Is Virginia Ready for the Transportation Revolution?

The 21st-century transportation revolution is undermining core pubic policy assumptions about surface transportation. Will Virginia change its thinking?
The 21st-century transportation revolution is undermining core pubic policy assumptions about surface transportation. Will Virginia change its thinking?

The 21st-century transportation revolution is shifting into higher gear. Technology companies, automobile manufacturers, and energy companies are reassessing the future to see how they  might exploit emerging trends. Where it all goes, nobody yet knows. But state and local governments, which build the infrastructure this emerging industry will run on, need to pay attention.

Highlights from an IHS Markit study, “Reinventing the Wheel,” appear in a Wall Street Journal advertorial today.  The thrust is that the surface transportation industry has not seen this much turmoil since the invention of the automobile more than a century ago. Three trends are converging in ways that are difficult to divine:

  • The rise of driverless cars
  • The rise of electric vehicles
  • The rise of mobility as a service

Of the three, the concept of “mobility as a service” — the idea that people don’t need to own their own automobiles but can order transportation when and where they need it — is potentially the most transformative. “Mobility as a service,” says the essay, “offers a new form of affordable, convenient, and time-effective transportation that could increase miles traveled around the world.”

Uber, which has first-mover advantage in ride-hailing, now has a market capitalization of $68 billion — more than any of Detroit’s “big three” automotive companies. China’s Didi ride-hailing company averaged 20 million rides per day in the second half of 2016.

The invention of ride-hailing apps for automobiles is just the beginning. “Mobility as a service is in its infancy, and even newer business models may appear soon enough,” says the essay. “In Europe we could foresee a modal switch from public mass transit to new forms that offer a different service experience than trains, metros, or buses.”

(We’re already seeing experiments in ride-sharing such as carpools and commuter buses. I fully expect ride-hailing apps to rejuvenate mass transit in the form of jitney-like van services. The advantage of van ride-sharing is that vans, which carry smaller numbers of passengers, can convey people from Point A to Point B with greater flexibility and precision than buses and trains that must stick to fixed routes at fixed times. Uber-ized vans won’t provide as much flexibility and precision as single-occupancy automobiles, but they will provide rides at a more affordable price — potentially for less than mass transit — thus making the service available to a much broader market.)

Mobility as a service has enormous momentum. And it overlaps with two other significant changes: driverless cars and electric vehicles.

“Removing the driver from the car would lower the cost of ride-hailing, thereby opening up access to new population segments,” the essay suggests. Technology companies such as Google and Apple, with some of the largest cash reserves globally, have the resources to overcome technology challenges (and, I would add, the liability issues surrounding car crashes and injuries).

Electric vehicles could diminish the resistance of those who fear that an increase in Vehicle Miles Traveled would increase air pollution and CO2 emissions.

There is one more element in the transportation revolution that the essay overlooks, and that is the assumption that automobiles must be four-seaters. As seen in the photo of experimental Toyota vehicles above, designs for single-seaters are multiplying, even as we see innovations such as battery-assisted bicycles. Such vehicles will bring down the cost of mobility as a service even more.

This multi-faceted transportation revolution is being driven mainly by companies outside Virginia. But, as the essay makes clear, the new technologies and business models will play out on local roads and streets. “The forces driving change will interact in different ways across the globe,” says the essay. “The key decision-makers may well be cities. Some may make bets on all all-electric fleets, while others could see more rapid adoption of autonomous vehicles.”

How will Virginia respond to the transportation revolution? In the previous post, I noted that state government faces a long-term structural mismatch between revenue and spending. Unless we are willing to raise taxes, we must fundamentally re-think how government delivers core services. The mobility revolution offers a once-in-a-century opportunity to do things differently — to provide more mobility for more people at less expense. Will we take advantage of this opportunity, or will we continue, out of institutional inertia, doing things the same way we always have?

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6 responses to “Is Virginia Ready for the Transportation Revolution?”

  1. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    What could be a helpful player on a much larger stage, this easily is pitched as the perfect futuristic science fiction alleged silver bullet scenario. But never doubt the politicians capacity to take the easy, abet expensive, ineffective, and wasteful massed transit way out. Especially so if it will line of pockets of a supporters pocket, and turn our lives over to the elite expert big business for yet another dangerous experiment, and huge fleecing of Public Monies . It belongs on the left coast alongside the Bullet Train.

  2. I see two elements to the rate of future change: (1) consumer preference, and (2) presence (or lack thereof) of government mandates.

    The limited success of electric vehicles to date can be largely attributed to the fact that California mandates sale of electric vehicles. We have some very interesting (Twitter?) debates ahead whether CA will be continue to be allowed to basically dictate US auto manufacturing policy. The way I look at it, we either need a national mandate or no mandate. I see the electric car situation as similar to E10 ethanol, which is indeed mandated nation-wide. Maybe that is also the future of electric cars.

    To be sure, there is a small natural market for electric cars, but without mandates, the adoption rate is slower and purchase costs are higher. When there is a government mandate, then the auto makers have to “push” electric cars by taking a loss on sales. Otherwise they owe large “fines” to California for under-selling their quotas. So that’s my “Crystal Ball” for electric vehicles.

    As far as other “disruptive” new technologies, it’s hard to say. Americans love new technology more than most, but we tend to be overly early adopters, as this article might suggest Jim is. I will take a wait and see attitude.

  3. I see that what is happening with transportation-as-a-service as an antidote to public money/crony capitalism. This should be able to proceed without the necessity of large public funding to serve a small portion of the market. Mobility services, including free market jitney-type services, solve many of the first-mile/last-mile issues that plague public transportation and make it a money loser. Widespread, easy to use phone apps for optimizing passenger pickup and transaction processing can keep this in the private sector, even for low-income individuals. Everyone has a cell phone nowadays.

    I do not think we need a national mandate to encourage adoption of electric vehicles. There is a small subsidy (for the first 200,000 EVs for each manufacturer) but it is nowhere near the subsidy that exists and will continue to exist for crude oil-based transportation fuel. Early adopters do make up much of the market now. However, many families are now choosing a $30,000 – $40,000 EV as their primary day-to-day vehicle (Nissan Leaf, Ford Focus, Chevy Bolt, etc.) because they typically do not drive very far each day. Lease costs are competitive with other vehicles. The second car is an ICE for longer trips.

    As EVs reach the same price point as a comparable ICE vehicle, the market will shift rapidly to EVs for many reasons, but especially because they are “cooler” and more fun to drive. Plus, they are designed for autonomous driving. This will happen by 2025 or maybe sooner. And it is easier to build many sizes and varieties of EVs for specific uses, as Jim points out.

    Traditional car companies are trying to prepare for the transition but they might not succeed. They are facing similar challenges as the utility industry. They have 100 years of habit building cars (with computers now) not computers with wheels (as the EVs are). The major transportation-as-a-service providers are likely to come out of the computer industry (Tesla, Apple, Google, Uber, etc.) rather than the automotive industry. When an industry is disrupted it happens from the edges, not from within.

    If you look back at California’s contributions: getting the lead out of gasoline, reducing emissions, increasing fuel mileage, etc. We all have benefitted from their foresight. Otherwise, Detroit’s lobbyists would have kept us building gas guzzlers and the big three might not have survived the oil shock’s of the 70s and 80s.

  4. CrazyJD Avatar

    I would only add one on-the-ground observation based on a recent trip to Breckenridge, CO. They have an elaborate free bus system, which gets you mostly where you want to go, albeit not in the time you want. There is also the complimentary van from whatever hotel you’re staying at. That van will bring you closer to where you want to go, but is entirely unreliable. Reason: A shortage of drivers.

    Breckenridge, CO, during ski season, when every young guy or gal wants to be there, has a shortage of drivers. Upon inquiry I was told that the shortage is nationwide. At the time, I did not pursue whether “nationwide” meant “ski resorts” or something broader. Certainly, we hear that there are tons of Uber drivers, so there is a disconnect happening, which may be the fact that Uber drivers don’t make very much and constantly complain about it.

    Would there be a shortage of drivers for vans if, say, Uber ran it? Presumably if you are a van owner, you need to have it filled; it’s not like running a Prius. Maybe you get 15 mpg, or less if it’s one of those larger things that run at airports.

    Jim may need to bring the personnel aspect into this new revolution. Can you get people to do this mobile driving, reliably and economically ?

  5. LarrytheG Avatar

    The electric car that is going to transform the US is not yet available here but is in Japan:

    ” Powered by a simple, but stunningly effective series hybrid called e-power, Nissan’s lowly Note MPV has upset Japan’s usually Toyota-dominated sales charts. In January, Nissan’s Note became Japan’s best-selling car, a title usually monopolized by Toyota’s Prius.

    Nissan’s Note was launched last November. Its gasoline motor does not power the wheels. It works as a generator, and buffered through a battery much smaller, lighter, and cheaper than that of a batter-electric vehicle, electricity is delivered to an electrical engine, which now finally sets things in motion. With that setup, the ICE can work at the revs most suited for low consumption, and the electric motor can deliver butt-kicking torque.”

    this car gets 80mpg… costs around 15K.. has a “range” of 500 miles and
    does not need recharging just fill up the gasoline tank.

    I see the adoption of this car over folks using ride-sharing like Uber.

    I don’t think the people in the US are going to give up their cars.

    Sure, they’ll use Uber to get back and forth to the airport.. and to go get their own car when it’s in the shop… but it’s going to be a long slog on people going with no car at all and depending on Uber. Just ain’t going to happen.

    but when cars start getting 50-80mpg… you’re going to see the bottom drop out of gas-tax-funded infrastructure and I bet tolls are going to be a major way.

    we talk about taxes .. as if they’re not needed or far higher than they should be. I think the gas tax is a good example of how people feel about the gas tax versus the reality of whether or not it is “enough” to pay for “free” roads and the impression I get sometimes is that people think they already pay enough in gas taxes and they are being squandered .. and all that needs to be done is to cut the waste and there will be enough funding.

    then that kind of thinking carries over to other taxes – that pay for education and MedicAid and the next thing you know – there is a total disconnect between reality and perception.

  6. LarrytheG Avatar

    re: Uber Vans and Jitneys….

    The computer problem of one person origin and destination is relatively straightforward especially if you have time-delay data – when then will provide an accurate time to pick up and take you to your destination.

    when you start adding more people with different origins and destinations.. it gets enormously more complicated.

    you could do a van POOL where everyone meets at a commuter lot and head to some destinations that are “close” to each other but to start with one person then add another with a different origin and destination.. then another.. it’s not a trivial problem and if someone figures out how to do it right – I’d be surprised.

    This is exactly why buses serve defined routes and stops…rather than anyone getting on anywhere and getting off anywhere.

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