The Future of Ownership

The shift from private ownership to shared access, particularly in the automobile industry has been remarkable. With the rise of ride-hailing apps and potential for autonomous vehicles, the emphasis on owning a car is diminishing, especially in India, where the culture of vehicle ownership is less ingrained.

This article was first published in The Mint. You can read the original at this link.

Private ownership of property is a relatively recent phenomenon. Tribal societies were built around the concept of the commons—they had no need to establish private rights of ownership over land. The transition from hunter-gatherers to agricultural societies did little to shake these deeply ingrained notions of communal ownership and with the creation of the nation-state, the notion of common ownership simply metamorphosed into the concept of sovereignty. It was only when citizens rebelled against the idea that the monarch had a divine right to their land that the modern concept of the ownership of property began to crystallize.

Ownership is central to modern economic theory. Adam Smith saw property as the means for providing for physical needs—both at the level of the individual and society. He believed that if ever there was a dissonance between private ownership of property and the interests of society as a whole, the “invisible hand" would correct the imbalance. As a result, the ownership of property is not only central to our existence, in many ways, it represents the aspirational goals of our lives. It has become the basis on which we measure our success—in terms of where we live, the property we own, the clothes we wear and the cars we drive.

Of late, however, our preoccupation with the ownership of material things has been on the wane—thanks, in large measure, to the rapid evolution of technology. We no longer feel the need to own vast libraries of CDs or DVDs of audio or video content—we can stream whatever we feel like, whenever we want, in high definition and fidelity. We no longer need to save to buy a holiday home—we can rent one whenever we choose to on any of the many home-share apps. We can even rent couture whenever we want to rather than investing in an expensive one-of-a-kind garment that we will only ever wear once.

Nowhere is the dwindling interest in ownership more evident than in the automobile industry. With the proliferation of ride-hailing apps, we are now so confident of getting a reliable ride wherever we are, at whatever time of the day or night, that owning a vehicle has almost become superfluous. Cars require a high initial capital outlay and constant further investment over their lifetime. They need fuel to function, a place to park and maintenance to keep their parts functioning. Despite the best care, cars have a shelf-life and must eventually be replaced by newer, more full featured upgrades. Given the improvement in our access to on-demand, always available transport options, there seems little point in investing in vehicles designed for obsolescence.

Mobility has already begun its transition into a service. In the US, the average age of buyers of new vehicles has increased by seven years—due, largely, to changes in buying patterns of younger people. But as always, it is India that truly has the opportunity to spin these tectonic shifts in technology to its advantage. When compared with the US which has 797 cars for every 1,000 people, India has just 32.

We don’t own as many cars per capita which means that, unlike the US, India has no tradition of car ownership that will come in the way of the transformation of mobility. To the contrary, younger generations of Indians will probably leapfrog vehicle ownership entirely, choosing to depend on ride-hailing rather buying a car. All of which will serve us well as we transition to our inevitable autonomous future.

One of the biggest hindrances to the success of autonomous vehicles is their inability to navigate alongside human operated vehicles. Autonomous vehicles find it hard to discern human error—at least not fast enough to take pre-emptive action. Machine-to-machine communication, on the other hand, is perfect and we are all likely to be far safer when our roads our entirely populated by autonomous vehicles. It is the interregnum, when self-driving cars have to share the road with human drivers, that will be challenging.

If India can leapfrog the culture of vehicle ownership and learn to consume mobility as a service, the eventual transition from human powered ride hailing to autonomous ride hailing will be trivial. While all this will take place in the fullness of time, the government can help by enacting suitably forward-thinking and purpose-built regulation that will encourage the mobility industry—understanding full well that by de-emphasizing personal vehicle ownership we will be able to decongest our cities and improve the efficiency with which we utilize our municipal facilities.

If we can complete this re-alignment in our approach to transportation before autonomous vehicles become commercially viable, India will have the unique opportunity to stand at the very forefront of the future of mobility.