In today’s Roaring ’20s video, I discuss:
- How Henry Ford led the automobile revolution of the 1920s.
- The huge financial benefits of owning a self-driving car.
- Why autonomous vehicles will be everywhere by the end of the 2020s.
To watch my new video, click the play button below…
Suburban living requires me to get in my car at least once a day for a trip to the grocery store, the office or (sometimes) the gym.
The practice of driving everywhere is a new thing for me and much different than life in New York City, where my commute was either in the back seat of an Uber or in an underground subway.
In those days, my car (if I had one at the time) would sometimes spend months parked in a garage, with a few weekend trips out of the city.
But in the suburbs, a car is an invaluable necessity. You can’t live without one.
If you think about it, cars were major disruptors before that word became a buzzword in Silicon Valley.
Cars shape our modern lifestyle — where we can live and work, where we can shop and even who we can visit (or escape from).
They were the biggest innovation of the 20th century, impacting every industry in ways people could only imagine before then.
And, as I’ll explain, self-driving cars will have an even bigger impact.
The 1920s Roared Like an Internal Combustion Engine
Although the automobile had been invented decades before the 1920s, they were so expensive only the wealthy could afford one.
But that started to change in 1908, when Henry Ford rolled out his first Model T. He wanted it to be affordable, but it still sold for $825.
So, he came up with the idea of using interchangeable parts on an assembly line. Rather than having a single worker build a car from start to finish, each worker performed only a single task.
This led to a more efficient process, and the price of cars dropped. By 1914, Ford had reduced the cost to $490, and by 1921 the Model T cost only $310.
The drop in prices led to a pickup in sales. In 1918, only 7% of American families owned a car. But by 1929, 80% of families had one.
In the 1920s, the number of cars on the road nearly tripled from 8 million to 23 million. The industry grew so fast that by 1925, the auto industry employed over 10% of the entire U.S. workforce.
The rise of the automobile industry enormously disrupted almost every aspect of the economy — from real estate to retail, from places of leisure to places of work.
People moved from cities to the suburbs, which led to economic growth in the construction industry. The daily commute was born, along with Americans’ least favorite pastime of sitting in traffic.
This new age of transportation remained in place for 100 years. However, a revolution is arriving by way of self-driving cars.
These autonomous vehicles are going to disrupt key areas of the economy like the automobile did in the 1920s.
The Biggest Transportation Revolution of the 21st Century
According to the report Rethinking Transportation 2020-2030 by RethinkX, by the end of the 2020s, 95% of U.S. passenger miles will be covered by fleets of autonomous cars.
If this occurs, modern life will be getting a huge makeover.
Here are my three top predictions as autonomous cars disrupt the transportation industry:
- The demand for oil will drop significantly. There are two main reasons why this will occur. For starters, automakers are moving away from internal combustion engines to more efficient electric vehicles. By 2030, 20% of new automobiles will be electric. The second reason is that cars will be much lighter. We think of heavier cars as safer. But when you don’t have human error, they can be lighter and consume less energy by getting rid of the steel parts and bumpers that currently protect us.
- Real estate will become more accessible, increasing urban sprawl. Commute times will decline significantly as traffic becomes a thing of the past, because 5G networks allow cars to travel more efficiently at higher speeds. Workers can move even further from their place of employment as the drudgery of the daily commute is replaced with watching videos on Netflix or starting the workday early.
- Automakers will switch from selling cars to running self-driving fleets. Cars spend 95% of their time parked. That means we only utilize 5% of their potential. Autonomous fleets will need many fewer cars, and auto production will suffer. It’s estimated that the number of U.S. vehicles will drop 82% from 247 million to 44 million in the new age of autonomous vehicles. That will lead to a 70% reduction in automotive manufacturing. Automakers, facing an existential crisis, will launch their own platforms to compete with Uber, Lyft and Google. Their business models will shift from producing cars for public consumption to producing cars to deploy in their self-driving taxi services.
As you can see, the self-driving car will be a transportation revolution unlike anything we’ve seen since Ford mass-produced the Model T in the 1920s.
Just like that revolution, autonomous vehicles will disrupt every aspect of our economy — and make us all backseat drivers in the process.
Editor, Automatic Fortunes