Toyota just announced it would be “investing” $500 million in Uber, the ride-sharing service, to further development of “autonomous” – that is, automated – vehicles and “mobility as a service.”
The reason Toyota and several other car manufacturers are making these “investments” is for one reason only: They know they cannot continue to sell cars for very much longer because people increasingly cannot afford to own them.
For three reasons.
First, the accretion of cost due to mandates that are becoming – and arguably already are – economically unsupportable.
Adding a single catalytic converter to a car back in ’75 (the first year for them) added a couple hundred bucks, maybe, to the price of a new car – and reduced harmful emissions by double digits. Adding four cats and O2 sensors plus direct injection (and a separate port fuel-injection system to deal with the problems created by the DI system) adds probably several thousand dollars to a car vs. a throttle body (TBI) injection system for reductions in pollution you need a 400x power microscope to see.
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The government is now insisting on essentially zero emissions – regardless of cost. And no matter that a car which emits almost zero emissions isn’t a threat to anyone’s health.
Cars are going to get even more expensive if the government insists they average 50-plus MPG (Trump is trying to prevent this) which would have the same effect as a general electric car mandate because adding electric cars – which don’t burn any gas – to a car company’s model lineup makes it more feasible to sell cars that do burn gas but don’t get 50-plus MPG, by improving the car company’s overall “fleet average” fuel economy figures.
Electric cars also emit no carbon dioxide – which the government now characterizes as an “emission” subject to regulation – even though it is an irrelevance as regards air quality or public health. Nonetheless, the only way to reduce C02 emissions is to build fewer IC cars – and more electric cars.
But electric cars are much to expensive for most people to buy, so they have to be given away at a net loss per car. The problem with that – for the car companies – is obvious.
Which brings us to the second reason for the desperate rush toward “mobility as a service.”
In addition to the costs imposed by government fatwa, there is the rip-tide-like effect on the cost of cars generally of a population that largely loves debt and living beyond its means combined with a mania for whatever’s New . . . with New things (mostly electronic things) becoming available literally all the time.
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The problem is these things cost money – and most people haven’t got it. Most people aren’t earning more of it, that is – enough to keep pace with the increasing cost of new cars equipped with all the Newest and Latest things.
So they finance. And the problem with that – when it comes to cars – is that cars are rapidly depreciating consumer appliances. You can only finance so far. Or rather, so long. Seven – maybe eight years, being the outer limit because at that point, no matter what you started out with, it will be worth less than half its original purchase price.
There isn’t much incentive to keep making payments on a thing that is worth less than what you still owe on the balance due – with years of payments yet to make. And even less incentive to make a loan on such an item – something lenders understand very well.
