Elon Musk’s ride-sharing vision could save the U.S. auto industry

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Elon Musk’s plan to create a fleet of self-driving Teslas could be the answer to growing concerns of how ride-sharing could dramatically affect the U.S. automotive industry, according to a Moody’s Analytics researcher.

Tony Hughes, managing director for Moody’s Analytics, told TheStreet that ride-sharing services like Uber and Lyft could lead to a decline in auto sales in America, citing Tesla’s plan for future ride-sharing as a potential saving grace.

“The nature of the vehicles by my reasoning will be that they become more homogeneous where ride-sharing is everywhere,” Hughes said. “You imagine the taxi fleet; taxis are very homogeneous. If ride-sharing becomes 100% of all journeys — no privately owned vehicles — that trend would be very bad for car makers. It means that their product would become commoditized. As a general rule, businesses want to maintain that their product is special. If something becomes a commodity, it means they lose the ability to charge excessive prices … That’s less profit.”

Musk’s plan to create a fleet of autonomous vehicles for Tesla could be the future blueprint for how automotive companies can stay competitive in an age where driving is obsolete.

Tesla’s plan for ride-sharing could change the U.S. automotive industry (Source: Tesla)

Essentially, Musk’s idea for people to enter their cars into a ride-sharing pool when they’re not using them would keep individual vehicles from automotive developers in driveways, thus eliminating the potential for high volumes of people to only use third party ride-sharing services and not buy their own cars. 

By enticing people to purchase their own vehicles and make money through a ride-sharing pool, car companies would still have the opportunity to maintain that their products are individual and “special,”  a major challenge caused by the commoditization of transportation, according to Hughes. 

The plan, which would include a mobile app for users to easily list their vehicle as available for ride-sharing, would also feature a separate Tesla fleet of self-driving vehicles for use. This model — the vehicle fleet coupled with ride-sharing potential for individual owners — could allow major car manufacturers to continue to exist. 

For Tesla and Musk, as long as these competitors buy into the sustainability of electric transportation, the competition should be welcomed.

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