Carlos Ghosn: Car Ownership Will Not Be Replaced With Mobility

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]