This commentary originally appeared in Forbes on June 25, 2015.
Researchers at Ford are working hard to keep the firm ahead of powerful demographic trends: it seems America’s young people are less interested in driving and owning cars. In three separate initiatives, Ford is breaking ground in very non-traditional ways for an auto company.
On Tuesday, Ford debuted the MoDe:Flex, an electric bike networked to mobile apps to warn cyclists of potholes and weather. It was Ford’s third “e-bike” offering.
In the U.K. in May, Ford introduced an on-demand car service called GoDrive. This service mimics smaller startups around the U.S., such as Car2Go and Zipcar.
In addition, last month Ford asked 14,000 American Ford drivers if they would consider renting their rides—while letting Ford owners keep all the proceeds—in a giant peer-to-peer rental field test. Given that the typical privately-owned car sits around 96 percent of the time, pragmatic Millennials may decide to give Ford’s idea a go.
Miles Driven in America no longer track with employment
The gradual scaling back of vehicle use and ownership has profound implications for state and federal highway funding and construction.
For instance, in 2005, Texans drove a cumulative 235 million vehicle miles averaging 10,314 miles per Texan per year, just above the national average of 10,109 miles. In 2010, even though Texas’ population had grown by 2.5 million, or almost 11 percent, the total number of vehicle miles driven on Texas’ roads declined by 1.2 million miles to a per capita annual mileage of 9,267, just under the national average of 9,590 miles. That Texans drove less than the average American in 2010 is all the more remarkable when considering that Texas had the strongest economy of any large state that year, indicating that Texas’ decline in driving miles relative to the rest of the nation has less of a connection with the economy than with other factors, such as increased urbanization.
But, as with much of the rest of the nation, Texas’ roads are funded largely through fuel taxes, registration fees, and soon, a share of vehicle-related sales taxes. A decline in auto use, on top of increasing fuel efficiency, will hit projected transportation tax revenues in every state as well as with the Federal Highway Trust Fund. Governments at both the state and federal level may have to apply increasing amounts of general revenue towards transportation just to maintain the road network in its present condition.
Further, the sharing economy, with innovations such as Uber and Lyft, may begin to transform the commute by conveniently putting more people into each car heading to work or coming back home. In addition, vehicle automation will reduce congestion by increasing safe driving speeds, cutting down on accidents, and dynamically rerouting traffic.
This innovation-driven change will likely catch traditionally slow-to-react government by surprise, but, regardless of government’s reaction, transportation options are likely to improve while the cost of getting around will decline as a share of income —both of which will be great for the overall economy.
Chuck DeVore is Vice President of Policy at the Texas Public Policy Foundation. He served as a California State Assemblyman. He is a lieutenant colonel in the U.S. Army (retired) Reserve.