Autonomous driving, ridesharing, and more: LA tech weighs in on the future of the auto industry

by John Siegel
June 21, 2017

Just a few years ago, using a phone to book a driver, finance a car loan or rent a truck was still firmly in the realm of fantasy. 

But here we are, on the precipice of a new era of the automotive industry. Manufacturers like GM, Ford and BMW are investing in the development of automated cars, on-demand ridesharing companies and other futuristic features — causing consumers to question the need to buy a car in the first place. 

As the industry continues to embrace technology and prepare for the future, we spoke with four startups about what’s going on in the automotive industry, what they’re most excited about and what these new options might mean for consumers in the future.

 

Fair is using tech to change the way people finance their vehicles, said the company's founder, Scott Painter — a prolific American entrepreneur and investor who also founded TrueCar and CarsDirect.com.

What is the current state of the auto tech industry?

There’s never been a more fascinating time to be an innovator or entrepreneur in the auto industry. Literally, everything is up for grabs. For the first time in 100 years, it’s not just car companies looking for ways to make vehicles slightly better. Everybody from Silicon Valley to bankers to futurists are looking to take huge swings in auto. And that’s because we’re at the doorstep of a transportation golden age that will be remembered centuries from now. People are now talking about auto innovation the way they talked about computers, cell phones and e-commerce 10 years ago. The map is filling out in terms of where social media can take us or how we can have our stuff better packaged and delivered to us. So the public’s fascination has swung back to how people can get from Point A to Point B faster, safer, and in really cool ways. After all, Da Vinci didn’t sketch pictures of cell phones. He was obsessed with how humans move around. And it’s a pretty great time to be finding answers to those questions.

How are the auto manufacturers staying relevant with the wave of new auto tech startups? 

Everybody is rethinking their business model right now. And success will come down to one thing: who can most effectively move from making and selling cars into a recurring revenue model, which is the idea behind subscription-based services in all these other industries. Even Tesla, which is the hot new entrant to auto, wants to change up their manufacturing model to pursue an electric ride-sharing service of autonomous vehicles. And this is a company that’s currently valued, in terms of market cap, at around $128 per driven mile. To compare, Uber is valued at $5 per driven mile and Ford is around $2 per mile (based on new cars sold in 2016). If that doesn’t tell you that everything is in play, I don’t know what does. Everyone has to be brave enough to turn over their own apple cart and look at how they can adapt to the new business model technology is making possible.

How do you see the concept of car ownership developing over the next five years?

People will always find ways to have access to their own car. Having your own car to get into and drive is just too efficient and attractive on too many practical and emotional levels to disappear. The idea of ownership will transition, though. It might simply mean having access to your own car as a service – same as we’re seeing with music, software and other subscription-based services. The driverless cloud is going to be awesome, but it’s not going to make people stop wanting their own cars. Taxis, subways, buses, ridesharing – none of them have hurt car ownership. In fact, car sales have increased every year since ridesharing started in 2012 and had their biggest year ever in 2016. Even in its most idealized form, the driverless cloud will be nothing more than a really cool way for people in very large cities to commute to work and places near where they live. People will still want their own cars to take road trips, run errands, work on, show off, and even store their stuff as they travel. 

 

Skurt’s platform allows users to rent cars without the pains of standing in line or being told there are no more rentals available. As soon as they’re finished with the car — which is delivered to wherever they need it — Skurt representatives arrive to pick up the vehicle. In January, the startup was named one of 50 LA startups to watch in 2017, and a month later, it closed a $10 million Series A to fuel nationwide expansion. According to Dahni Bagdasarov, a talent acquisition and H&R professional with the Culver City-based startup, car ownership will continue to decline as consumers find easier, cheaper alternatives to getting around. 

What is the current state of the auto tech industry?

The auto tech industry is moving and changing quite rapidly. There are many startups out there trying to solve mobility issues and we've noticed a big trend of people giving up car ownership.

How are the auto manufacturers staying relevant with the wave of new auto tech startups?

Industry giants are working hard to stay relevant with the new wave of auto tech startups. They are building out new programs for electric cars and autonomous vehicles. Also, they are making major investments in tech startups, such as Skurt. BMW invested in Skurt because we provide consumers a car instantly. We allow industry giants to transact directly with consumers without having to sell the physical car.

How do you see the concept of car ownership developing over the next five years?

Over the next five years, car ownership will continue to decline as more options become available. Between Skurt and ridesharing services like Lyft and Uber, you’ll be able to get around instantly without owning a car.

Fifty years ago, people were counting down the days until their cars could fly. What’s a reasonable auto tech innovation consumers will see in the next few years?

In the next five years, it's reasonable to see major advancements in autonomous cars. Autonomous driving technology is improving on a daily basis and pretty soon they will be at a level where cars can drive themselves. 

 

HyreCar is a peer-to-peer carsharing marketplace that allows car owners to rent their cars to ridesharing drivers. According to Nate Ryan, VP of strategic growth, consumers are opting for convenience over the traditional concept of owning a car, and manufacturers are taking notice.

What is the current state of the auto tech industry?

The rise of the ridesharing industry and apps such as Uber and Lyft kickstarted a transportation revolution. Automakers are seeing a massive decline in vehicle ownership as consumers turn to technology and convenience for their transportation needs.

How are the auto manufacturers staying relevant with the wave of new auto tech startups?

The industry giants are scared. A recent study done by the Boston Consulting Group indicated that by 2030, one out of every 10 cars purchased is going to be used for car-sharing purposes. Another study has shown that the utilization rate of a vehicle is only 4 percent. Now that vehicle owners are realizing they are wasting 96 percent of their assets, they are turning to ridesharing, which is going to be the future of car ownership.

The automakers today are doing everything they can to find their way into the ridesharing market. Some have done so by trying to offer semi-affordable rental options to Uber and Lyft drivers.

How do you see the concept of car ownership developing over the next five years?

Car owners are all now turning to car sharing. As stated above, vehicles are only being utilized 4 percent of the time and car owners are realizing this, which is why they are turning to car sharing. Not only does it have a beneficial effect on the environment, it is also giving those who are not able to purchase a vehicle affordable access to reliable mode of transportation. With the rise of Uber and Lyft, car-sharing is providing a new opportunity to start a career as a ridesharing driver.  

What are you most excited about? 

We are most excited about the opportunity and the shift that the taxi and auto industry is taking. Specifically, the automation of cars and increased mobility it provides to everyone. With Hyrecar being so involved in both the ridesharing and carsharing space, we've seen the positive daily impact these new tech startups have on individuals lives and that's what is really motivating and fueling the change in this industry.

  

LA-based YayYo is a ridesharing startup currently operating in beta. The company’s app allows users to compare costs between the major ridesharing players operating in the area, as well as local taxis.

What is the current state of the auto tech industry?

The auto tech industry is in a very exciting state, said head of fleet operations Laurie DiGiovanni. Never before in automotive history has there been a stronger shift in the marketing landscape than what we are witnessing now. The automotive industry is changing permanently right before our very eyes.  Since two of the biggest auto tech trends for 2017 are clearly electric vehicles and ridesharing, the auto tech industry will continue to evolve.   

How are the auto manufacturers staying relevant with the wave of new auto tech startups?

Industry giants have had the same business model for close to a hundred years. Over those years, we’ve seen trends come and go, but the shift from traditional car ownership to a growing segment of vehicles that will be used for rideshare is permanent. “Cars as a Service” will require industry giants to navigate in an unfamiliar landscape that is radically different from decades gone by. Some OEMs [original equipment manufacturer] are embracing the change with bold moves and expanded business models that include becoming an auto and mobility company, while others are paying lip service to the new auto tech industry. OEMs will still have to evolve if their business model has not been fully embraced. There are still major innovations to be made by OEMs that will be required to really, truly service the new needs of the “Cars as a Service” market. It’s going to take more than the strategic acquisition of an existing rideshare company like the Ford/ Chariot and GM/Maven deals. The most relevant move OEMs could make would be to consider engineering development to meet the needs of customers who are using their car for their business and for rideshare companies that are acquiring their own fleet of vehicles to serve rideshare passengers, like YayYo and RideYayYo.There are ranges of design and engineering assets that need to be considered for the Car as a Service buyer.   

How do you see the concept of car ownership developing over the next five years?

Many are rightfully predicting that the number of teens who are getting their driver's license will continue to decline.  Cars matter less to 18 to 25 year-olds, and they see the value of a car as getting them from point A to point B. That’s it. There is no question that millennials would rather be doing a lot more with their time, namely staring at their device or cruising social media, than taking care of a car. Millennials will continue to see car ownership as a burden. This trend will progress and there is already a generation of buyers that cannot justify the expense and obligation of a car payment, fuel, maintenance and insurance, when they will have the far easier options at their fingertips. Five years from now this mindset will be the norm and people will opt for rideshare. Ridesharing is on a strong trajectory to be the transportation of choice for the new consumer.

Fifty years ago, people were counting down the days until their cars could fly. What’s a reasonable auto tech innovation consumer will see in the next few years?

Semi-autonomous auto tech innovations will continue to rise, and as consumers become more and more comfortable with these innovations, it will set the stage for fully autonomous vehicles, which will happen in our lifetime. Auto tech innovations are at their height in development and realization. In addition to tech innovations, there is a growing need for design innovations, specifically interior design innovations and engineering of the backseat. To the rideshare industry, the backseat has become real estate for a branded passenger experience. For rideshare companies that are investing in a company-owned fleet — like YayYo — why would I not want to alter the back seat in order to deliver a stronger passenger experience? For now, my only option is aftermarket renovation, which is in development.  Someday I hope to work with an OEM partner that would engage in back seat design engineering innovations.

I believe for OEMs to really serve the “Car as a Service” model, they will have to consider the design and engineering needs of the back seat for the rideshare passenger.

 

Images via participating companies and Shutterstock. Responses edited for clarity and length.

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