# Car Ownership In Post Pandemic (Shortage) World



## JasonF (Oct 26, 2018)

I was thinking yesterday of the end result of the parts shortages halting manufacturing and what it might bring to the very near future.

General Motors had been predicting for years that very soon, car ownership will be something only the wealthy do, and everyone else would either use ridesharing or subscribe to vehicle availability plans (where you pay a monthly fee, and if you need a car, one is brought to you). We've all heard of something called a self-fulfilling prophecy, and with car prices increasing sharply due to parts shortages right now - experts say it could top out as much as 20% - this might be the point in history where companies like GM say 'I told you so' and embrace the price increase as a catalyst to the future they've been predicting will happen anyway.

In short, the situation we're in now might lead to a 20%+ increase in car prices, and those prices could remain there or go higher. GM and others could then create a continuing supply crunch by simply reducing production permanently and closing factories, and then fill the demand for new cars by selling ridesharing services and subscriptions. Their stockholders would no doubt drool at the prospect of hooking customers on continuing fees instead of having to deal with the booms and droughts of market forces.

But what that also requires is all of the manufacturers playing along, and they all move in step to do the same thing. This could very well happen with legacy automakers, since they all have the same stockholders, and if one of them finds a way to perpetually drain money from customers, their stockholders will demand they do the same. If that happens, you have a rapid conversion of the car market in a very short time to one where no one but the very wealthy actually owns cars anymore - it would become a subscription/rental service.

I suspect that even if they don't go full zero ownership, at the very least legacy automakers might curtail production long after parts become readily available in order to milk the price increases for as long as they can, and get people adapted to them as the "new normal". Because once they raise those prices, they're going to have a fight with their stockholders to bring them back down again.

Then we have Tesla. They are the perpetual loose cannon in this entire scenario. So far they've refused to cooperate with any of the trends set by the legacy automakers (which is why legacy auto tries so hard to get rid of them). If they continue on that path and insist on selling cars at somewhat reasonable prices directly to consumers, with downward instead of upward pressure on prices - as long as parts costs cooperate - they can take advantage of stockholder friendly price increases and curtailing supply by other companies to bring _even more_ Tesla EV's into the marketplace. And legacy auto won't notice until there are millions of Teslas driving around everywhere, and then they ask themselves, "What happened? How did we lose the market?"

In order to do that, though, Tesla would have to shun more outside suppliers, and make more parts themselves - because if legacy auto is curtailing manufacturing, their suppliers will also curtail their production, and Tesla's component prices go up. Maybe they're doing that anyway, though, since the parts shortages now almost shut down their production, and it's smart to look for alternatives.

What direction do you think this will take?


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## garsh (Apr 4, 2016)

JasonF said:


> General Motors had been predicting for years that very soon, car ownership will be something only the wealthy do, and everyone else would either use ridesharing or subscribe to vehicle availability plans (where you pay a monthly fee, and if you need a car, one is brought to you).


Could happen within cities, where parking is difficult to find and expensive, and many destinations are within walking distance, or at least a short bus ride away.

Won't happen in suburbs and rural areas. Way too inconvenient to not have a car at home, ready at a moments notice.


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## JasonF (Oct 26, 2018)

garsh said:


> Won't happen in suburbs and rural areas. Way too inconvenient to not have a car at home, ready at a moments notice.


That's true, but my point above isn't that it's a consumer preference, it's something GM would like to cause to become the only option.


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## JWardell (May 9, 2016)

We almost got close to this point. I started using Uber/Lyft nearly every time I was going to dinner or to friends. Never worth dealing with parking and traffic. It was cheap and reliable point to point transportation. Started to think we probably could live with 1 car instead of two. Certainly many of my friends only have one car that is barely driven.
But that all broke. Now it is next to impossible to get an Uber. Prices are easily 10x what they used to be, and I have literally waited two hours to get a car, when it was sending drivers from 40 miles away (and they would eventually cancel).
Meanwhile, trains and busses are more broken than ever. They reduced frequency and even cut whole lines.
Glad I have two cars now. Imagine if I was someone who was dependent on this?

I still don't have much faith that even Teslas can handle the complex urban driving situations and battle other drivers around here, they will regularly just get stuck. What happens when you 6-way intersection is covered in snow and pedestrians? Sure, robotaxis will be a nice addition to options, but all of these services break down to easily and you are stuck. I think we are still decades away. And by then we will just be jumping around in our flying cars anyway


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