Rethinking RethinkX Two Years Later

03.13.19 | Blog | By:

Just about two years ago, Tony Seba the Silicon Valley consultant, made major headlines with his firm’s “RethinkX” work. The media went nuts over just this nugget:

“[W]e are on the cusp of the fastest, deepest, most consequential disruption of transportation in history. By 2030, within 10 years of regulatory approval of Autonomous Vehicles (AVs), 95 percent of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call ‘transport-as-a-service’ (TaaS) …[Taas will have] enormous implications across the transportation and oil industries, decimating entire portions of their value chains, causing oil demand and prices to plummet, and destroying trillions of dollars in investor value — but also creating trillions of dollars in new business opportunities, consumer surplus and GDP growth.”

Recall some other findings:

  • The projected speed of TaaS adoption RethinkX predicted at the time is shown in the figure below.
  • Using TaaS, the average American family will save more than $5,600 per year in transportation costs, equivalent to a wage raise of 10%. This will keep an additional $1 trillion per year in Americans’ pockets by 2030, potentially generating the largest infusion of consumer spending in history.
  • In this intensely competitive environment, businesses will offer services at a price trending toward cost.  As a result, their fleets will quickly transition from human-driven, internal combustion engine vehicles (ICE) to autonomous electric vehicles (A-EV) because of key cost factors, including 10 times higher vehicle-utilization rates, 500,000-mile vehicle lifetimes (potentially improving to 1 million miles by 2030), and far lower maintenance, energy, finance and insurance costs. ICE and A-EV fleet composition in the U.S. is shown in the graphic below.
  • TaaS will offer vastly lower-cost transport alternatives — four to ten times cheaper per mile than buying a new car and two to four times cheaper than operating an existing vehicle in 2021. Cost saving will also be the key factor in driving consumers to adopt TaaS.
  • High vehicle utilization (each car will be used at least 10 times more than individually owned cars) will mean that far fewer cars will be needed in the U.S. vehicle fleet, and therefore there will be no supply constraint to the speed and extent of TaaS adoption that we forecast.
  • Demand for new vehicles will plummet: 70% fewer passenger cars and trucks will be manufactured each year. This could result in total disruption of the car value chain, with car dealers, maintenance and insurance companies suffering almost complete destruction. Car manufacturers will have options to adapt, either as low-margin, high-volume assemblers of A-EVs, or by becoming TaaS providers. Both strategies will be characterized by high levels of competition, with new entrants from other industries. The value in the sector will be mainly in the vehicle operating systems, computing platforms and the TaaS platforms.
  • Oil demand will peak at 100 million barrels per day by 2020, dropping to 70 million barrels per day by 2030, shown in the figure below. That represents a drop of 30 million barrels in real terms and 40 million barrels below the Energy Information Administration’s current “business as usual” case in 2017 and a 30% decrease in just 10 years.

At the time, I pointed out to Future Fuel Outlook clients (see May 2017 report) that the report lacked a fundamental understanding of the oil/refining industry, future fuel demand and where that demand would be coming from. I noted at the time (and have been subsequently backed up since then by numerous analyses by other organizations, such as the IEA) that the real source of future fuel demand growth is not coming from the light-duty fleet in the U.S., but rather from heavy-duty trucking, shipping/marine, aviation and the petrochemical sector especially.

From a geographic standpoint, the demand growth is coming from Asia, Africa, the Middle East and to a lesser extent Latin America. And no one in these regions will be “TaaSing” in automated EVs for quite some years (if at all) but many already are TaaSing in ICEVs. In the report, I noted that dents in global fuel demand will take place because of fuel efficiency improvements globally, primarily in the LDV fleet but increasingly in the heavy-duty fleet as well. But oil demand is actually increasing.

At the time, I mainly focused on these kinds of insights based on my own experience in the global fuel policy and market arena and on publicly available forecasts to illustrate my points. But, having spent a fair amount of research time over the last year on AVs and digging into various aspects of EV market and policy issues globally, I retain my prior points and want to add a few others as it respects AVs:

  • Are we going to see AVs by 2020?: No. Every single expert I have spoken to in researching this (including several car companies) say the earliest we’ll see real AV introduction to the U.S. market is 2025 (far contrasting with the RethinkX figure above). Real penetration will take years more.
  • Are consumers going to wholesale ditch their cars?: No. I think one of the biggest pieces ignored in just about every fuel-vehicle issue on the table these days is consumer behavior and preference.  And there’s plenty of evidence from Deloitte and others that U.S. (and European, for that matter) consumers are wary of AVs, not feeling ride sharing/pooling and are somewhat noncommittal on EVs.
  • Are AVs going to be exclusively autonomous?:  No. Actually, there will be autonomous technology in both, and likely far more in ICEVs.
  • Are AVs going to solve congestion issues in cities?: Not initially. Experts I talked to said we may be headed in to a “mobility hell” with more VMT than ever, at least in the initial years of really bringing the technology to mass market.
  • Is AV technology going to sweep the globe? Not for a long time. The reality, as with EVs, is that the technology will be available to wealthy consumers (and ride hailers) that want to pay for the technology. However, and as pointed out further below, it’s the poor globally who stand to benefit the most and really need the technology.
  • Does the technology hold promise? It sure does. Consider: 40,000 people in the U.S. alone die in car crashes every year. The figure globally: 1.34 million, according to the World Health Organization (WHO).
  • Is it going to make our cars cheaper, or ride hailing cheaper?: It is actually not clear, contrary to the Seba analysis. Among other issues, proponents assume that AVs will be constantly occupied, and that’s not necessarily true. Another assumption, is that ride sharing will be so cheap, people will be compelled to share and this is actually not happening in reality now.

Future Fuel Outlook clients can read more in depth about why I’ve come to these conclusions in this recent report.

With respect to the last point, consider this comment from MIT/Harvard researcher Ashley Nunes in The Guardian just this week:

“Affordability is something self-driving enthusiasts often take for granted. They promote a future where sharing is caring. In this future, society is served by robocabs – for-hire vehicles that operate much like taxis today. The key difference is that software algorithms, rather than humans, are now in control. Without a driver to pay, rides become cheap enough to compete with conventional car ownership. This prompts consumers to abandon car ownership in droves and road safety ultimately soars. At least, that’s the idea. However, the reality is very different.

Driver wages are a key part of taxi fares today. The average cab ride in San Francisco for example will cost you around $13. The driver keeps most of that. There is one caveat, however. Taxis are inefficient – so inefficient in fact that cabbies only spend about half their time earning fares. The rest is spent finding them. This ‘matching inefficiency’ dramatically shrinks a driver’s actual take-home pay. It also cuts the potential savings driverless technology can deliver – and that affects the technology’s affordability.

In fact, assuming current market conditions persist, our work shows that hailing a robocab would actually cost consumers significantly more – on a per-mile basis – than owning a car today. Additionally, even if robocabs were miraculously always occupied (Uber and Lyft fare better than traditional taxi companies in this regard), we find profits would still need to shrink considerably for the technology to be cost competitive with the status quo. Ride-pooling would help. Divvying up fares is an easy way to make driverless technology more affordable. But the concept doesn’t have many fans. Pooling after all, merely trades one set of costs (capital) for another (opportunity).”

Nunes isn’t against AVs but is rather injecting some realism into the hype. In fact, he advocates for the subsidizing the technology especially for the poor, who are more likely to die in crashes than wealthier people in part because they own older vehicles with less safety features.

“Subsidized access to driverless technology should be offered to America’s poor. Those opposed to such a move must consider that public revenue already pays for a portion of road crashes. If subsidies can deliver an equivalent or greater benefit, using the public purse becomes fiscally prudent. Subsidizing driverless car access is also more effective than improving mass transit. The latter may be greener but it is inconvenient and slow. For the poor, this means being unable to go where they want, when they want, which ultimately impedes upward economic mobility. Conversely, low-income Americans that rely on cars experience less poverty and fare better when it comes to getting and keeping jobs.”


The RethinkX predictions are not likely to come to pass. Speaking as a sometime fellow outlier, you need outliers like Seba with different views, expertise, backgrounds and analytical predispositions to challenge prevailing thinking in more entrenched industries such as auto and oil. That might end up being the lasting impact of RethinkX.

Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.