The growing popularity of ride-hailing services, coupled with the rise of electric and self-driving cars, will eventually put a dent in new car sales, according to a study from IHS Markit.
The study predicts sales of vehicles to private users will decline nearly 20 percent to 54 million units annually in the four major car markets — the U.S., Europe, China and India — by 2040.
At the same time, the study forecasts a sharp rise in the vehicle miles traveled per year in those areas — up 65 percent to 11 billion miles per year by 2040. This is reflecting a shift in the market from traditional consumer car buying to fleet purchasing by on-demand ride and shuttle services like Uber and Lyft.
“We’re doing more with fewer resources, which from a tech perspective means we’re able to optimize and efficiently use our resources a lot better,” said Jeremy Carlson, an automotive analyst for IHS Markit.
Ride-service companies are expected to purchase more than 10 million vehicles in the U.S., Europe, China and India in the next 23 years. Those companies are only expected to purchase about 300,000 vehicles in 2017, as the study predicts these companies will move away from asking drivers to provide their own cars.
While consumers favor ride services over car-ownership, these mobility companies are expected to also be among the most influential adopters of disruptive technology like electric vehicles and driverless cars. The study says individual car buyers will also start to favor electric vehicle technology as the cost of battery packs should be slashed in half to just $100 per kilowatt hour — the price point necessary to make electric power competitive with fossil fuels.
“Consumer adoption in general is going to be key to all of this,” Carlson said. “We need to better understand how consumers will react to autonomous vehicles, especially, but electric vehicles too.”
The study says electric vehicles, including hybrids, will capture about 30 percent of the new car market in the countries studied by IHS Markit by 2040, up from just 1 percent last year.
But another paradox arises in the study, which predicts that gasoline-powered cars will still hold the majority of the new car market, accounting for 62 percent of sales, down from 98 percent of the market today.
The continuing demand for gasoline will be driven by a demand for mild to full hybrids, which still rely on internal combustion engines, according to the study
“Oil’s monopoly as a transport fuel will erode as a new era of multidimensional competition takes hold — but it will remain a major player,” Jim Burkhard, IHS Markit’s vice president of global energy markets and mobility, said in a statement Tuesday. “Many of its advantages as a fuel, such as its high energy density, will persist. And the size of the current automotive ecosystem will moderate the pace of change.”
As the three disrupting factors in the study — mobility, electric vehicles and self-driving cars — converge with one another over the next 20 years, Carlson said there is no one driving force in the change of the industry.
“These factors represent a sum that is greater than the individual parts,” he said.