Foundational Changes
It’s the second-order consequences that are hardest to see, but most interesting.
Capital Thinking • Issue #147 • View online
Interpreting the effects of disruptions large and small is more of an art than a science.
The real trick is to look beyond the headlines and even the immediate consequences to the more distant effects that will ripple through an industry, a society, or a nation.
No one can predict exactly what those second and third order changes might be but with a little thought, we might be able to make a guess or two.
And that’s how (and why) you make the big bucks.
Take a look and see how it’s done.
Cars and second order consequences
There are two foundational technology changes rolling through the car industry at the moment; electric and autonomy.
Electric is happening right now, largely as a consequence of falling battery prices, while autonomy, or at least full autonomy, is a bit further off - perhaps 5-10 years, depending on how fast some pretty hard computer science problems get solved.
Both of these will cycle into essentially the entire global stock of (today) around 1.1bn cars over a period of decades, subject to all sorts of variables, and both of them completely remake the car industry and its suppliers, as well as parts of the tech industry. Both electric and autonomy have profound consequences beyond the car industry itself.
Half of global oil production today goes to gasoline, and removing that demand will have geopolitical as well as industrial consequences. Over a million people are killed in car accidents every year around the world, mostly due to human error, and in a fully autonomous world all of those (and many more injuries) will also go away.
However, it’s also useful, and perhaps more challenging, to think about second and third order consequences.
Moving to electric means much more than replacing the gas tank with a battery, and moving to autonomy means much more than ending accidents.
Quite what those consequences would be is much harder to predict: as the saying goes, it was easy to predict mass car ownership but hard to predict Walmart, and the broader consequences of the move to electric and autonomy will come in some very widely-spread industries, in complex interlocked ways.
Still, we can at least point to where some of the changes might come.
I can’t tell you what will happen to car repairs, commercial real-estate or buses - I’m not an expert on any of those, and neither can anyone who is - but I can suggest that something will happen, and probably something big.
Hence, this post is not a description of what will happen, but of where it might, and why, with some links to further reading.
Read more from Benedict Evans at the link below =>
Benedict Evans*Feature post photo by Thomas Kelley on Unsplash