A few years back, McKeel Hagerty was shaken by a consultant’s prediction that gas-powered vehicles would be obsolete today.
By this time, we all would be whisked around in autonomous living rooms. Cold champagne and caviar would be at the ready as a satellite-guided limousine brought us to the best table at our favorite restaurant, a mega yacht prepped for an evening cruise, or a private jet cleared for takeoff to a tropical island.
So much for predictions. As it turns out, Hagerty, CEO of Hagerty, an automotive lifestyle brand in Traverse City that provides specialty vehicle insurance and hosts lifestyle events like the Concours d’Elegance at the Detroit Institute of Arts (Sept. 22-23), is still adding value to what is now a public company.
The range of options for autonomous vehicles hasn’t changed much since Hagerty first heard that doomsday scenario in 2017. We still have elevators, escalators, moving walkways, and the cream of the crop — monorails at airports and Disney’s parks — but where are the robo-cars?
Depending on the company or government agency, R&D activities have slowed or been eliminated. Turns out that for all the hype, self-driving cars are much harder to bring to market than most anyone realized.
For starters, hundreds of satellites must be lifted into orbit to provide the GPS bandwidth to guide specially equipped vehicles across street grids. In truth, we’ve barely installed the millions of sensors that are needed to bring true reliability to advanced transportation in urban areas.
Getting everything to market will be tough, plus there’s the unknown. Consider how the entire auto industry was upended starting in 2020, when a few key factories in the Far East caught fire and the supply of computer chips nearly slowed to a halt.
In a short period of time, new cars and trucks couldn’t be delivered, and many automakers chose to keep production going for fear of laying off key talent. Inventory started piling up seemingly everywhere. The global chip shortage also caused price hikes for new cars and a sudden jolt in used-car values.
What’s more, OEMs were second fiddle to manufacturers of computers, smartphones, and video game consoles, which had longstanding contracts for more robust integrated circuits that brought higher profit margins.
Another factor that curtailed self-driving cars was the introduction of electric vehicles, which came roaring out of the gate in 2008 when Tesla debuted its first model. Today, a mere 15 years later, EVs represent 7 percent of annual U.S. sales despite hefty subsidies every step of the way.
Why aren’t we all plugging in? Even though EVs have 10 percent of the parts of a gas-powered vehicle, it turns out the batteries are extremely difficult to manufacture at scale, most rare earth metals must be imported, charging times are still way too long, and there aren’t nearly enough public chargers.
Cost is another challenge. The average price of an EV is $64,000 (no subsidy), compared to $48,000 for a gas-powered car. Access to a charger is a must, which puts apartment dwellers at a disadvantage.
All of which leaves Hagerty in a prime position. The traditional vehicle market isn’t going anywhere soon; most people still love a finely sculpted motorcar, whether as a driver, a passenger, or a passerby.
Rather than pine for an unrealistic future, we should enjoy what we have, set realistic goals, and stop trying to mandate everything that’s coming down the road.
R.J. King
rjking@dbusiness.com
