Ownerless and driverless vehicles

Whilst this may be a catchy title, it is, in essence the traditional Finance conundrum of lease of buy, or the cost/ benefit analysis of ownership..


The future of personal transport needs a paradigm shift from the car being an aspirational symbol to mobility as a service.

This is in line with what sociologists may call ‘Millennial thinking’ -put simply there is a move away from straightforward ownership and the responsibilities of insurance and maintenance into a more consumer friendly approach to having pay as you go services. Brands are now fast turning themselves into subscription products and services as Consumers become more comfortable with the subscription experience, something driven by the likes of Amazon Prime, Netflix, Spotify, etc but also upstarts like Graze or Dollar Shave Club

There are benefits of moving consumers to a pay as you go model. The analysis of big data and spending habits can give added value to the product and being flexible to change without too much effort knowing that the service provider can provide an upgraded vehicle if, for example you want to go on holiday and need a bit more room.

The prevailing mood against emissions, traffic density and the threat to global warming also means a move towards greener cars and much more thoughtful utilisation.

The future therefore involves more eco-friendly vehicles and shared ownership, This is a real opportunity for the automotive industry to embrace the fourth ( digital ) revolution and improve mobility and quality of life all round. All is not lost in the world of finance (or insurance) as these services will still be required, albeit delivered in a different form. Manufacturers need to embrace the concept of ‘Servitisation’

The Drivers for Change

The benefits for connected vehicles and a cooler planet are obvious, but to achieve these laudable aims, a further initiative is required to bring together various strands within the automotive sector.

  • Autonomous vehicles as a service.

Using technology to find the most efficient route is already well tested, this coupled with real time traffic updates means less miles travelled and less time wasted. Add the ability for passengers to ‘ change their minds’ and deviate from pre- programmed routes, then driverless cars will happen. The danger with this approach is that it is an all or nothing situation. If you want truly connected vehicles then you need connected roads, smart motorways, digital HGVs, automated cyclists and even connected pets, so that the algorithms can identify and predict these ([potential) hazards

City Centre parking may be a thing of the past as , once empty, the vehicle finds itself an out of town parking place, recharge it’s batteries and be readily available when you want picking up, leading to even less congestion.


  • Finance

There are several variations on this theme.

We have seen in the automotive sector a real shift from Finance providers selling HP or lease purchases to more personal contract plans and longer-term car rental options. With the speed of obsolescence, the trend is not to lock yourself into three-year leasing deals, but rather find a product with a flexible length and also the opportunity to upgrade/ change vehicle as time and needs change. What we have seen in recent times in the Car Finance world is a move towards a more personalised finance product for the consumer and not the vehicle, although Finance houses still look to the vehicle and it’s equity for security.

Looking further into the future, blockchains and peer to peer transactions will eliminate financial intermediaries such as finance companies or banks. Provided the technology is secure, the use of blockchains and bitcoins will allow owners to directly rent out their vehicles under terms and conditions they set themselves. Any person with access to mobility can adapt a car share approach without too many barriers to entry, setting terms and conditions as they see fit

This can also be beneficial as a way of securing payment for incidental trip charges such as toll roads, recharging stations and parking lots. This can also ensure that there is scrutiny of each user to carry proof of identity, age, insurance coverage and ability to pay.. There will have to be some checks and balances in this system to ensure regulatory compliance, e.g for tax recording but such issues are not insurmountable

  • Ride sharing

Manufacturers are hoping for commercial sales of fully autonomous cars by 2020, Tesla has already announced plans to allow owners to hire their cars to a common autonomous fleet when not in use. This should produce revenue offsetting the initial cost of the vehicle. This is akin to car clubs in the UK and the US, but the ownership model still divests itself in individuals. This will probably be a transitional stage in ownership, but it shows a move towards manufacturers perhaps being unable to sell the Capital in the vehicle to the consumer, who is preferring a subscription based service.

  • Ownership

The future is to have ‘economic’ vehicles and minimise costs to access.

This will also entail vehicles having detailed cost benefit analyses and real time information which leads to better utilisation and minimisation of running costs.

As we head into the future new models of ownership will evolve. Not only will mobility be a service, but it will be a ‘monetised ‘service not exclusively limited to the manufacturer or traditional lender.

In short the notion of ‘ access rights’ comes into play. So, who has access to the Car is one part of the supply chain, and the payment for such rights can also be achieved either by parting with cash or using digital means for payment. This has serious ramifications for manufacturers. Who wants to ‘own ‘ a driverless car?

If we accept that the car is no longer a status symbol and the fact that access to finance and outright car ownership is still smarting from the last liquidity crisis, why would anyone want to own so much metal. Manufacturers need capital to make the vehicle and it may well be that the ownership of the vehicle doesn’t get past the factory gate, i.e. Manufacturers responsibilities don’t end when the vehicle is sold, in fact there is a ‘reverse ‘ model to the supply chain and that manufacturers may not even sell the vehicle but retain ownership and adopt a rental model. This would eliminate a whole host of intermediaries overnight Car rental companies, finance houses and taxi drivers (including Uber)

Some Manufacturers may create ‘ multiple ownership ‘ whose identities and shares in the vehicle can change in real time. Car dealer may be a thing of the past as manufacturers will simply deal direct to local markets where the cash is flowing

Data about the ownership and usage of the vehicle will be stored ( and used) by the manufacturer the decentralized platform.

  • Mobility as a service- a leap of faith

I started this piece with the lease v purchase question, there is also the deeper economic question of asset ownership. This is not confined to vehicles but we have seen the success of Airbnb where the marginal costs are being minimised by the owners of assets. This has an impact on finance (and society) as a whole , service delivery via knowledge is more important than profit maximisation and supply v demand as society , in general, drives down the cost of access to assets via a more collaborative and communal approach. Perhaps a return to a more ‘commons ‘ base social contract is on offer rather than reliance on ‘market price’ This, however comes at a wider cost to society as a whole raft of jobs will be made obsolete, notwithstanding the current move towards protectionism and the use of automatons generally to replace some of the lower paid Coupled with social media, consumers now want real time information, access to mobility is more important than owning it. Manufacturers are coming to terms with the word ‘servitisation’ This is now what is driving value for the consumer.

Apps enable Millennials to find alternatives and manufacturers must simply use the Big data available to them to better understand consumer needs. This also includes making vehicles ‘technologically smarter’ which provides the owners with real time information on condition (and more importantly) usage. This is part of the trend for an increase in the number of ‘ things’ that are on the ‘Internet of Things’

  • The Environment

It is our old friend, Corporate Social Responsibility. Millennials want business to behave itself and protect the planet, so financial performance isn’t paramount, what is more important is longer term sustainability. The circular economy also means that perhaps we move away from Vehicle manufacturers with ‘built in obsolescence’ to a much more worldly and holistic view of what to do with end of life vehicles and what can be recycled.

The linear economy and notions of ‘supply chain’ may become a thing of the past and that the buck stops with the manufacturers regarding the responsibility for the cradle to grave management of the vehicle rather than leaving it to the traditional supply chain of intermediaries to equally bear their responsibilities.

If we talk of mobility as a service, manufacturers have to have a ‘service chain;’ not a supply chain . The ultimate consumer wants to use the product in safety and would want the reassurance that the ultimate maker of the machine actually takes responsibility for ownership, condition and suitability of use.


The Drivers for change puts the ownership model under stress.

Such Drivers create the ‘perfect storm’ of trends which means that Society is thinking twice about ownership models and access to services rather than capital. It begs the further question of what is going to happen to capitalism as the logic in this piece says that, whilst there is a demand for the service, someone still needs to own the asset, in this case, we have simply pushed the ownership back to the manufacturer. This may mean that those who have access to capital may just get richer and inequality comes into play. What Millennials have done is to force the pace of debate on this and a new strain of capitalism may emerge

Cars are already telling us when they need a service, photocopiers tell us when they run out of paper

By selling access to the asset rather than the asset itself, manufacturers will remain responsible for the life cycle. Big data from the vehicle’s life will enable manufacturers to adequately prepare for the vehicles second life.

Servitisation has the potential to unlock new revenue streams and cost savings for manufacturers and distribution partners.

We may not see ownerless cars but we will see less ownership.