Entire industries are changing course with the introduction of disruptive technologies and business models, such as Airbnb for travel, Uber for transportation, Netflix for TV – and so many more.

It is clear that connected and automated vehicles are poised to cause the same kind of paradigm shift in the way we think about cars. While we wait for self-driving prototypes to become floor models, technology is already changing the way people approach transportation.

=> Find out more: The Age of Mobility

According to Morgan Stanley, complete autonomous capability will arrive by 2022, followed by massive market penetration by 2026 and extinction of the cars that we know and love today 20 years after that. IHS Automotive predicts that there will be approximately 54 million self-driving cars in use globally by 2035, while ABI Research suggests that half of new vehicles shipped to North America by 2032 will have driverless, robotic capabilities.

The Next Chapter

Innovation has paved the way for new business models, thanks in part to the ideal mobility device: the smartphone. As smartphones become more and more ubiquitous, disruptive ideas are reshaping our lives. From your smartphone, you can hail an Uber, rent a Car2go, and find the nearest bike share station, all with up to the minute information about availability. Smartphones have the power to set users free from a confined transportation system.

It’s just a matter of time before disruptive business minds develop an app that provides users with all available options – a combination of all mobile-enabled travel options in the form of the cheapest/fastest/most efficient way to get to your destination. Fully automated vehicles – when they join the road – will just be one more option in your app.

Under such a system, predicts Timothy Papandreou, from Google Self-Driving Vehicle Project at X, the specific mode of transportation is beside the point. Customers don’t necessarily care who or what brings them to where they’re going, as long as it gets them there on their desired timetable. “We are aiming at mobility as a service,” he explains.

The question then becomes how public transit will fit into this paradigm. Obviously, the best case scenario is that public transportation agencies stay with the curve and build a solution that compliments the mobile revolution. What is certain, however, is that new mobility models are blurring the lines between public and private transport, and that governments thus far have been slow to react to change.

Bill Peduto, Mayor of Pittsburgh, summed up the situation during a discussion at the Age of Urban Tech conference in Montreal (in 2016) by saying that “the culture of government is risk averse, while the culture of entrepreneurs is to embrace new stuff.”

The Private Sector Surges Ahead

The private sector, meanwhile, has recognized the inevitability of technology in transportation and is investing accordingly: as of today, Daimler owns the car-sharing service Car2go, GM has invested heavily in ride-sharing provider Lyft, Avis Budget Group owns quick rental service Zipcar, BMW is working with Chinese tech giant Baidu on building driverless cars, and Uber has come full circle, investing in self-driving trucking company Otto. The automotive industry is partnering with and investing in the technology they see as the next step forward in their industry.

While much of this technology is still only beginning to penetrate the market, its growth demonstrates its virility.

While car sharing only represents $400 million market , compared to the $24 billion traditional car rental market, according to a study from the Transportation Sustainability Research Center, further research also shows that membership has grown an average of 133% each year between 2010 and 2014. Another study of Car2go members suggests that the service is, on net, reducing the number of privately owned vehicles among their regular users: 2-5% sold their vehicle and 7-10% did not purchase a vehicle because Car2go satisfied their needs.

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In fact, if you drive 9,700 kilometres or less a year, it’s probably cheaper to share than to own, and the payoff is impressive. Research showed that households saved $154 to $435 (USD) per month after joining a car-sharing service.

While it’s still early days, it’s clear that car sharing and C/AVs are here to stay. This technology has buy-in from major players from both the automobile and technology industries. The debate is about how soon – not if – the technology will be mainstream.

The End of the Two Car Family

Jack Kerouac inspired a generation to take to the open road. Cars represent freedom, letting you break away from the hustle and bustle of busy city streets, out onto the open road with the wind in your hair. We have a love affair with our automobiles. The question then becomes, how our emotional attachment to our cars will translate to the sharing economy and the advent of self-driving vehicles?

While global car sales are still breaking records in many places across the world, experts all say that this growth is quickly levelling off. There are many reasons for this – rising gas prices, the expense of owning a car, to name a few – and now in many urban centers car and ride sharing options are making this expense unnecessary. You can use a car when you need it, on demand, without having to worry about the oil changes, tire changes, parking, etc, that comes with traditional car ownership.

The big car manufacturers agree. BMW has started DriveNow, which lets buyers of its Mini brand car-share through the platform, offering their car to borrowers when they are not using it. Ford, meanwhile, is trying a similar tactic by pairing with car-sharing platform Getaround, which uses a similar model.

The research suggests that the first big shift to come will be the end of the traditional two-car per family model of ownership. Instead, families will shift to a car and a car-sharing membership. “A change in mindsets is happening, especially in urban centers,” says Alexandre Taillefer, Managing Partner, XPND Capital in Montreal. He thinks that the prestige people used to prescribe to owning lots of cars is waning, and that a rental-by-usage system is what’s on the horizon.

The logic behind these predictions becomes clear when you look at the statistics on how people are currently using ride-sharing in their daily lives. For example, Lyft’s data shows that 25% of the trips on their service are either to or from a public transit station, showing how people are already adopting an intermodal approach to their commutes. It demonstrates the potential of rideshare and transport network companies to provide convenient, cost-effective first-mile/last-mile solutions that support transit ridership.

So what does it all mean for governmental organizations who need to start strategically examining their city’s public transit programs and urban planning initiatives?

While mobile apps are only beginning to gain major market share and C/AV technology is still in its infancy, this is the time to do the research and commission the studies that will help municipalities decide how to best incorporate the coming paradigm shift into their 5- and 10- year plans. 

What is important, notes Gianluca Barletta, formely Head of Smart Consultancy at WSP, is that the public sector doesn’t stay on the sidelines while the autonomous revolution is happening. “Having a public sector that works with the private sector - while maintaining control of the overall legislative framework to ensure equity, inclusion, privacy, safety, and security - will be the key to a sustainable deployment of AV,” he emphasizes.

What is clear, however, is that if the public sector doesn’t make efforts to stay competitive in the 21st century, the private sector isn’t going to wait for them.