William Lyons

I write frequently in this column about emerging trends in the fields of transportation and mobility. In April and May, I wrote about the emerging trend of the car subscription model. The car subscription model is a relationship where individual consumers pay for a subscription to use a car only when needed, as opposed to the current but dying model of car ownership. This model has been accelerating and now has a name – Mobility as a Service (MaaS). And, according to some prognosticators, MaaS is going to usher in the end of the internal combustion engine.

For those of our readers who also read The Economist, you would have been struck by the imagery on the cover of the Aug. 12 edition. The cover showed a cartoon of a “dying” car motor, with the caption “Road Kill: The Death of the Internal Combustion Engine.” There was no mistaking the message being conveyed by the article: the days of the automobile powered by fossil fuels are numbered.

The Economist makes the case that as battery technology advances, electric cars will become less expensive to own and operate than fossil-fuel powered cars. Electric vehicles have fewer moving parts. They use energy more efficiently, with no emissions from the car itself. And when using renewable energy sources, they eliminate tons of air pollution and greenhouse gases. The upside is tremendous. The downside, however, is significant.

When electric cars hit the tipping point, which most suggest is within the next few years, it will not take long before electric cars outnumber fossil fuel cars. The transition will be quick. That means that there will be very serious disruption in the fossil fuel car supply chain. Unemployment for automobile assembly workers will be substantial and economic consequences for the fossil fuel industry will be grave – with many stranded production assets.

As one country after the next in Europe announces that they will prohibit the sale of gasoline in the next 20 to 30 years, the writing is on the wall. Car maker Volvo has announced that by 2019 it will only make cars that are either hybrid or electric. Others are sure to follow suit. Things are about to get interesting.

Noted author, entrepreneur and academic Tony Seba recently published a study entitled “Rethinking Transportation 2020-2030: The Disruption of Transportation and the Collapse of the Internal-Combustion Vehicle and Oil Industries.” The study, which is grounded in scholarly research and extensive modeling, makes a forceful case that the confluence of autonomous vehicles and electric cars is going to cause the collapse of the internal combustion engine industry, as well as the fossil fuel industry.

His theory is that low cost electric cars, autonomous vehicles and the emergence of car subscription services will create market conditions that make internal combustion engine uneconomical. And thus, the death of the internal combustion engine.

Seba and his coauthor, James Arbib, have predicted that once autonomous vehicles reach the mainstream of American consumerism, the internal combustion engine will have a remaining life of approximately 10 years. Since the authors believe that mainstream fully autonomous vehicles are only approximately three to five years away, they see the end of the internal combustion engine by 2030.

The study goes on to say that the confluence of these mobility trends will create the conditions for Transportation as a Service (TaaS), or what I and others have described as Mobility as a Service (MaaS). The advent of the subscription model has forced executives at all of the major automobile makers to take notice, and wisely so. To survive the next market disruption in the automobile industry, the automobile manufacturers will need to evolve into companies that own fleets of vehicles for hire, offering subscriptions to consumers. If Seba and Arbib are right, the companies will need to insure, fuel, maintain and repair the vehicles they manufacture. This is a sea change in the way these companies see themselves.

Seba and Arbib make one other point. They believe that the fossil fuel industry and the automobile manufacturers think that the transition to MaaS is on a much slower path. The authors make a strong case that this view ignores the trajectory of every other major technology driven disruption, such as smartphones and Uber. If the authors are right, the disruption will be all the more difficult for both industries.

The future has been seen in a vision. It holds very bad news for traditional automobile manufacturers and the fossil fuel industry. And it heralds the death of the internal combustion engine, as well as the birth of Mobility as a Service. It seems change is in the air – and on our highways.

William F. Lyons Jr. is president of Fort Hill Cos. of Boston.