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Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

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Forget Driverless Cars – Driverless Air Taxis Are The Future

Ford is the latest major company to jump on the driverless vehicles bandwagon announcing that it intends to develop fully autonomous vehicles. That announcement is just the latest in the long string of big companies interested in driverless tech from Tesla and Google to Uber and (rumored) Apple. In that context Ford’s announcement is not much of a surprise and was largely greeted with a collective yawn by Wall Street. To really get investors’ attention these days you need to do something truly revolutionary – perhaps something like what Airbus is proposing.

European aviation giant Airbus is Boeing’s biggest competitor and a major manufacturer of planes. Now the aerospace giant is reportedly working on a flying driverless taxi that you can summon via an app on your smartphone. The concept itself is extraordinary enough – but Airbus’ equally extraordinary timeline shows that it’s serious. The company expects to have a prototype built and doing initial tests by the end of 2017.

In an article titled "Future of urban mobility: My kind of flyover" on the Airbus website, Airbus project executive Rodin Lyasoff said "Many of the technologies needed, such as batteries, motors and avionics are most of the way there". Airbus believes that the global demand for flying taxis and similar vehicles would be in the millions of vehicles. "In as little as 10 years, we could have products on the market that revolutionize urban travel for millions of people," said Lyasoff.

Airbus is reportedly developing a second craft as well – a drone-like helicopter for ferrying passengers around the city. The second craft – called CityAirbus has been under secret development by French and German engineers with Airbus for the last two years.

These projects highlight the titanic changes taking place in transportation after decades of the status quo. The projects have the backing of top Airbus execs as well. Airbus CEO Tom Enders says in the article "I'm no big fan of Star Wars, but it's not crazy to imagine that one day our big cities will have flying cars making their way along roads in the sky… In a not too distant future, we'll use our smartphones to book a fully automated flying taxi that will land outside our front door – without any pilot." Related: Trump Unnerves Fracking Chiefs While Obama Admin Supports It

Airbus’ announcement is significant to non-Airbus investors for two reasons. First, it underlines the fact that the transportation industry is rapidly evolving. Innovations like the Hyperloop, driverless cars, electric vehicles, supersonic jets, and space planes are all actively under various stages of development by dozens of firms across the country and around the world. Some of these innovations may never get off the ground. But some will – and that is going to change the future of many industries tremendously over the next decade.

Second, the future of oil and its reported decline may be less inevitable than many have assumed. While driverless cars and electric vehicles are not mutually exclusive technologies, flying taxis and electric vehicles are, at least at this stage of tech development. Planes and helicopters all run on jet fuel because the tech simply does not exist to create lightweight batteries with enough power to run a turbine engine or heavy duty helicopter prop. Thus consumers in the future may be choosing between a driverless electric car or a driverless fossil fuel powered flying taxi. Perhaps investors in oil stocks need not fear the future as much as they have been told by electric vehicle advocates.

By Michael McDonald of Oilprice.com

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Leave a comment
  • Richard Kleeman on August 28 2016 said:
    Absolute rubbish. Why print this stuff. With over 51 years in aviation and an airline career I have to say this is total nonsense. The complexity of aviation with traffic avoidance, severe weather, in flight emergencies, electrical problems, engine failures, fog, rain and many other problems would preclude this from ever happening. Imagine trying to set a pilotless aircraft down in front of a home through power lines, trees and other obstacles often in strong winds, amongst birds, animals and people on the ground. To land in front of homes means a helicopter of some sort and once you get to the size of supporting people, the engine power and complexity of rotors would make this very expensive. Lastly the insurance implications of all this would be the killer, especially when an out of control contrivance killed people.
    A bit of reality needed here.
  • GregSS on August 29 2016 said:
    Richard: I totally agree with you. Not to mention the air taxi will have to avoid thousands of drones delivering Amazon packages or Dominos pizza.
    I think I'll stick to ground taxis

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