Auto analyst: Mobility, not ownership, industry future
“I’m not going to Cobo this year because it’s a waste of my time,” says auto analyst Adam Jonas.
The managing director and leader of the Global Automotive Research team at Morgan Stanley doesn’t think the new cars and trucks on display at the North American International Auto Show are worth investigating. Jonas is not bullish on the traditional auto industry. Further, he lumps the likes of Tesla Motors in with General Motors, Ford and Fiat Chrysler when he argues that the future of mobility will be measured in travel miles served and not in automobile units sold.
“Tesla is not disruptive,” asserted Jonas, an influential voice on Wall Street. “Zero to 60 mph in 2.5 seconds with an electric motor is not disruptive — it’s fun, sure, but it’s not different.”
Tesla sells luxury objects to rich people, which is how the auto industry started, but what promises to be truly disruptive melds autonomous vehicle operation and transportation as a service, Jonas suggests. Asked if he’d said this to Tesla founder Elon Musk, Jonas said, “yes, and he had no answer.”
Speaking at the Automotive News World Congress in the Detroit Marriott on Wednesday, Jonas posited an “autopia” in which consumers pay for Position-On-Demand-as-a-Service and most people stop owning cars. What that means for the builders and sellers of cars looks just as dismal for Tesla as it does for Ford. Jonas works on Wall Street, but his is a Silicon Valley-centric view of a transportation system transformed, sharing the tech world’s expectation that everything changes rapidly when a new solution arises. Other voices at the World Congress suggest a slower transformation over decades, with many transportation alternatives co-existing.
Jonas forecast that within the year, a technology company will announce a test of the mobility-as-a-service model using driverless devices in a U.S. city. It may not look like a huge thing, Jonas suggested — limited to low speeds, within a small geographical area, with ridership numbers that look tiny compared the sale of 17.5 million cars. “It might be a novelty,” he said, “but it will be a moment.” Because, he argues, people travel 10 trillion miles a year worldwide inside cars. And that time has value.
“Instead of doing this,” he said, gesturing to indicate steering a car, commuters and travelers will be paying attention to what’s on their device screens. Google and Apple, he said, could offer transit services “at a loss, or break-even” to dominate that time. “Apple could justify its entire market cap providing Point A to Point B for free, to get access to that time.”
He said a company that just provided mobility, if it charged $1.50 per mile, could grow into a business with revenues the size of Toyota’s if it got 1.5 percent of the 10-trillion mile market. “How long before it’s as big as Toyota — which side of seven years?”
Electric cars don’t impress Jonas. Asked if the Chevrolet Bolt is a “game-changer” he replied, “No, any number of Chinese firms could do it. If GM can make money on it, now that would be a game-changer.”
EVs, though, aren’t selling in big enough numbers fast enough to transform the auto industry, he argued. Lacking a fast rise in electric-car market share, perhaps driven by a steep rise in oil prices that doesn’t look to be on the near horizon, the zero-emissions regulations in California, “are not going to be met. California is going to come to GM and say ‘You’re not hitting your ZEV targets,’ and GM’s going to have to say, ‘Look, we have this Bolt, but no one’s buying it.’ ’’
A change in the regulation will be necessary, Jonas said.
It might have been the most conventional thought he shared at the World Congress.