How the Sharing Economy Threatens the Traditional Economy

For centuries, technology has been making it easier to make more goods more cheaply, driving up ownership and consumption of everything from TVs to toys. But we’re entering a different era. Technologies that enable us to summon everything from a car to hiking equipment on demand are making access to goods, not the production of them, more efficient. And more efficient access will pose a big threat to the traditional economy.

Take the potential impact of self-driving cars on car sales. How many of America’s 253 million cars could you take off the road and still meet current demand if we had perfect availability of self-driving cars?

One way to ballpark this is to determine how many miles people drive today and then how many self-driving cars would be needed to drive those same number of miles.

A passenger vehicle drives about 12,000 miles a year in the U.S., according to the Environmental Protection Agency. There are 8,760 hours in a year; so if you ran your car all year, you would only need to go about 1.5 miles per hour to cover 12,000 miles.

If you assume instead that you could continuously occupy a self-driving car at 60 mph all year long, you could drive 525,600 passenger miles per car per year. That would cover the 12,000 average that a vehicle drives with about 2 percent of the cars currently on the road, or six million cars. That’s a 97% reduction.

Of course this is just a hypothetical estimate based on one simplified model of car utilization. To rigorously do this calculation you would need to factor in variables like demand for cars during peak usage, stop lights, the wear on the car, etc. Still, directionally if the promise of on-demand, self-driving cars doesn’t terrify Detroit, I don’t know what possibly could.