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Paul Mampilly is an American investor, former hedge fund manager and winner of the prestigious Templeton Foundation investment competition. Paul has been featured on CNBC, Fox Business News and Bloomberg TV. He is the founder of the popular investment newsletter Profits Unlimited, ... more

The Auto Industry Is About to Completely Change

Date: Thursday, November 9, 2017 12:33 PM EST

“Will we need to learn to drive?” my son asked me recently.

Before I tell you what I told him as an answer, I want to give you an idea of why he asked me this question.

You see, right now, we’re at a moment when things that once seemed permanent are now in question.

Cars and driving are one of these things. Just to get a sense of car history, consider this:

Nelson Jackson, Sewall Crocker and their dog, Bud, made the first successful transcontinental automobile trip in 1903. Car technology was primitive. They relied on stagecoaches to ferry spare parts.

One time a cow had to tow them. And another time, a team of horses had to be sent to get them out of a Vermont bog. The 4,500-mile journey took 63 days, 12 hours and 30 minutes.

Few then would have imagined what would happen next.

An Insane Level of Growth

Incredibly, the U.S. went from 800 cars in 1900 to 458,500 in 1910 to 8.2 million cars by 1920 to 253 million now. That’s an insane level of growth.

And car growth has exploded even higher in recent years. In 2016, U.S. vehicle sales totaled 17.55 million. That beats 2015’s record of 17.47 million and was the seventh consecutive year of unprecedented growth.

However, I’m incredibly pessimistic about car sales because I believe that we’ve seen their peak.

In 10 years, we’ll have fewer cars on the road. And fewer still in 20. That’s why I told my son it’s unlikely he’d need to learn to drive.

The reason I’m so pessimistic is because new innovations are going to wipe out cars as we know them.

A Total Wipeout for the Auto Industry

The average price of a car is $35,000, but the costs of traditional car ownership go far beyond the price tag. There is also interest paid on car loans, insurance, taxes, fuel and maintenance. Some expenses are nonobvious, such as parking, property taxes and construction costs for home garages, and the value of our time.

And according to research by the Bureau of Transportation Statistics, our cars are only used for about 4% of the day.

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