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?