The fully autonomous ride going far

The Fully Autonomous Ride –
Going FAR
Predictions on the next Disruption
Tsunami;
This one will affect everything
2018-05-27 Albert Cerqueira © 2018 1

Fully Autonomous Ride will Change Everything
Light Vehicle Fleet + ‘Individual’ Riders
Now: Based on US Stats for 2016 & 2017 ; system is stable
• 269 million light vehicles
• Kind most people own & drive
• Selling & financing vehicles
and all the incidental support
costs like insurance, fuel,
maintenance, registration,
parking, etc. is worth about
US$ 2.0 trillion
• Most vehicles spend most of
the time parked…. …getting
more productive use out of
them would be nice;
Autonomous Rideshare?
• 326 million people with 222
million registered drivers
• Total annual trips : 162 billion
• America spent over 7 million
years on the road last year
• Average one-way journey is
14.6 miles & ‘wastes’ 23
minutes
• Drivers do 730 one way trips
per year; sometimes they
have passengers.
• All in, average cost per one
way ride: US$12.60

What is the Fully Autonomous Ride?
• The attention & hype is on the Fully Autonomous
Vehicle (FAV).
• The prevailing premise is that the typical owner of a
‘manually’ controlled car will steady give way to
vehicles with autopilots and self driving capabilities.
– Individuals will have their own Fully Autonomous Vehicles.
• So the ownership model remains unchanged.
• The ride share and other fringe business models will
remain a small part of the mix; so status quo is
preserved.
• This is a comfort to all the entrenched players.
This expectation is wrong.

What will it really look like?
• There are two trillion dollars (US$ 2,000,000,000,000) up for grabs.
– Everyone is greedy & no one will share.
– With just 50% growth in ridership, it is US$ 3 trillion.
• The two big expectations of fully autonomous vehicles are:
1. They are intrinsically safer, so fewer accidents.
2. They can spend much more time on the road giving everyone in the family their
own ride when needed.
• Item one leads to a shift in lability expectations;
– The manufacturer of the autonomous vehicle (whoever sells the final version
with all software & sensors embedded in the vehicle) is now the responsible
party in all accidents.
– Lawyers & Insurance Companies will want them to pay up, and will push for this.
– So to limit their liability (costs) and keep tight control, they will respond by never
selling the vehicle, they will just sell the ride.
• Item two leads to a logistics challenge, the family probably needs their
individual rides at about the same time of day, so multiple personal FAVs is
expensive and just propagates the current state of the vehicle mostly sitting
not doing anything productive though most of the day.

Just take the ride when it comes
• So the more cost effective option is to ‘just take a ride’;
• The ride-share providers sell rides so that works out,
provided there are enough vehicles and riders to keep
everything in balance.
– The new just take a ride based model has to be no more
expensive, or better yet, cheaper than the current ownership
model on a per trip basis.
• If you are entering this market:
– You need a way to drive volumes up quickly.
– You need a fleet adequate to meet demand for rides at peak.
– Trickle in does not work; need to saturate a market fast.
So everyone will be in a hurry.

Fully Autonomous Vehicles + Rides
= Fully Autonomous Rides (FAR)
• Around US$ 3 Trillion;
– expect around 50% growth to cover pent up demand for individual rides by non drivers.
240 Billion Rides
& 330 Million Riders;
Everyone that wants to,
can afford a local trip for
around US$12.60 per trip
66 Million
Fully Autonomous Vehicles;
~10 rides per vehicle per day @
23 minutes each = about 4 hours
a day work shift per vehicle

Enablers: the plus matters
• FAR needs to be as easy as going to the family garage,
climbing in and driving way….
– Door to door service; this needs volume, logistics
management and regular predictable usage.
• Regular rides = subscription services
• Subscription service = subscription device
• Now in Apple & Samsung market space
• Device needs a data plan & a killer Ride Manager App.
• Now in the Mobile Carrier Market & App Space
• Then you can do behaviour tracking
“Your ride is going to be ready in 5 minutes, accept or delay?”
It is NOT enough to just offer an autonomous vehicle;
you have to seamlessly connect the riders with the ride
before they know they need it.

Capture the Ride &
You Capture the Whole Thing
• So if I’m going to capture my fair share of the US$ 3 Trillion Dollar FAR
service, then I need to provide free Phones & Data Plans.
• I will want to control the whole experience:
– The online access on my free to you phone is also the on-vehicle access to the
web and all your favourite sites;
– Maybe they are my version of your favorite sites instead?
– Can now control the web access and the associated web revenues.
– Now we are into Google, Amazon & Facebook market space
With 3 US Trillion Dollars at stake, where is the balance of power?
• The vehicle provider; or
• The ride aggregator; or
• The web portal (Devices, Apps, and Data Plans) provider?
My regular presence in a ‘branded’ Fully Autonomous Vehicle
= My choice for:
• Phone (device) & Carrier
• App & Web Presence
• Financial Services Company

What Happens to the Base?
• The fleet will shed ¾ of the entire inventory in as little as 10 years,
starts around 2020 when production of fully autonomous vehicles
with No-Operator-Controls show up.
• Various studies have settled on a 7 to one substitution rate; one FAV
can replace up to 7 regular light vehicles.
– The FAVs can be on the road, providing rides all day….
– The impact is biggest in major urban centres.
– Rural communities will have economies of scale issues.
• So trim down to 6 to 1 to allow for 14% excess capacity for peaks
and responsive service.
• Fleet shrinks from 269 / 6 to 44 million
• Allow 50% ridership growth : 66 million vehicles are enough to give
everyone that needs/wants one, a FAR.
3 out of 4 existing ‘vehicles’ are not needed in a scenario that
grows ridership by 50% over today’s baseline.

What Happens to the Existing Base?
• Fleet will shed 3/4 of entire inventory in as little as 10 yrs.
– Vehicle OEMs if they stay in their sand box of building
vehicles: will shrink dramatically and lose.
– Fuel companies: these fleets will be mostly electric to
maximize bulk buy opportunities for private fleets.
• Even so, No need for gas in every neighbourhood, more like
commercial self serve stations if stay with gas.
• Bulk Fleet Buyers can now set the price they are willing to pay;
balance of power has shifted.
– Auto insurance companies will lose over 70% of their base,
they will compensate by raising rates; fleet owners will opt
to self insure physical damage and obtain bulk 3rd party and
injury protection.
• So more loss of base; leads to consolidation and whoever is most
willing to basically act as a re-insurer for 3rd party & injury liability.

– Rental Companies & New / Used Dealerships : : transform into
FAV fleet service providers (someone has to keep them clean).
• Don’t buy the OEM inventory to sit on your lots; sell your large base of
operations to act as daily service & staging locations throughout the
ridership areas.
• With 5 to 10 times the daily workload for less careful users, there will be a
need for daily service & prep of FAV.
• Most Locations will not be needed, maybe one in ten; auto-malls are
dead; time to convert them to condos?
• Now function as distribution, dispatch and service/repair centres; they
need to be spread out.
– Traditional Taxi Cab and Delivery companies :
• Their services will merge; people are cargo too.
• Most vehicles will be unattended, but once in a while an on board
attendant is a useful thing to have.
• Some opportunity to offer attendants on some rides to ‘help’ getting
on/off and dealing with transport of packages and other goods to the
door step.
– Can be a premium service, or differentiator.

– Mass transit (busses) will be able to focus on hub to hub
solutions; neighbourhood feeders which run empty for most of
the day are no longer needed.
• There will be premiums charged (congestion fees or access fees) for going
direct to high volume, high value locations at peak times.
• Venues will charge for access/convenience for drop off/pick ups: it will
become a priced item.
– Instead of having large empty lots that get jammed once in a while; there will be
nice sheltered plazas for pick up & drop off, but have to pay for proximity.
– Transactions will be seamless to the app in the FAV/Rider.
– Parking: Drop off & Pick Up locations; no static day long stays.
• Buildings will sell access rights & change facility entry designs to maximize
flow at peaks. Parking Garages will be converted to other use.
– Gov’t fees for parking, registration, traffic enforcement etc:
• ¾ are gone, so these will go up per vehicle to make up the shortfall;
• every FAR vehicle will be treated & licensed like a Taxi & expect road use
fees to be assessed, since the ride is fully tracked, fairly easy to tax it.

– Everything is going to run through the FAR service account.
– The FAR Service Provider is my Bank?
• No cash, no credit/debit card, no other payment solutions
needed/wanted?
– Interesting impact:
• Now, to ride is to have a credit history… ..and a credit profile.
• Everyone is finally in the financial system? !
• Fringe used car ‘approval’ of financing to get any car you can,
becomes consolidated FAR service providers setting up and running
clearing account for rides and anything else that you want to run
through your FAR Service account?
– Amazon market space?
Access to FAR becomes an essential regulated service, to ensure fair
access and economic opportunity, even if you are homeless (no
fixed address).

But I Like My Car; I Enjoy Driving
• Current ownership model places the typical one way ride at about US$12.60.
– Assumes all vehicles and all drivers are sharing the load equally.
– If you have a high end vehicle and live in an expensive town, it will cost more…
– The owner operator pays for:
• The vehicle (cash or financing & fees)
• Insurance and Registration
• Operating Costs: Fuel, servicing, repairs & maintenance
• Parking & Traffic fees (as required)
– The bulk of the costs are for just having the vehicle around and ties up a lot of
discretionary income or cash flow.
• These costs are affordable because there are so many (millions) vehicles/owners out there.
• When the base shrinks by 75%, per transaction costs per private vehicles, even if they are
autonomous enabled, will jump by at least an order of magnitude;
– $900 average overall insurance premium becomes US$ 10,000.
• So collapse of the per unit affordability will kill the private ownership of vehicles.
– Insurance & liability makes personal driving too risky for the average joe; they will need
to just take the ride.
• Only the truly wealthy will be able to afford them; and for them, there are other approaches.
– They can pay for exclusive use and get custom fittings of the fleet vehicles so that there is
always one of their specials available to them.
– If they move around a lot, this can get expensive, but the 1% can afford it.

Safety & Privacy is a New Game
• To be viable, unattended autos need a mature and strong set of societal institutions to
protect the asset and the rider.
– FAR vehicles are only viable in markets where there is a very high confidence that the vehicle or the
rider will not be interfered with.
– This makes FAR markets a better opportunity for countries that have societies where strong rule of
law is well established and the regulatory and support infrastructures to run the FAR vehicles are
already in place.
– Any region with light weight social protections for personal property (the car) and personal safety
(the rider) will not be able to hang onto the FAR vehicles; in this case theft and vandalism will be the
norm which collapses the FAR market proposition.
– More importantly, riders will NOT risk a FAR vehicle if they are likely to be ambushed in it; new
policing and protection becomes an important part of the equation.
Expect every FAR vehicle to be fully and continuously monitored & tracked;
In-car surveillance and external surveillance plus full trip logs down to the second
and on-board vehicle diagnostics; maybe passenger health and vital stats too.
• Privacy and security laws will need beefing up; and we thought social media was a problem for
personal privacy and safety.
Aside: Curious how the bank job get-away scenarios will play out; if all the vehicles know exactly where and when
you went to, at all times, how do you escape?
– Alibis are going to be harder to orchestrate… …Something for Hollywood to dream up.
• One intriguing change is the same shift that saw air marshals on most commercial
passenger flights will also see road marshals in the continuous flow of FAR vehicles;
• What if the police response time is measured in minutes like the Hollywood TV shows and movies always depict?
• That is a needed component of the FAR market’s success; plenty more cops per mile of travel?
– Well they won’t have to do traffic duty, since the FAR vehicles always obey the rules.

Accidents & Repairs
• There will be much fewer accidents.
– Much lower occurrence, means much higher scrutiny.
– Since liability is going to be a question of which system and
algorithm in the real world was more at fault?
• Every accident will be treated like an airliner crash; NTSB does a
comprehensive post mortem to determine root cause.
– Full investigations and fleet wide ‘orders’ to avoid/mitigate this
problem from occuring again….
• Maintenance programs and records will be regulated and
tracked.
– This is going to be as stringent as the aircraft maintenance and
servicing standards.
– Home hobbyists, tuners and tinkerers are not welcome.
– There is no aftermarket for FAV; the OEMs will control the full
life cycle.

Less Accidents & Fewer Owners –
P&C Insurance Companies Are Out
• Auto insurance market has been stable & saturated for quite a while now.
• Overall Insurance Premiums revenues grow on two business drivers.
1. Stable fleet & the average value of the vehicle insured increases every year.
2. Accident volume is stable & the average cost of a claim increases every year.
• As long as everyone sees the same baseline increase in costs, everyone’s
revenues grow to cover it and long term viability & profit is assured.
– Policy premiums grow by a few points above inflation every year; owners pay more.
• So if the fleet shrinks by ¾ and pretty much all of it is owned by less than a
handful of big players… …the P&C market will be in freefall.
• Most companies that focus on auto insurance will collapse or
consolidate… …even GEICO.
• The focus will be on re-insurance of 3rd party liability & personal injury.
– It’s pretty much where airlines have been for a while now.
• P&C – Auto-only Insurers will be mostly gone within 10 years.

What About Competition?
• The new internet reality; The Category Killer Takes It All.
– Since the economic value is tied in the convergence of Fully
Autonomous Vehicles and very frequent Riders… …the need is to
“own” the most (if not all) of those two assets.
FAV + Rider = FAR (Fully Autonomous Ride)
– The vehicle part is easy; just don’t sell it – sell the ride.
– The Rider… …make your version of the service indispensable / all-
inclusive.
• Gov’t will intervene to ensure competition but that will take
the form of two maybe three competing/overlapping
networks per major area.
– There won’t be much room for regional champions, so wind up
with 2 or 3 national networks with caps on max local market share.
– To be more than fourth into the game is to be out of the game.
• Global alliances will take on aspects of the code share model
in place with major international airlines.
– FAR is most like commercial flying; you buy the seat/ride, not the
plane & owning/operating your own plane is too expensive.

It will get worse before it gets better
• Pent up demand for point to point rides is sitting in all the car
pools, buses (school & transit), trains and subways.
• Without other shifts to support the overall reduction, the
number of vehicles/rides during peak times will rise
dramatically;
– Congestion just go worse and the needed cost pressures on private
vehicle ownership to reduce that fleet has not yet happened.
So…
• FAR providers can partner up with mass transit by offering to
take you to the local main depot/pickup location for a buck or
two, a 5-10 min 2-3 mile journey, but door to depot?
– Replace feeder buses & offer to make their main line buses fully
autonomous.
– Add in ridership logistics planning & capacity optimization is possible.
– Eliminating the mostly empty off hour feeder networks pays for this.
• New Congestion Fees offset the ‘extra’ two bucks to get to the
depot.

Who owns the road?
• Everyone and everything wants the journey to end sooner….
• As the volume tips in favour of FAR users; the streets, roads, freeways,
and highways will get segregated.
1. Some for exclusive use by FAVs with higher speeds & higher densities;
2. Mixed with slower speeds & much lower densities (car to car spacing).
• Network of things, which includes the FAVs, means the roadway
network traffic manager (computers) will be able to co-ordinate
between equipped FAVs and way-post devices to go much faster and
with much tighter spacing than mere mortals can pull off.
– US freeways and city regional roads will wind up the exclusive domain for
FAV equipped cars & trucks;
• Speeds will be what the roadway network manager decides is appropriate
for the latest conditions;
• A little like air traffic control.
• Unlike how Hollywood shows it, human intervention will not be allowed.
– Everyone else has to take the side roads and go much slower.

How is the Ride Going to Work?
FAR Vehicle Fleet & Staging FAR Rider Pool: Point to Point Travel
 FAR vehicles must be in fairly high supply in any area they are servicing.
a. 5 to 10% more than latest local FAR User demand to handle peak &
establish/entrench that this is the MOST convenient and cost
effective way to get a personal point to point trip.
b. The FAR fleet needs to be ready and able to meet both regular
(planned) and spot service requests with no discernible delay.
 The regular pool of riders (users) has to be large enough to make the
economics work.
a) Their ride requests and intentions need to be planed for and
anticipated.
b) Leaving your car at home is both the smart and prudent thing to do.
c) Smooth out start/stop times to minimize total trip time.
Everything else is a series of enablers, the choice is to control all the enablers or share them with the established players.
Vehicle Ride Management – en route:
 On board AI & sensor systems plus GPS and multi-mode connectivity to
‘safely drive’ the vehicle.
a) Complete sensor suite and platform to do all the driving.
b) No on-board user controls.
c) Ride Monitoring and Detailed Logs.
 Network of things:
a) Vehicle to vehicle communications; emergent smart network.
b) As more vehicles get ‘aware’ of their journey purpose; intent is
shared with all other vehicles so that traffic smooths out.
c) A delivery vehicle makes its intention clear (pick off or drop off for
20 minutes at 123 Main St.
 Space at the loading point is cleared or reserved; every
other vehicle moves around it.
d) Safety & Protection systems and services.
e) Drone Mode: Remote access to enable support and manual
override; for when things just don’t work as planned; if we can fly
a plane half way around the planet, we can occasionally drive a
FAR in the area if needed.
f) Waypoint systems; congestion and flow management by sharing
traffic and planned traffic information; enhanced positing tech to
augment GPS.
g) Maps, Maps, Maps….
Passenger Management:
 Ride Subscription Service – regular use with flat and on demand with spot
rate (premium)
a) Provide the access & payment device as part of the service; now
the transport provider is also the internet access provider and
most likely the provider of the smart phone or smart phone
equivalent.
 On Demand ride request service; like current Uber
a) Spot demand for a ride right now or real soon; who is available
to handle?
 Ridership history and patterns to plan capacity, routes, pick-ups, drop offs,
etc.
 In-cabin monitoring; security & liability controls.
Extended Passenger services:
 They are going to get bored since they just get to sit in the vehicle.
 Provide in-car entertainment or work space; connectivity and on-board
systems need to be superior to personal devices; the ride time is NOT
wasted.
 Link on board entertainment systems to provided access devices/services
& now you own the rider’s complete on-line experience.
 The transport companies will displace the smart phone companies, maybe
even the mobile/internet companies.
a) Join my FAR service; I’ll provide a phone & data plan, for free.

Transition in 4 stages; each stage is 2 to 3 years;
starts in 3 to 5 years 2021 -2023
Stage Features
1.
Introduction
• Trials and exploration of viable business models.
• Attempts to contain the scope & preserve business as usual.
• Entry of disruptor players; those willing to throw out the whole existing
model.
2.
Emergent
• Viable business models gel; focus is on growth/dominance
• Rampant investment and consolidation; related industries fold into the
new consolidated model.
3.
Mainstream
• The FAR becomes the accepted (lowest cost) version for personal
transport.
• Only a handful of players are left in the game.
4.
Saturation
• Regulation & access are the issues of the day.
• Sunset industries have folded into the new Trillion Dollar Transportation
Services behemoths.
• The few players focus on complete service fulfillment of FAR Subscribers;
edging out into new revenue sources

Stage Transition in 4 stages; each stage is 2 to 3 years; starts in 3 to 5 years 2021 -2023
1.
Intro
• FAVs will be just like any other car, but no driver controls.
• People will want something familiar… …to start.
• OEM product pipeline is full of ‘normal’ parts/components, will want
to use them up.
• New ride share fleets will focus on major urban centers where high density
and congestion favour a FAR;
• Conventional cab & car rental companies will start to close up shop.
• Delivery & Courier Services will shift to attendants, not drivers on
board to handle the package and getting from curb to the door step.
• The subscription / full service model will get tested and refined;
• The Rider App will be key;
• Investing in ways to connect the Rider with the FAV is essential;
• Without this component, the system will have too much inertia, it
won’t be convenient enough.

2.
Emergent
• 2nd Generation FAVs will be tailored to always on the road needs; design
shifts to utility & durability, sleek and sexy are gone; like trucking – If not
spinning, then not earning.
• First Generation FAVs will be swapped out as quickly as possible.
• Regulatory shifts will start to become pressing; gov’t will look to preserve
their revenues by taxing the new services in new ways.
• Each major urban center will see the conventional / competing services
based on private vehicle ownership starting to be squeezed out.
• Delivery & logistics for people and packages will evolve to attendant
or self-serve; ‘licensed driver’ becomes a non-essential skill.
• The Full Service Rider App on Free Device & Data Plan plus full financial
services handling has become the only viable model.
• Capture of the full on-line & economic activity of Riders begins in
earnest; to ride is to spend… ...if I control all spend, I control
everything.

3.
Mainstream
• FAR will be a ‘right’; government will need to regulate to ensure that it is
affordable/accessible to all.
• Real estate tied up ‘housing’ parked cars will free up; streets, garages,
driveways, parking lots, etc.
• Property that has lots of room for parked cars, has lots of room….
• The marginal costs of keeping a personal vehicle on the road will jump.
• Emergent system behaviour, with more FAVs on the road, they can co-
ordinate amongst themselves, faster travel times with no increase in road
infrastructure.
• Internet of things includes all the FAVs on the road updating all the
other FAVs. So maximum density and distribution is now feasible.
• Start tearing up all the excess asphalt.
• FAV transport infrastructure evolves to a roadspace control model.
• Rural Model will start to evolve; Tax incentives will be needed to ‘level’
the field.
Your FAR based financial activity = your economic footprint;
everyone is on-line via a very small number of gateways.

4.
Saturation
• Private Ownership of vehicles is squeezed out; marginal costs of having
your own car will be prohibitive.
• Everyone is ‘forced’ to buy a frequent ride service; your ride is your life;
regulations become essential.
But comes with free phone & free data & free membership in ‘everything’
• Fintech will converge on the FAR service platform.
• Rural Model becomes a major political (vote) issue for fairness; some sort
of subsidy for disadvantaged will become a right.
• The Heavy Vehicle Industry also moves into this space;
• Point to Point is network managed (which is just about everywhere),
so FAV capable;
• Off the grid is like operating a farm tractor on the field.
• It isn’t really driving, it is keeping all the systems going while the
unit pulls the load up and down the field.
The first trillion dollar companies emerge at the expense of:
Auto Mfgs, Energy (fuel or power), P&C Insurance Cos, Taxi/Rental Cos, Delivery/Couriers,
Dealerships & Finance, Repair & Maintenance, Parking…
…Smart Phone Suppliers, Mobile Network Operators, Social Media, eTail, etc

Fully Autonomous Ride :: FAR
• The journey to dominate a US$3 Trillion transportation market and
subsequently own the entire economic activity of all riders.
• You HAVE to be able to do the ‘plus’ (seamlessly connect riders to
cars); without it you are just a bit player.
• ‘Plus’ isn’t enough; you have to be able to scale to very very big; fast

Uber’s Got This – right?
• Variable vs Total Cost
– Uber is leveraging existing idle fleet to sell a
‘premium priced solution’ as 100% marginal sales.
• So should be very profitable in the short term.
• They don’t care about sustained capability, there are
plenty more spare vehicles & drivers to sign up.
– The owners of the vehicles are subsidizing the
business model.
• Even so Uber lost US$4.5 Billion in 2017
• The drivers will wise up;
• Not sustainable over the long term.
– FAV mfg/owners, will not subsidize Uber.
But being the Ride-Share App in everyone’s
Mind-Space; what is that worth?
• Heft; go big & stay big
– Investment = more than US$25 billion per year,
over 10 years to just build the fleet;
– Then you have to acquire the infrastructure for
local service provision;
– And build the ride user base;
…all at the same time.
• A fair number of Uber Drivers
focus on just the cost of gas to
pick a few extra bucks on a car
that is otherwise, just going to
sit there.
• But if you are going to do this
as a business you have to look
at all the costs.

Who Can/Should Do This?
owning the FAR (Fully Autonomous Ride)
= owning everything
• Big Auto:
– Do or die for them; one way or another will shutter 75% of
current capacity.
• Big Tech:
– Protect the golden goose, Web syndrome of category killer; if
you own the FAR, you own it all.
• Big Finance:
– The Finance Retail Front End moved to the Ride to & from
work or any other destination - banking is fully virtual too;
– $$ access = customer & app :: controlled by the FAR provider.
• Expect Global Consortiums to form; all trying capture
more than 25% of the base.

And the winner is….
• The market winner is not the first to deploy a fully
autonomous vehicle or even the first to deploy a city
wide ride-share service using FAR vehicles in a key city or
two; it is the first to get to one million units out there;
– Well maybe the first to get 10 million units
– At 7 equivalent, 10 million FAR vehicles = 70 million old style
ones; 70/269 = about 25% market share of the current
volume and worth about US$ 500-$750 billion per year.
• At 25% market share the shift has been entrenched;
– New car sales will evaporate, drops from 17 million units to
less than 4 million units in less than 10 years;
if you aren’t in the new game, you aren’t in the game.

Big Auto, after they buy a Rider App &
Line up a big, big bank.
• Big auto has the means to build lots and lots of units; fast.
– More importantly, they have the national and international infrastructure to base
and run their proprietary FAR fleets;
• You need a fleet to service the new FAR market.
– Dealerships become distribution, dispatch & service centers; covering a territory
to minimize overall transit times for FAR vehicles to end user locations.
• Dealerships get smaller; can now develop their empty lots.
• Ford & GM both hold about 18% of the US new car market in units (number
of autos).
– They have a similar proportion of deployed base, so they can leverage their
infrastructure to quickly shift to nation-wide FAR delivery.
– The most valuable asset GM & Ford have is the substantial national infrastructure
to launch the new FAR personal transport services;
– they share that infrastructure with their dealer networks.
• If they go for a similar position on the Combined Static FAR market that is
worth around US$400 billion, each.
– Their current global sales are each around US$150 billion; the traditional sales
will collapse quickly, so this is do or die, they have the most to lose.

What if Big Auto Takes a Pass?
• The traditional auto mfg market is going to collapse.
– All the trade battles on auto duties is a waste of time.
• Whichever major player sets up the dominant FAR
service, gets to dictate terms on vehicles purchases;
– Even allowing for 50% growth in ridership, the new
production volume will be only 25% of today’s peak.
• Building cars is going to be a very small part of the
new reality.
– If they insist on being ‘car guys’ they are insisting on
being out of the big game.

Keep an eye out - Stage1: Introduction
• Trials and exploration of viable business models.
• Attempts to contain the scope & preserve
business as usual.
• Entry of disruptor players; those willing to throw
out the whole existing model.
• This is happening now.
• It will get more mainstream within 5 years.
• At that point, news will be:
The FAR Company launches its 25
th
service program in Omaha;
GIECO declares 10
th
straight quarter of dropping revenues;
US Big Auto Co declares bankruptcy & liquidates;
Tesla ships last vehicle… …will focus on Home Power Systems.

NUMBER CRUNCHING
The Fully Autonomous Ride – Going FAR

Follow the Money: Existing Spend
Cost of Ownership Extrapolated in US$ Billions
US Total Population (2017) - million 326
US Drivers (2016) - million 222
total fleet million units: 2016 269
Fleet - New, less than 5.8 yrs old (million units) 98
Fleet - Preowned & Still Financed (million units) 80
Fleet - Preowned & Paid off (million units) 91
Monthly Annual Entire Fleet
Car Payment - New $504 $6,048 $594
Car Payment - Used $365 $4,380 $351
Insurance $98 $1,176 $316
Fuel $128 $1,536 $413
Maint & Repairs $99 $1,188 $320
Registration, Fees, Taxes & Misc $12 $144 $39
Depreciation $0 $0 $0
$2,032
total - New $841 $10,092 $991
total - Used $702 $8,424 $675
total - Used & Paid Off $337 $4,044 $367
$2,032
https://www.nerdwallet.com/blog/loans/total-cost-owning-car/
Average Age of Vehicles (years) 11.6
Average Term for Financing (years) 5.8
Average Number of Rides per Year per Driver (2015) 730
Number of Drivers (million) 2016 - more than one auto 221
Total Annual Auto trips (billion) @ 1 driver per auto 161
Full Up Average Cost per trip $12.60
Average number of Rides per day per Light vehicle 1.6
• The fleet is segmented into thirds:
• New & Financed
• Pre-Owned & Financed
• Pre-Owned & Paid for
• Using average cost of ownership and
extrapolating it to the total fleet, the annual
market value for all ‘necessary’ expenses
translates into $2.0 Trillion dollars annually.
• Ops Costs: Fuel, Repairs, Servicing etc, are
about $733 million.
• Given the disparate data sources and
purposes, the calculations are ball park:
• Over US$2.0 Trillion Per Year is the full up
Static Cost for current Personal Point to Point
Transportation (SC-PPPT).
• 50% growth at current price point is US$3.0
Trillion; but won’t happen by growing the
fleet; no room.
• 161 billion rides & 269 million Light Vehicles =
600 Trips per Year per Vehicle ::
• US$7,554 per Year per Vehicle is the current
annual cost of SC-PPPT.

Some Stats: Various sources & calculations from public web sites
Item Year Value
Number Registered Light Vehicles (fleet on the road) & Average age is 11.6 years 2016 269 million
Number of new OEM Light Vehicles sold each year : average value of US$33,530 per 2017 17 million
Total Population :: (Canada is 36.6 million) 2017 326.9 million
Number of Registered Drivers (1.2 cars per driver & 68%, about 2 thirds, of all Americans are drivers) 2016 222 million
Annual Total Trips: Number, Duration, & Distance
 average one way journey is about 14.6 miles (23.2 km); and wastes around 23 minutes
2015 162 Billion
7.1 Million Years
2.4 Trillion Miles
Annual Trips Per Driver: Number, Duration, & Distance
 If allow 8 hours of sleep; 14.4 awake days per year are spent driving full time with no stops.
 This is the time in the vehicle; if have to walk a fair distance to and from it?
2015 730 Trips, one way
11.7 Days per year on road
10,700 Miles per year
Annual Trips per Registered Light Vehicle: Number, Duration, & Distance
 Cars Spend most of their time parked; so parking is big business/cost.
 Fully Autonomous Vehicles are expected to be moving except for service and refuel/recharge.
2015 602 Trips, one way
9.6 Days on road
8,800 Miles per year
Annual Value of US new Vehicle Sales on 17 million units; average of US$33,500 each. 2017 US$570 Billion
Average Light Vehicle Annual Insurance Premium 2018 US$907
Big Gross Sales Annual results (companies with heft): 2017
Tech to Retail-Tech Retail to Auto Mfg & Ride Share
 IBM
 Apple (market leadership pays)
 Google
 Facebook
 Amazon
$ 80 Billion
$229 Billion
$110 Billion
$ 41 Billion
$178 Billion
 Walmart
 GM
 Ford
 VW (1 US$=.8 Euros, €231 Billion Euros)
 Uber
$481 Billion
$145 Billion
$157 Billion
$184 Billion
$ 7.5 Billion
Estimated annual all-in market/cost of personal light vehicle based travel 2016-17 US$2.0 Trillion
The U.S. GDP in US $ Trillion 2017 $19.39
All in costs for a single one way trip is around 2016-17 US$12.60
All in Personal Transportation of light vehicles as percentage of US GPD…. 10.3%

Background
• Over the last decade I was involved with a P&C insurer doing various projects & initiatives.
– They were substantial and valuable activities, but all were focused on the near term and essentially
dealing with the status quo.
• During my last week, when I was wrapping up my last project I was asked “what issues
should they look out for that would need to be addressed in the longer term?”
• Great question, but I hadn’t put any thought into that so there was no insightful or useful
answer I could share.
But… …I got to thinking.
• Autonomous Vehicles are coming and they are supposed to have a big impact. What exactly
would it be? Maybe a dip or shift, just another ripple & then things would carry on as
normal, a real change, what exactly?
• So I started doing some research and concluded that the end game was Fully Autonomous
Rides; which led me to the conclusion that this will be the single biggest disruption since
the first large scale industrial revolution driven by steam technology.
– The computer finally completely displaces the driver… …and then?
– Everything will be affected and nothing will be able to avoid some ripple crashing through their safe
havens.
– I’ve shared very specific scenarios that can be tracked, so we can watch it unfold with a game plan.
And to answer the question posed by the P&C exec…
.... You need to plan for the entire collapse of your industry;
it is only 10 to 15 years away.

The fully autonomous ride going far

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