Page 11 - September 2018 Disruption Report Flip Book

DISRUPTION OF TRANSPORTATION SEJAPNTEUMARBYER20210818
highway autonomy will likely prove to be a popular and reasonably affordable feature — highways tend to be somewhat less complex than urban centers, and who wouldn’t want to let the car drive while stuck in traffic? Features like this exist today at a level-2+ and level-3 basis (Nissan ProPilot, GM SuperCruise, Tesla Autopilot, Audi Traffic Jam Assist), but upgrades to level-4 are expected around 2021.
Stage 3 (2023+): AV Subscription Networks (Level 4+): The third stage comes around the mid-2020s and entails expanding AVs into personally-owned vehicles that consumers can purchase, but perhaps more compellingly, subscribe to. ...[I]n addition to traditional car ownership and leasing, automakers would create AV Subscription networks for personal AVs available for sale.
...We estimate the U.S. RoboTaxi addressable revenue market at $900 billion, or ~$0.60 per mile on ~1.5 trillion urban/suburban miles driven (representing ~50% of all U.S. miles driven). The network-effect element described above suggests that this will be a few- regional-winners-take-all market.
The AV Subscription market is also sizable particularly when considering the potential historic transfer of wealth in the automotive supply chain — arguably from the rental car and aftermarket revenue channels into the AV network. ...[W]e roughly estimate a fleet of 100,000 AV Subscribers can earn $2.5 billion of lifetime gross profit.
Let’s do some back-of-the-envelope math: Today, an automaker might earn $8,500 of variable profit per unit sold, and then let’s say another $1,500 from follow-on services
etc. The U.S. light vehicle population stands at 272 million, meaning that an automaker’s lifetime vehicle profit TAM is $2.7 trillion. Now let’s assume that AVs eventually bring down household vehicle density to 1.0x from 2.2x today — a drastic move that would see a 54% reduction in the number of cars on the road.
To be sure, outside of urban RoboTaxis affecting personally-owned car ownership in cities and close surrounding suburbs, we don’t think that the remaining AV business models (AV Subscribers) would necessarily lead to a substantially reduced vehicle density outcome, due to the value of having instant access to mobility. Our prior modeling has shown a ~12% decline in future U.S. demand (new vehicle sales) by 2030E. Nonetheless, going with the 54% decline for a moment would mean that we have 126 million light vehicles on the road. Our AV Subscription math previously showed a lifetime adjusted gross profit of $29,000 per vehicle, which would amount to $3.7 trillion on 126 million vehicles on the road. This suggests that the total lifetime profit pool actually rises by >30%.
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