U.S. automakers are beginning to gear up for a future that would have been unimaginable for them even a few years ago, in which customers no longer see the need to own their own vehicles. That shift, in turn, translates into deep uncertainty for fossil fuel demand.
“Carmakers are looking ahead to a day when the automobile plays a smaller role, or even no role at all, in many people’s daily routines,” the New York Times reports. While the shift is driven largely by demographics, with younger consumers letting go of the idea that a vehicle is either necessary or a necessary expense, rapid innovation is also coming into play.
“Novel technologies, including ride-hailing services like Uber and advances in self-driving cars, are creating new alternatives for commuting, shuttling children, and going to the store — particularly in urban settings.”
The changing face of automotive, and not just the rise of electric vehicles, adds up to the biggest single disruption facing the tar sands/oil sands industry, according to fossil analysts IHS. “New transportation options such as car-sharing, ride-hailing, and autonomous cars will change how consumers view and value personal mobility,” the company stated in a recent market assessment.
“They may increase or decrease local fuel demand depending on the fuel they use, how they are utilized, and the policies in place. Today, this is probably the greatest uncertainty facing both the automotive and energy industries.”
Since “on-road transportation accounted for more than half of global oil demand” in 2016, IHS added, “the long-term development of Canadian oilsands, like other sources of supply, is inextricably linked to global demand for crude oil, and in turn for transportation fuels.”
The Times notes that automakers are paying more attention to the first and last mile of a trip, “the short distances some people must travel from home or work to a local destination, often a mass transit station.” That focus is often paired with an emphasis on autonomous vehicles.
Automakers are banking on fleet demand to offset any loss in sales to individual consumers, the Times notes. But for the automotive industry as a whole, global consulting firm PwC expects new vehicle sales to decline from 41 to 29% of industry profits by 2030. By then, “mobility services” like ride-hailing and other last-mile options are expected to account for 20% of net revenue.
“We are on the cusp of a revolution” in which cars “are no longer our entire game,” Ford Motors CEO Mark Fields said late last year. The result, added CFO Robert Shanks, is that “margins could be more like 20% instead of the 8% we are trying to get to today,” since mobility services require less up-front investment