By on November 9, 2017

Carlos Ghosn

Everyone in the automotive industry is talking about a grand shift toward mobility, resulting in a future where nobody owns cars and we all putt around in autonomous pods. Well, almost everyone. Carlos Ghosn, who currently chairs the alliance between Nissan, Renault, and Mitsubishi, thinks that’s a crock.

While there’s plenty of executives keeping quiet on the evolution of ownership, few have come forward suggest business as usual will be the new status quo. Meanwhile, swaths of industry experts are pushing the notion that rental services, ride-sharing, and firms like Uber or Lyft will eventually replace the need for dealerships and garages.

Not Carlos.

“A lot of people think this is substitution. It’s not — it’s addition,” Ghosn said in an interview with Bloomberg at its The Year Ahead conference. “The traditional business of building cars and selling cars and owning cars is going to continue.”

Take that, market analysts and mobility experts.

However, where cars will continue being sold is a little less reassuring. Ghosn said that, while markets like Japan, Europe, and the United States may have plateaued, there is plenty of room for growth in China and India. But he doesn’t believe mobility services will replace new car sales anywhere in the foreseeable future.

Obviously, tech firms pushing autonomous technology and ride-hailing services disagree. “Our view is that individual car ownership is something that will go away because it is very inefficient,” Jeff Holden, Uber’s chief product officer, said in a pervious interview with Bloomberg.

His claim is that, since the average car owner only uses their vehicle 4 percent of the time, ride sharing would be far more efficient — claiming those cars could be active 80 to 90 percent of the time. “When you get to those kinds of utilizations what you see happen is prices go way down,” he said. “So why would you own your own car? It’s just a hobby at that point. It just doesn’t make sense.”

I’ve thought a lot about these efficiency claims recently, and Uber’s pricing would have to dwindle massively to make it worthwhile in the long term. Let’s say you have a very reasonable commute distance of 26 miles to the office. Based on Uber’s current pricing structure, the most conservative estimate for that trip would be around $32 dollars. Let’s assume, for the sake of this argument, that autonomous driving halves that fee — saving us the need to calculate the return trip. That’s still $8,320 annually just to get a lift to and from work.

Ten years on, you’ve spent $83,200 for a car you don’t even own and didn’t use for anything but commuting. Granted, that’s some really soft math and doesn’t even take into account the additional money that goes into car ownership — like fuel, insurance, road tolls, and maintenance. But Uber would still have to scale back its pricing by an almost unfathomable percentage to make its service a preferable alternative to any individual that didn’t also have public transit as a secondary option.

As for the environmental impact, I would estimate that as negligible. Why would having one vehicle racking up miles and needing to be replaced sooner be better than having several that last over a decade apiece — especially when the shared vehicle mills around between trips, expending extra energy as it hunts for another passenger?

I’m beginning to see Ghosn’s point.

“The traditional business of building cars, selling cars, and owning cars is going to continue. I don’t think it’s going to stop,” he said. “You’re going to have the new business that develops around the car … For me, it’s an additional business. It’s not the substitution. It will have an impact on the normal car business but, in my opinion, it’s going to be marginal. And we, as car manufacturers, have to pay attention to the traditional business of doing cars but — at the same time — prepare for the new businesses that are going to develop through connectivity, autonomy, and mobility services.”

[Image: Nissan]

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36 Comments on “Carlos Ghosn: Car Ownership Will Not Be Replaced With Mobility...”

  • avatar

    I guess at some point we could have an air bnb for cars. You could keep your car when you need it, but lend it to someone like uber and they would pay you a fee for using it. I guess you could also save on parking fees – drive yourself to work, give the car to uber for the day, and then call it back when you need it. Anyone will to contribute to my kickstarter campaign?

    • 0 avatar

      That already exists in several variations, though the name of the popular one escapes me. Didn’t Jack use it to rent a Porker in Miami? Or was that Bark?

      • 0 avatar

        I believe it is called Turo, although I have never personally used it. I am also unsure of how the insurance works.

        • 0 avatar

          Yes, the company is Turo. I read of an individual who bought a Tesla Model S, knew he couldn’t afford it and joined Turo. He said it allowed him to keep his car. Turo’s website has an example of a $75,000 car rented out 15 days a month. They claim you will earn $23,600 per year on a high-priced car.
          Would I want my brand new Tesla rented out like a taxi, absolutely not!

  • avatar

    I think Carlos is quite right. The world is never black and white. Autonomous pods will not replace private ownership of cars, ever. There will be both.

  • avatar

    “Uber would still have to scale back its pricing by an almost unfathomable percentage to make its service a preferable alternative to any individual that didn’t also have public transit as a secondary option”

    Many people do not have public transit as an option that can compare to a direct ride to and from work, not to mention non-commute trips to stores.

    When you consider the true cost of ownership of a car over 10 years, including depreciation and lost opportunity cost of the money spent on a car, Uber probably only needs to cut costs 50% over your estimate. $42K over 10 years seems about break even with ownership. Uber could probably hit that mark using autonomous cars, especially if they can work out car-pooling. As an added bonus, your time is freed up from driving a repetitive route. For people living in urban settings without dedicated parking, this will make even more sense when coupled with services like ZipCar and Avis for the few times that Uber won’t do.

    • 0 avatar

      I’m pretty confident that I could entirely switch to using Uber right now at their current prices and I would be financially better off. What I pay for insurance, registration and taxes alone on five cars would pay for a TON of rides around town. Never mind, depreciation, capital costs, interest, maintenance/repairs and, of course, gas.

      But I don’t care, because I like cars and driving. Hard to get Uber to drive you around in a ’74 Spitfire on a nice sunny day in Maine.

      • 0 avatar

        Hard to get Uber to drive you around in a ’74 Spitfire on a nice sunny day in Maine”

        I have thought about a ride hailing service that uses classic cars. But, that’s too much liability. The idea of getting a ride in a ’57 Chevy is nice, but the reality of a being in a crash while riding in the 1957 kinda ruins it.

    • 0 avatar

      This may not make sense at first, but Uber already costs half of what it costs now. By now, we have probably all read the reports that Uber is only charging riders about 41% of the true cost of the ride. The other 59% of the cost is being made up with investor capital. Uber has been functioning as a loss-leader for years in an attempt to get market dominance. Once it gets there, it plans to do some combination of raising prices and cutting costs in order to swing over to sustainable profits.

      My point is that, if the data is correct, then even if autonomous cars cut the cost of rides by 50% from today, Uber would still need to RAISE prices 9% just to break even.

      So, go on with the fuzzy math, Matt Posky. If anything, you are being generous to the “mobility solution” boosters.

  • avatar

    I think we’ll see mostly private ownership in rural and wealthy areas. We’ll see autonomous Uber style sharing in densely populated and poor areas, where the autonomous vehicles are a better version of public transportation.

    I’ve already managed to take an Uber ride in San Francisco that was considerably less expensive and considerably more convenient than the public transportation experience. If 2 or more people are going together, that’s practically guaranteed to be cheaper than public transportation if you are paying per ride.

    • 0 avatar

      “I think we’ll see mostly private ownership in rural and wealthy areas. We’ll see autonomous Uber style sharing in densely populated and poor areas, where the autonomous vehicles are a better version of public transportation.”

      This. We won’t see much autonomous pod sharing displacing private vehicle ownership. It’s an incremental opportunity for people to get out of public transport.

      • 0 avatar

        “It’s an incremental opportunity for people to get out of public transport.”


        The places where ride sharing have an advantage, are the same places pubic transport currently does: Dense areas where simply finding space for a car that is used only a few percent of the day, is enough of a pain to forego the conveniences of having your own car. In more open spaces, where traffic jams and finding parking is a nonevent, being able to leave your stuff in the car is too valuable to pass up.

        As for the Sci Fi of autonomous, when that finally comes to fruition, it makes _at_least_ as much sense for a privately owned vehicle, as for a Taxicab; as the parking issue becomes a nonevent.

  • avatar

    “since the average car owner only uses their vehicle 4 percent of the time, ride sharing would be far more efficient”

    Yeah, but the problem is that 4% occurs at nearly the same time for everyone:
    8 AM drive to work
    noon drive to/from lunch
    6 PM drive home

    I can’t rent my car if I’m using it too! So my car will be available from 11 PM to 5 AM… you good with that? I’d love to hail an Uber and when they show up point to my boat trailer and request the nearest boat ramp.

    I understand how this ride share thing could work in the city but out in the ‘burbs you need like 1 car plus 2 SUVs just to keep up with Jones… and I’d bet that 80% of car purchases boil down to this: Ohhhh you’ve got leather and the 12 speaker system, nice, did you see MY new car?

    Maybe its because I enjoy my vehicles and use them for various purposes but I’ve never understood the hype around this ride-share economy. It still seems like its a good 100 years away from becoming anywhere near mainstream. I assume we will have flying cars before the every man’s answer to transportation is an automated Uber pod. Till then city folks will take the subway / metro / hyperloop.

    • 0 avatar

      Uber is working on your flying car.

    • 0 avatar

      Not to mention people want private transport. They don’t want someone else’s body odors and trash invading their space. Nor do they want anyone f*cking with their radio presets or seat position. That’s why people don’t like public transport.

      • 0 avatar

        Today we share office space, share airplane space, share restaurant space, share vacation space, where does it end? Well… my vehicle is one of the few places left where everything is just the way I want it. Nobody tells me to change the radio or turn down the temperature.

        Given the way most people keep their cars there is NO way I’d borrow one due to the pig-like environment inside!

        • 0 avatar

          To be fare, I use Uber quite a lot for work all over the country (and locally occasionally), and I have never had an Uber car that wasn’t immaculate inside and out. I’m sure there are some, but I am also sure those drivers would be poorly rated.

          • 0 avatar

            The Uber drivers make sure the cars are in tip-top shape, but without the driver to police things and clean up I think cars would be a mess quite quickly.

  • avatar

    I met with a drivers ed class at the local high school (In a suburban town but with great rail links to the nearest big city (This was in a school where DriversED used to be a required course but this was the first year it was optional.)) I asked by show of hands in this self selected group how many expected to own their own cars in 5 years time. less than half of this group which was already less than 1/2 of the senior class put their hands up.
    Then I asked them how many of them were bothered by the forecast that in 10 to 20 years actually driving yourself about would be relegated to special areas and a car of today would not be allowed to mix with the world of self driving traffic. Only about 20% were upset by that thought. We might be seeing kids in school today (K-12) who are the last generation that will actualy have any use for a drivers license.
    I don’t like it but and aspect of freedom may be lost some time this century. Will I at age 70 still be around for it tore a problem for me?
    Well if I am lucky I have perhaps 15 to 20 years where my health will allow me to still have the right to drive myself so perhaps I should be more welcoming of a time where I would not be dependent of the kindness of others or public transport to visit the doctor of shop… but if this change happens I don’t think it will be a net positive for the developed world… I expect that in the 3rd world driving skills will be needed for quite a long time to come… but I don’t want to live there just to keep driving…. perhaps we will have enclaves set aside for folks to keep their old cars and play with them.

  • avatar

    Autonomous pods are the future that Hollywood has sold everyone, but few actually want. The main drivers behind the proliferation of the private automobile continue to perpetuate it’s acceptance today:

    -People want to be in control of where they go, at their leisure
    -People want private, not shared transport
    -People buy cars, nice ones, as status symbols

    Anything that diminishes these things won’t be widely accepted.

    -Autonomous cars have the perception of relinquishing control.
    -Forget car sharing outside of major urban centers where ownership is a major hassle.
    -Autopods are decidedly less emotional or romantic than the automoblie. A high end toaster might be nice but it’s not a screaming F-YOU to your neighbors

    • 0 avatar

      +100 Folks should stop doing math and start realizing that some things are just about how people “feel”. People like owning their own vehicle. They like have absolute, total control over their own movement and schedule. Plus no one ever talks about the elephant in the room. How does all this sharing work when you have kids? And car seats? and all the crap you keep in the car so your kids don’t melt down and make you contemplate suicide? How does sharing work when you have six billions different tasks, errands and activities to accommodate?

      • 0 avatar

        This. Convince is the most underrated factor. Private cars let one go where/when one wants to go. No reliance on anything else, not being at the mercy of outside factors. Even if car ownership costs for me were to quintuple, I would still drive for this reason alone.

      • 0 avatar

        Great point, Groovypippin. Related: if you read any of the post-mortems of the 2016 Presidential Election one of the biggest mistakes the Clinton campaign made was in trying to “algorithimate” (yes, I just intentioned that word) the campaign and to use data collection and analysis to make all major decisions. Trump’s team, on the other hand, had its finger on the pulse of the electorate and took advantage of that.

        Interesting that the Clinton camp screwed up the way they did, considering her husband was the king of on the ground, gut-feeling politics that kept him alive politically for so long.

    • 0 avatar

      I think there are two different things:
      • autonomous vehicles
      • private vehicle ownership

      So there are 4 combinations. I think we’ll see all 4 for a while but the public with driver will give way to public autonomous and we’ll be down to 3.

      One reason people will want their own cars to be autonomous (at least as an option) is that I think traffic will be so much worse with autonomous cars that driving will be excruciatingly slow and painful. Autonomous cars will slow traffic conditions (at least until the software is worked out fully). Many times I’ve seen autonomous cars be “extra safe” which means they move with extra caution and thus clog traffic. Further, now old people and children can get on the road by themselves, so that will be even more traffic.

      Consider a household’s morning routine now:
      • 2 children go to school on the schoolbus
      • 2 adults each drive themselves 1 way to work.
      Total: 1 shared bus and two 1-way car trips

      With autonomous car:
      • each child is individually driven to school and the car returns back home empty
      • each adult is individually drive to work with the car returning back to home empty once — car remains at one adult’s office
      Total: SEVEN 1-way car trips

      Suppose I want to go to my parent’s house 100 miles away. I wouldn’t dream of driving there during rush hour (rush our is from 6 AM until 10 AM and from 4 PM until 8 PM here in the bay area). But if I could sit in my back seat and be driven, I wouldn’t mind doing it during rush hour. Further, I would probably also visit my parents more often.

  • avatar

    If we left it to the marketplace many people would prefer to own and drive their own cars just a Ghosn says. However our progressive overlords have decided that personal cars represent a bit too much freedom and using the environment and safety as bludgeons they’re going to make it very difficult for ordinary people to own a car. Part of that effort will be enlisting Hollywood and the media for the usual propaganda push.

    But there will still be private cars. Surely you don’t think that Barack Obama and his circle are going to ride around in anonymous mobility pods.

    • 0 avatar

      What the hell does that have to do with liberal and Obama?

      People all over the world in large metro area (US included) do not own cars. Parking is freaking expensive and you can always haul a cab and walk to a store nearby to buy what you need. Now we have ride share and online shopping why would you need a car at all?

      It sure is nice, if you can afford the parking spot and tolerate the traffic. It is also nice if you can afford car insurance (most would), but what’s wrong with people wanting to save a few bucks a year riding in their own car (or a hauled ride) with less accident risk and therefore less insurance cost?

      I though you people are always about choices and freedom?

  • avatar

    I drove Lyft for a week, just to see how it would work out. Working during the work day in a big city, Denver, I was lucky to find myself driving passengers about one-third of the time. The rest was spent returning from dropoffs in outlying areas and waiting for new calls. That meant poaching a parking lot spot for 15 minutes here, standing at an unpaid parking meter for five minutes, or simply driving around at random. All the while, I was acutely aware of how many other rideshare logos I saw in other empty cars on the roads beside me.

    I realize that most drivers take calls from both Uber and Lyft to build business. Working around bars in the evenings can be lucrative, too. But the point is, there’s less efficiency in the current rideshare reality than it its lofty ideals. Demand and supply are not that well matched.

  • avatar

    Timeshare never replaces hotel. Their salesmen just end up being worse than used car salesmen.

    4% utilized, because everyone utilize them at the same time. There is no way you can replace them all with shared ride, unless it is a mass transit.

  • avatar

    Don’t let my user name fool you. At 33 years old I have always loved driving cars, the freedom to go anywhere at anytime in a vehicle that YOU actually enjoy matters to a lot people still and to force the majority of us that enjoy driving into autonomous pods will backfire on these giant tech companies that slowly want to control our lives.

    Sure I see the convenience of riding around in a car that you can just sit back in relax in, but the downside of something so high tech is what happens if the car/pod does break down or a tire pops? Or the grid suddenly gets hacked and every pod ultimately comes to a screeching halt? What then?

    There’s a lot of unanswered questions relating to autonomy of future vehicles. A part of me is seeing from 2 sides, on one hand it’s great as it will cut down or eliminate accident deaths plus it’s seen as a way to making riding even a more relaxing stress free experience, on the other hand I see a future where we are being overly controlled and taken over by a government that wants to slowly end our freedoms through convenience and the acceptance of it . Also regulating driving to a point where driving your own car will be illegal because human error causes accidents and kills people.

    I don’t know how SEMA and the rest of classic car industries and organizations out there will take this. The government is going to have a massive fight on there hands for probably years in regards to this whole autonomous future talk.

    One things for sure is the U.S is a massive country with many small rural and hard to access areas, my question is, how will these pods be able to get to these areas without pinpoint accuracy when google maps and Waze can’t even find it? The GPS system will have to be absolutely perfect for all of this to work properly.

    I’m simply not a fan of autonomous vehicles, car buyers will still search for individuality, vehicles that are an extension of who they are and this will never change unless the market says otherwise. And the next generation of kids will be the deciding factor unfortunately.

    • 0 avatar

      At 46 years of age I have 0.0000 interest in self driving cars and agree with most of what you said. It just doesn’t make much sense for the smaller cities and suburbs or country folk that rely on vehicles to get to where they want to go whenever they want.

      Regarding my GPS I have to laugh when I tell it to bring me home and it joyfully lets me know that I have arrived at my destination a half mile down the road from my actual house.

  • avatar

    He’s right. I have a wife and two young kids. I have car seats, toys, snacks, and a stroller to lug around and I like my private car. To think that we will completely ditch our privacy and comfort of our cars for ride sharing is a pipe dream.

  • avatar

    Mobility, whether it’s a vehicle with a driver (e.g. Uber) or an autonomous vehicle (e.g. Waymo), is just a more user friendly form of mass transit and mass transit requires a high population density to be viable. It isn’t going to work in the country where your “next door” neighbor is half a mile down the road.

  • avatar

    You are right about the extra traffic autonomous ride sharing cars will cause. I am an Uber driver and I drive EMPTY the same amount of miles as I do with a passenger in the car. So my one car is causing twice the traffic than if my passengers just drove themselves and parked their car.

    Autonomous cars are not going to save the ride share companies that much money. Yes, they eliminate the human driver, but they then have to pay humans to clean and fuel the cars, which is now included in the driver earnings. They also would now directly own these cars, increasing their capital costs, and be responsible for the insurance and repairs. All things that are currently covered by the driver’s earnings.

  • avatar

    We never discussed how mobility solutions work for drivers like myself. I have done it for a few months on a part-time basis while looking for an IT contract. And essentially it’s a shit job. It only works for new immigrants and only until they get some “domestic” experience and improve their English (some of them). It’s a dead-end job why would a country and business in general push a dead-end-job industry? Makes no sense, being a car driver works or is worth-while only if you work as a taxi driver because the fees are such that you can earn living wage. So basically Uber/Lyft and Wall street are pushing a new industry that would decimate a decent industry like taxi to be replaced by another shit business in the race to the bottom. Uber/Lyft are OK as small marginal players that offer opportunity for those who have nothing better at the moment or need some extra few bucks, for everybody else it’s a bad way to make a living.

  • avatar

    Yeah, as I keep saying…some of this stuff may mean some people decide to not buy cars, but if autonomy really happens, other people will be buying cars for their PETS(and children, elderly parents, have their own errand-running delivery truck, etc.)

  • avatar

    The businesses that need to worry are parking lot owners and mass transit systems. Who is going to pay big money to have their self-driving cars sit around all day when they can send them home or out to work at Uber vehicles. Who is going to sit on a crowded bus or train when they can have a vehicle (whether owned or “rented”) take them wherever they want to go much more efficiently and likely cheaply.

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