Roger Rabbit Redux – Self-Driving Car Edition

With General Motors investing $500M in Lyft and buying Cruise Automation (aftermarket self-driving car technology) for $1B, there are some people speculating that the company may be recreating its mid-prior-century effort to monopolize mass transportation. In the 1940’s, National City Lines and Pacific City Lines, owned by GM, Firestone Tire, Standard Oil of California, Philips Petroleum and others bought more than 100 electric train and trolley systems in at least 45 American cities, according to Samuel “Dr. Gridlock” Schwartz writing in his book “Street Smart.”

The goal of these acquisitions, many believe to this day, was to shut them down and thereby monopolize mass transportation and shift it to internal combustion-fueled technology nationwide. Some believe this as fact. Others believe that these systems were on the wrong track and their demise was inevitable.

The more mythic interpretation of events, with GM as the big baddie, was even more firmly embedded in the public’s imagination by the live action animated/fantasy comedy film “Who Framed Roger Rabbit?” in 1988. Those who have seen the film will remember the scenes of tracks being ripped up across Los Angeles.

Wikipedia tells us that the film and the widely accepted interpretation of events was the subject of a session at the 1999 Annual Meeting of the Transportation Research Board. This TRB session, entitled “Who Framed Roger Rabbit: Conspiracy Theories and Transportation”, concluded that “such systems met their demise for a number of other reasons (economic, cultural, societal, technological, legal) having nothing to do with a conspiracy, even though it was true that National City Lines, Inc. (NCL) was a front company—organized by General Motors’ Alfred P. Sloan, Jr. in 1922, reorganized in 1936 into a holding company — for the express purpose of acquiring local transit systems throughout the United States.”

Also according to Wikipedia: “In 1949, GM, Standard Oil of California, Firestone and others were convicted of conspiring to monopolize the sale of buses and related products to local transit companies controlled by NCL and other companies; they were acquitted of conspiring to monopolize the ownership of these companies. The corporations involved were fined $5000, their executives $1 apiece.”

Is it possible that in a Roger Rabbit redux, with GM making strategic transportation plays, the company is looking to create a private utility using self-driving Lyft vehicles? The idea is simultaneously brilliant and insane. But recognizing the brilliance requires recognizing that self-driving cars only fit into a model that is driven by a network.

By definition, self-driving cars will either be part of a public or a private transportation network. Most of the peer-to-peer players have discovered that ad hoc use of a stranger’s car is pretty icky. It simply does not have the same cachet and value of an airbnb-style proposition.

GM’s interest in creating a massive private network of shared, self-driving cars ultimately means that Lyft will become a footnote to what Maven is ultimately intended to become. The good news for Lyft is that it will take years to make such a self-driving network possible.

Given the fact that it is going to take time to create this disruptive solution, it may be time for GM to think about how it can leverage and integrate its dealers into the vision. Supporting a network of shared vehicles will be expensive from the standpoint of maintaining high-mileage vehicles and making it easy for customers to find those vehicles.

Is GM manipulating and monopolizing? No. GM is just playing the new transportation game. As Roger Rabbit’s wife, Jessica, says as voiced by Kathleen Turner in the movie: “I’m not bad. I’m just drawn that way.”

Roger C. Lanctot is Associate Director in the Global Automotive Practice at Strategy Analytics. More details about Strategy Analytics can be found here: https://www.strategyanalytics.com/access-services/automotive#.VuGdXfkrKUk