Nearly every aspect of the Everyday Economy is being changed by the internet and digital technologies. Transportation, which accounts for nearly 10% of the broad economy in the U.S., is no different. We’ve seen how the ubiquity of internet-connected, GPS-enabled smartphones gave rise to new mobility services like Uber, Lyft, Didi Chuxing, Ola, and others globally. But the future of transportation blends the physical world and the digital world perhaps more than other facets of the Everyday Economy.
In the near-to-intermediate term, the two most disruptive innovations to transportation are autonomy (land, sea, and air) and electrification (specifically of road-going cars and trucks). But other opportunities exist as well. So let’s take a look at what the next decade or so may hold in innovation for moving people and goods around.
Trends in Transportation We’re Watching
Autonomous Vehicles (AV)
Autonomy is a direct result of digital technologies like GPS, computer vision and LIDAR, and machine learning. While much of our attention as consumers is on the potential for autonomous passenger cars, autonomy will have a sizable impact on the transportation of goods via commercial trucking, oceanic shipping, and last-mile delivery via aerial drones and ground-based robots.
Most in the technology world believe the advent of autonomy is a matter of when not if. While semi-autonomous modes of travel already exist (airliner autopilot systems, ADAS systems in passenger cars, etc.), fully autonomous end-to-end travel does not yet exist on the road, in the air, or on the sea. Full autonomy in a broad range of conditions is an extremely complex and difficult problem to solve.
While this is presently the contrarian view, it is conceivable that getting from 95%+ autonomous to 99.999%+ may not be achievable in the next decade or two.
Perhaps fully autonomous cars, planes / drones, and ships will be perpetually beyond the horizon of current innovation, in the same way nuclear fusion has always been 20-30 years in the future for the last 75 years.
We at NextView do believe full autonomy is coming to our roads, skies, and waterways, which is why we’ve invested in companies like Optimus Ride and Skyways. But we also believe that in the next 5-10 years, vehicle autonomy will likely be deployed in specific settings and not anywhere, anytime, any circumstances. Autonomous tech will also have a phase-in period just like any other significant innovation, so mass-market adoption may be further out given the time it may take for physical infrastructure, regulations, vehicle replacement cycles, and consumer familiarity to move forward.
Regardless of exactly how and when vehicle autonomy is developed and adopted, there is a massive opportunity not only in the underlying technologies themselves but also in the second-order impacts. Autonomy will obviously impact labor utilization in the transportation industry, but it will also have far reaching changes to financial services (how vehicles are owned, financed, and insured), real estate (changing where people live/work/play), and other industries.
Electrification of Cars & Trucks
The internal combustion engine shaped the 20th century in dramatic ways: the mass market adoption of automobiles, the invention of the airplane, and less happily enabling mechanized warfare that resulted in massive human toll through two world wars. It’s less clear if electricity will broadly displace fossil fuels in planes and ships, given range and energy density challenges. But it’s probably only a matter of time before all electric and electric/gas hybrid propulsion completely displaces gas engines in cars and trucks.
Most of this innovation will take place in the physical realm and not the digital: better batteries, new vehicles, and charging infrastructure. But there may be some opportunities to create digital businesses as this macro shift occurs. For example, one could imagine new marketplace opportunities as the fulfillment of “fuel” for transportation potentially becomes more distributed.
Web 2.0 Hits the Road
While autonomy and electrification get a lot of attention — and rightly so given the potentially far-reaching societal impacts — we believe there are many market opportunities in transportation in the next 5-10 years that are “simply” applications of existing internet and digital technologies. Here are just a handful of examples from our post-Uber, pre-autonomy world.
- Over 90% of long-haul truckers used to use CB radios, but now smartphone messaging is becoming widely adopted. There are over 3.5 million commercial truck drivers in the U.S., between both local and long haul, so utilizing mobile internet applications to organize their activities presents multiple large market opportunities long before autonomy may set in.
- IoT devices have opened up the possibility of monitoring location, maintenance, and other aspects of all kinds of vehicles. This IoT infrastructure has enabled startups like Metromile to create usage-based insurance (UBI) for passenger cars or various bike-sharing companies (Mobike, Ofo, LimeBike) to utilize a dockless operating model.
- We invested in CarDash, which is using large-scale data and an on-demand business model to change the auto repair industry. By aggregating large amounts of digital repair data, CarDash brings transparency to an opaque industry and makes it easier for consumers to maintain their vehicle.
There are undoubtedly many other technology-driven businesses to be built in the coming decade that will change both the B2C and B2B realms of transportation. It’s part of the fabric of our everyday lives, in terms of how we as individuals get from place to place and how we acquire a range of goods and services. Both through existing technologies, and through newly emerging ones like vehicle autonomy, startups have a truly unique opportunity to redesign how cars, planes, ships, drones, and robots make our daily lives possible.