Pretty soon, your car is going to pay for your morning coffee and even cover the expense to fill up the tank. That is, as long as there are cars with gas tanks. Innovation is everywhere and automobiles seem to be amongst the biggest recipients. Cars are indeed the ultimate mobile devices.
Car makers are always looking for new revenue streams. They soon will be allowing drivers the ability to order coffee from the road, put in a takeout order from a restaurant, make a hotel reservation on the move, as well as pay for gas at the pump. Car companies will continue to connect retailers and restaurants with drivers as consumers move beyond the phone in the digital age. It’s a natural progression for the automobile but it also continues to raise serious safety concerns at a time when distracted driving is already at elevated levels. General Motors estimates that Americans spend an average of 46 minutes a day in their cars. When it’s bumper to bumper traffic, drivers are quick to hit their phones to pass the time or increase productivity. Self-driving cars definitely have a place in our present and future.
If you look at traffic statistics, cars can’t begin driving themselves soon enough for safety purposes. Over 25% of fatal car crashes result from what’s called “distracted driving.” That generally means the driver is texting or using their phones for another purpose while driving. You see it all the time on the road from coast to coast. It’s become as dangerous as drunk driving. Nearly 60% of teen crashes are reportedly the result of distracted driving. According to the DMV, 9 people are killed daily from distracted driving. It’s that serious.
The good news is that issues like these generally lead to ingenuity. Necessity tends to be the mother of invention. Automation is expected to bring safer and more efficient transportation. But there’s another fascinating trend: Teenagers are not driving like they used to. The University of Michigan did a study: In 2014, only 24% of 16-year-olds had their driver’s license. 35 years ago, back in 1983, it was nearly half. Perhaps they don’t see the need because driverless cars are coming. Maybe it’s because Uber is so easy and finding parking is such a pain. Or an outside chance is they simply enjoy quality family time and you just can’t beat mom & dad as chauffeur… Yeah, that’s probably not it.
The auto industry’s move into e-commerce is still in early stages. Manufacturers are only bringing in roughly $40 per car per year today. However, it’s expected to be much bigger down the road and a necessity if the trend towards Uber and driverless cars continue. Connected car data and services are expected to bring in $750 Billion in revenue by 2030.
Disruptive innovation continues to be the theme in the Digital Age. But it’s been the case for decades with consumer electronics. Sony owned the portable music space in the 1980’s with the creation of the Walkman. But Sony got crushed by innovation in 2001 when Steve Jobs rolled out the device that carried 1,000 songs in your pocket. The iPod gave way to the iPhone six years later. Before that, when we needed to make a phone call on the road, we used a phone booth. That’s right, those of you reading this under the age of 30, there used to be boxes with phones scattered around the world that connected callers for coins. Today, wires are a thing of the past. Credit cards are next. Consumers are paying digitally with their phones in fast form. Forget the phone booth. Pretty soon, people will be asking, what’s a phone?
What’s next? We study these trends and themes very closely. Innovators see things well before others do. Remember, it’s alleged that 100 years ago when asked what people wanted, Henry Ford responded that they would have said a faster horse. Things move faster than ever these days. It’s all very investable.
We will have our Fall Newsletter out next week, mapping out how we see the year-end unfolding.
Have a nice weekend. We’ll be back, dark and early on Monday.