The car companies plan to stop selling cars in favor of selling “transportation” – as a “service” – instead.
The main reason for this reorientation of their business model is simple: People increasingly cannot afford to buy cars – the average transaction price is now about $35,000 which is a sum roughly equivalent to half the average American family’s annual income and thus, not sustainable as a purely financial matter.
Meanwhile, cars – themselves – are becoming soul-less appliances very much like cell phones in terms of their interchangeable homogeneity and their disposability.
People are for that reason losing interest in them.
But cars are very much unlike cell phones in one critical way: their cost. It’s one thing to throw away a smartphone after a year or two; another to do the same with a $35k car after four or five. This problem is going to get much worse, very soon – for two more reasons.
The first is the hard-pushing of electric cars, which will increase the transaction cost of buying considerably since the typical entry-level electric car costs about $40k, not counting the cost of the wiring upgrades many people’s homes will require in order to be able to recharge an EV in less than 10-12 hours. Also not counting the cost of the replacement battery pack the EV will probably require right about the time the six year loan is paid off.
Unless the cost of replacement battery packs comes way down – as in down by at least 75 percent – the EV owner will be looking at spending thousands more to keep his EV moving after he got done paying for it.
The second is that the buying power of what he uses to pay for all of the above is waning almost daily. This thing styled “inflation” – which means the diminution of the buying power of money, via the reduction in the value thereof, achieved by printing (or digitizing into existence) new “money.” In terms of this discussion, it means that a year from now it will be even harder for the average person to finance a $35,000 car absent an inflation-correlative increase in the amount of money he has available, to counteract the diminished buying power of money. That $40k (today) EV will likely be more like $45k, next year – not counting the cost of the wiring upgrades.
It could be a lot more.
Regardless, it’s not sustainable – as purely financial question – absent a by-some-miracle correlative increase in the average car-buyer’s buying power. This being as likely as water fountains spritzing us with champagne. Add to this financial problem the emotional problem arising from the increasing disinterest in new cars except insofar as they work as appliances.
Why not rent them to people instead?
This is what is meant by “transportation as a service.” With a difference – as a lease is the way people traditionally rented cars.
A lease enabled a person to drive more car than they otherwise could afford to buy. Or pay less to drive a nicer car – however you prefer to look at it. Regardless, you signed up to rent/lease a given car for a period of time, usually three years or so. At the end of the lease period, you usually had the option to buy the car at a price negotiated at the time of lease inception. Or you could assume another lease. Or just walk away.
Transportation as a service differs in that you pay to have temporary access to transportation as you need it. You don’t retain exclusive physical possession of a given vehicle for a set period of time, during which the vehicle is very much yours in every sense except the legal sense.
You will posses nothing, going forward.
It will be more like dialing up a movie on Hulu or Netflix. You view the movie and then it’s gone. You drive the car (more likely, it will drive you) and then it’s gone. On to the next drive, of someone else. You will own nothing – and you will possess nothing. But you’ll pay for it, forever.
Or at least, as long as you want to have “access” to the “service.”
Serial payments, with no paid-for date. That is what is meant – or rather, intended – by “transportation as a service,” which is congealing as a kind of side-effect, intentionally or not, of the double-tap policies of forced electrification and forced homogenization, these policies boosted by the policies of the “Fed,” the styling given to the privately owned banking cartels that were given operational control over the value of money, by being given the power to create it out of nothing, hey! presto! style.
The car industry helped all this along by going along with electrification as the path of least resistance (as they see it). By not making any real effort to contest outrageous usurpations – in an ostensibly “free” country – such as the federal government decreeing how many miles-per-gallon the cars we buy must go and that every new car must be “safe,” as defined by its compliance with a roster of federal regulatory ukase having nothing to do with whether a car is prone to crash.
But now, it faces the consequences of these things, in the form of customers who – increasingly – either cannot afford what they’re selling or don’t want to buy into it.
The consequences differ for us. We’ll be reduced to making payments, ongoing, as the price of having “access” to “transportation . . . provided as a “service.”
. . .
If you like what you’ve found here please consider supporting EPautos.
PS: Get an EPautos magnet or sticker or coaster in return for a $20 or more one-time donation or a $10 or more monthly recurring donation. (Please be sure to tell us you want a magnet or sticker or coaster – and also, provide an address, so we know where to mail the thing!)