Why There Will Be Far Fewer Cars, But Many More Miles Driven

You don't have to be Milton Friedman to figure out that car ownership is economically foolish.
"I want you, on purpose, to spend $33,000 on an asset, okay? And I want you, on purpose, the minute you buy it, to lose 11.5 percent. And on purpose to make that asset sit idle 95 percent of the time," said Gary Silberg, the Americas head of the automotive division of the financial services firm KPMG. "You don't have to have a PhD in economics to figure out that it's maybe not a great idea to buy a car.
"The average price of a car in America is $33,000, the average loss is 11.5 percent, and the average idle time is over 95 percent."
But Americans love their cars, right?
"Okay, so why do people buy cars?" Silberg asked Tuesday at the Smart Cities Symposium in Chicago. "People buy cars because there's a utility. If we look at the utility function, a car gets us from Point A to Point B. And moreover it's who we are. It's me, you know, it's electric, it's the Audi, it's the—whatever your car is. So there's a utility and there's a lot of rationale. What I'm going to argue is that number of cars people own will decline over time but the number of miles we travel actually will soar."
Decline because the utility function will increasingly be provided by cars people don't have to purchase, by autonomous vehicles that can transform all that idle time into revenue-generating labor time. Fully autonomous vehicles operated by Lyft have already transported 30,000 people on the Las Vegas strip, Silberg said, and the passengers have given those driverless cars a 4.9 stars.
Vehicle-miles traveled will explode, he added, largely because of all the people who lack mobility today and will gain it tomorrow.
"The cost per mile is going to drop significantly, and this will give access to older people in particular and younger people," Silberg said, citing KPMG research on the effects of the mobility revolution.
The aging population, particularly the 81 million Baby Boomers, will soon be able to catch autonomous lifts instead of resigning themselves to declining mobility like the many generations that preceded them. Meanwhile, parents will no longer have to transport younger people, ages 0-15, to every event they attend. They too will suddenly gain access to mobility.
In a 2015 study, KPMG projected senior mobility will lead to half a trillion VMT for each of these two demographics. That will bump America's VMT from 3.2 trillion miles to more than four.
"I think it's going to be a great thing, actually, but we can't be naive about it."