Ride-hailing firms will be giants in 2030

It is ironic — but true — that automakers are racing to develop a new generation of vehicles that will utterly destroy the traditional auto industry.

By 2030, dealerships will showcase vehicles that are electric, connected and automated — vehicles powered by technologies beyond any automaker's expertise.

These cars and trucks will be built, sold and serviced by corporate coalitions that adopt the comforting identity of a Ford, Volkswagen or Toyota.

But automakers won't be calling the shots. Instead they will manage uneasy alliances of suppliers, giant ride-hailing fleets, mega-dealers and Internet behemoths — all with their own agendas.

Some of these players are automotive newcomers with no vested interest in the status quo. They gained fame and wealth by disrupting their own industries, and now they want to disrupt yours.

True self-driving vehicles are still a decade away, but the corporate coalitions that will produce and service them already are starting to form. Here's a guide to the industry's power structure in 2030.

On Nov. 20, Volvo announced a three-year deal to supply up to 24,000 robotaxis to Uber.

The deal was a logical step for the companies, which had jointly launched a test fleet of 100 self-driving vehicles in 2016.

Ride-hailing firms such as Uber, Lyft and China's Didi Chuxing are eager to introduce robotaxis because they can dispense with their biggest operating cost: drivers.

These companies are not content to be traditional fleet operators. Last year, Uber announced the $680 million acquisition of Otto, a startup that is developing technology for self-driving commercial trucks.

Lyft has formed partnerships with Ford and General Motors to develop self-driving vehicles, and in May it signed an agreement with Waymo to do so.

As Uber, Lyft and Didi Chuxing deploy the first batches of autonomous vehicles, they will wield considerable clout.

Robotaxis likely will be used for a mobile office, a lounge, a theater or even a party wagon. When that happens, the taxi fleets might order a batch of chassis from automakers, then outfit them with custom interiors designed by seatmakers such as Adient or Faurecia.

In an article written for Automotive News last month, Bob Lutz, a former General Motors vice chairman, says the debate over whether private owners will accept autonomous vehicles misses the point.

Lutz wrote: "All we need is acceptance by the big fleets: Uber, Lyft, FedEx, UPS, the U.S. Postal Service, utility companies, delivery services. Amazon will probably buy a slew of them. These fleet owners will account for several million vehicles a year. Every few months they will order 100,000 low-end modules, 100,000 medium and 100,000 high-end. The low-cost provider that delivers the specification will get the business.

"These modules won't be branded Chevrolet, Ford or Toyota. They'll be branded Uber or Lyft or whoever else is competing in the market."

Let's assume that China, France, Britain, India and the Netherlands really do intend to ban production of fossil-fuel cars.

A handful of mega-suppliers — such as Panasonic, LG Electronics, Robert Bosch and Continental AG — have made big bets that this transformation will actually occur. Those bets are starting to pay off.

When Tesla announced plans for a Gigafactory in the Nevada desert, it called on Panasonic Corp. — the world's largest producer of EV batteries — to help build and run it.

As far as Tesla is concerned, Panasonic is a partner — not just a supplier. In 2010, Panasonic bought a $30 million stake in Tesla, and it also put up an estimated 30 percent of the Gigafactory's $5 billion price tag.

The Chevrolet Bolt offers another example of the close ties between an automaker and key suppliers. LG Corp. produces the Bolt's battery, electric motors, powertrain electronics and infotainment system.

To gain LG's cooperation, GM allowed it to retain control of its intellectual property. And as GM introduces 23 electric models over the next five years, its Korean partner doubtless will be deeply involved.

Other mega-suppliers — such as Bosch and Continental AG — also are positioning themselves for the electric age.

In June, Bosch disclosed that it is spending $448 million annually to design powertrains and batteries for electric vehicles. Meanwhile, Continental has invested $1.2 billion in EV research over the past five years.

There aren't a lot of companies that can afford r&d on this scale, so a shakeout seems likely as EVs gain share.

In an EV world, a handful of survivors — such as Panasonic, Bosch, Continental and LG — will enjoy economies of scale that their smaller rivals can't match. Automakers will treat them as partners — not vendors.

Think of your dealer as a mobility broker.

By 2030, dealerships will service robotaxi fleets, drones and a few privately owned vehicles.

Dealerships will sell cars, too, but it won't be like the old days. Forget about dickering over prices. That's old school.

Instead, motorists will pay subscriptions for their transportation. Some will join a group lease and share their vehicle with friends.

Others will opt for a plan that lets them switch vehicles. Would you like an EV for your daily commute, then switch to a pickup for the weekend? Your dealer can arrange it.

By 2030, dealers will generate revenue from three sources.

Mobility services, which include fleet management and subscriptions, will generate 30 percent of a store's revenue. Service and maintenance will account for 40 percent or so. And the remaining 30 percent will come from consumers who buy vehicles, then rent them out when they aren't using them.

There is a catch, of course. This business model favors large dealership groups that can afford the staff, training and facilities to service large fleets.

Mom-and-pop stores will survive — mostly in rural areas — but they won't compete in major metro markets. In fact, the big dealer groups already are planning for it.

Last month, AutoNation Inc. announced a multiyear agreement to service Waymo's fleet of self-driving Chrysler Pacificas. The dealership group will support Waymo in Phoenix and northern California, then elsewhere as Waymo expands.

The company's 274 dealerships can service self-driving cars anywhere in the country. Mom-and-pop stores can't match that.

Software engineers can't anticipate every situation that a self-driving vehicle might encounter at a construction zone, crosswalk or busy intersection.

So they are designing computer chips that can use artificial intelligence to identify objects — and figure out how the vehicle should respond — with the sophistication of a human motorist.

To gain access to this technology, automakers are forming alliances with chipmakers. Volvo, Mercedes and Audi are collaborating with Nvidia. Toyota has partnered with Renesas. BMW is working with Intel.

The r&d required for artificial intelligence is extraordinarily costly. Nvidia, a leading producer of graphics processors for gaming and mobile computing, spent $3 billion to develop its Volta architecture.

That architecture underlies the Xavier processor, which Audi will introduce in its self-driving vehicles in 2020, followed by Volvo in 2021.

Nvidia is covering its massive r&d costs by marketing Volta for supercomputers, the health care industry, financial services and gaming.

Needless to say, only a handful of competitors can match it. One such company is Intel, which introduced its own AI supercomputer — Nervana — in November.

Facebook will use Nervana to identify patterns generated by its users. Intel also is promoting Nervana for weather prediction, medical diagnosis, financial fraud detection and self-driving cars.

Automakers simply don't have the market leverage to nickel-and-dime Nvidia or Intel for big discounts. In the world of artificial intelligence, the auto industry is just another market segment.

In a market shaped by companies such as Bosch, Intel or AutoNation, it would be tempting to predict the demise of the world's great automakers. That would be wrong.

Global automakers such as Ford, Toyota and Volkswagen will continue to build cars and trucks because mass production is a job for experts. But their brand identities will slowly fade.

Fleet operators such as Uber, Lyft and Didi will maintain inexpensive fleets of podlike taxis. Passengers in self-driving vehicles will value a smooth, comfortable ride rather than raw acceleration.

And electric cars — autonomous or not — will be powered by a standardized assortment of motors, batteries and electronics.

To manage all this, automakers will preside over alliances of chipmakers, mega-dealers and key suppliers. Their badges may or may not be on the cars, but they won't be in the driver's seat.