendees will hail from outside of the United States, and we'll have over 600 startups. I estimate that of the total number of companies, about 20 percent didn't exist three years ago. CES not only continues to be the event for the future of entertainment, television and the likes, but it also opens the world's eyes to what's happening among startups.
One of the car companies expected to make a splash in the automotive space is newcomer Faraday Future. Can you share any details?
Faraday Future released a prototype for their electric vehicle at CES 2016, and they've claimed that they will unveil their first production car in January. Everyone is looking out for that, which speaks to the rate of change and innovation that's taking place. But Faraday Future is just one of many companies within the transportation space to make announcements at CES.
Speaking of which: Europe's biggest auto maker Volkswagen recently said it wants to generate a "substantial part" of its revenue from mobility services like car sharing by 2025. GM invested $500 million (479 million euros) in Lyft, BMW an undisclosed sum in carpooling service Scoop. Is the mobility-on-demand market hyped or the only way for legacy car makers to stay relevant?
Auto manufacturers will continue to make vehicles. What a company is ultimately trying to do is monetize their R&D cost. In other words: everything that goes into the production of a vehicle. But the future of transportation is clearly moving towards self-driving vehicles, which will roll out to the masses through services like Uber, Lyft or others that have yet to form. The technology will most likely come to market through these fleet approaches. Naturally, OEMs [Original Equipment Manufacturers] are looking at how they can play a pivotal role in this changing market. As the underlying technology changes and as self-driving vehicles come to market, we'll see novel approaches like car sharing services and on-demand models that take advantage of available technology as well as the demands within the marketplace.
Will car makers make the lion's share of their revenue with apps and other services instead of physical products in 10 years?
Auto manufacturer have a long, rich legacy of adapting to changing circumstances. They've been looking at what consumers want and how they're are using their products since the early days of Henry Ford. Just as they've invested a tremendous amount in design to respond to consumers' evolving tastes and preferences in the past, they're now making investments in new types of ownership and usage models consumers want. This could be a product that is needed by a segment of the population, like a truck that's outfitted the right way or introducing a hybrid minivan. Those are examples of auto manufacturers responding to what they're observing in the marketplace.
Can innovative mobility solutions come from outside of Silicon Valley?
I think it will happen both ways. The traditional auto manufacturers, whether it's Mercedes or BMW or Ford, will continue to innovate as well. They'll approach it in a multi-faceted way, making investments in companies that are changing the way we think about transportation as well as looking to make those changes themselves.
What are the advantages of a driverless future?
Self-driving cars take utilization rates up to very high levels. Today, the average car is utilized only 4 percent of the time. Self-driving cars can get utilization rates of 96 percent or higher, which means the world will look very different than it does today. Car companies are looking at those type of things to see what ownership models and usage cases are going to look like around their core product, which is bringing technology - cars and vehicles - to market. But auto manufacturers are also increasingly interested in access to data, because it allows them to fine-tune the innovation they're bringing to market and to customize the user experience. As we move toward utilization rates of 95 percent, data will be used to help ensure that those vehicles are sufficiently maintained and serviced similar to the way data is being used among airlines, which have increasingly been using digitized information around servicing engines and other jet components.
Do you see any risks around data being collected to such a huge extent?
Companies in these businesses usually do all they can to ensure the integrity of the data and protect privacy and security. I believe information will be shared when the benefits outweigh the risks. Outside of some initial tests in places like Pittsburgh by companies like Uber, we don't have a good sense of what will be involved in self-driving services yet. Consumers have become generally comfortable sharing information that provides back to them a better experience, whether that's music being available when they want it, or getting movie recommendations based on their taste. Here, too, what we'll see in self-driving will be an extension of what we've seen in other places that have become digitized.
How do you envision the future of mobility?
We still have a number of decades before self-driving becomes the reality for the masses. Many of the coming announcements will be around driver-assist technology, which is about helping consumers have a more enjoyable and safer experience. OEMs say they're five to six years away from being able to bring self-driving vehicles to market. So 15 year from now, we'll have significantly more experience with self-driving vehicles. But we won't replace every single vehicle with autonomous cars overnight. As usage rates continue to increase, we'll see ownership rates go down. Consumers will become significantly more comfortable with the idea of a driverless future and its implication on their daily lives as a result of having more and more self-driving vehicles on the roads.
Dr. Shawn DuBravac is the CTA's chief economist, a public speaker and a widely published author on topics including finance, economics and technology. His most recent book, "Digital Destiny: How the New Age of Data Will Transform the Way We Work, Live, and Communicate," was published in 2015.