If there’s one thing I’m even less qualified to predict than my automotive predictions, it has to be on what’s happening in the aerospace industry. But, that didn’t stop me before, so why stop now?
2017 is going to be a relatively boring year for space
I say this right after SpaceX has just launched for the first time since the September anomaly and there are now 10 Iridium Next satellites in orbit. Both the launch and landing on “Just Read the Instructions” went off without a hitch. SpaceX is definitely going to steal the show this year, and hopefully they’ll be able to resume, and even accelerate, their torrid pace of launches. The most exciting launch will be the oft delayed Falcon Heavy demonstration flight from the old Space Shuttle and Saturn V launch pad at the Kennedy Space Center, followed by the first “Crew Dragon” demonstration late this summer.
Neither the “Crew Dragon” or Boeing’s CST-100 spacecraft are going to carry passengers this year though. For that we’ve got to wait until 2018. In fact, 2018 looks pretty promising for aerospace in general, with the James Webb and the wheel-less Mars InSight lander.
The big question marks are Virgin Galactic and Blue Origin. Virgin Galactic has resumed testing of SpaceShip 2, but I’m guessing that 2017 is going to come and go before any paying passengers get to ride on it. As for Blue Origin? Who knows. They probably have the best shot of launching passengers on sub-orbital flights this year, but Jeff Bezos is so tight lipped that it’s difficult to say with any real confidence.
We’ll see a lot fewer 747s, A340s and A380s
Over in the aeronautical side of the things, airlines will continue to downsize from their super-jumbos in favour of 777s, 787s, A330s and A350s. There’s pretty much no reason to fly with more than two engines at this point, and three engine jumbos like the MD-11 and L-1011 are already ancient history. That leaves Boeing with the “Queen of the Skies” and Airbus stuck with the A340 and the A380. Even with fuel prices staying at relatively low levels, it still makes more economic sense to fly longer haul routes with smaller planes than it does to fly a plane with twice as many engines. That includes the price of additional crew, which is still cheaper than all of the fuel which gets consumed.
United already said it’d accelerate phasing out of their 747s this year, and Delta has said the same thing. That means there won’t be a single US carrier flying 747s by the end 2017. Meanwhile Airbus is souring on the A380neo (new engine option) which means there aren’t going to be a lot of fuel savings any time soon.
… and a lot more narrow bodies
For smaller planes, it’s still unclear whether the Bombardier CSeries will take off. Embraer is taking their fight against Bombardier to the WTO, however it’s not like Bombardier is making any money at this point. The real turning point could be when Delta starts to fly the CSeries and if its cost competitive and reliable. That’s not expected until spring of 2018, so it could be another long year for Bombardier.
The 737 MAX on the other hand will see its first delivery this year, and presumably we’ll start seeing them in the US shortly afterward, starting with Southwest. The MAX isn’t a new airframe though, and it just replaces the engines to be something around 14% more efficient. That’s not much different than the A320neo which Airbus introduced last year.
I’m probably the least qualified person to comment on the automotive industry. As a family, we only have one car, and we’re more likely to ride a bicycle or take a train than drive the car. That said, we live in the Silicon Valley, and it seems like there has been a tectonic shift in the automotive zeitgeist from Detroit to Northern California.
Driverless cars will not quite be ready for prime-time.
I see Waymo (Google) cars on the street in Palo Alto pretty much on a daily basis at this point. I saw the Uber cars in SF, and even the Otto semi-truck driving around. Tesla is releasing a highly anticipated upgrade to Autopilot, and it seems like every day another auto manufacturer announces that they’re working on driverless cars. So, we’re getting close. Really close. But I don’t think we’re quite there yet.
Even if Tesla completely nails Autopilot, there just aren’t enough Tesla’s on the road to bring driverless cars into the mainstream. When I travel to places which are not the Silicon Valley everyone thinks driverless cars are a pipe dream. And they have a point. How do you make a car drive down a freeway in Alberta with drifting snow where you can barely see the lane markers? I’m sure we’ll get there, but it’s a lot easier making your car work in the Bay Area where we barely even have “weather” than it is in a place with monsoons, dense fog, or real winter driving conditions.
Electric cars will still not take off, but probably will in 2018.
Speaking of Tesla, electric cars will still be niche in 2017. The Tesla Model 3 is slated to be released late in the year, but given that Elon tends to be wildly optimistic with his release dates, I would be surprised if it came before 2018. And really, Tesla is the only contender at this point. There are a number of car companies that have electric cars (like BMW, GM, Ford, Fiat, VW, Nissan), but only Tesla has cracked the nut of making a cool looking, high performing car without the range anxiety. If you can drive 4.5 hours at 70-75 mph you probably don’t care that it takes 45 minutes at a Super Charger to fill your car up to 80% capacity.
The other contenders just don’t have enough cool electric vehicles in the pipeline to make any kind of meaningful impact on the market this year. They all know with ever increasing fuel efficiency standards that they need to get into the electric car business, but it takes time to develop the technology and build out a charging station network. The Chevy Bolt may do well, but cheap fuel prices will hinder adoption in places which are not the Silicon Valley. Oh, and just about everyone would rather have a Tesla Model 3 than a Bolt.
Hydrogen Fuel Cell cars will continue to stagnate.
Toyota and Honda seem to be doubling down on fuel cells, and if you’re a hydrocarbon manufacturer like Saudi Aramco you’re probably rooting for them to succeed. But fuel cell cars aren’t going anywhere fast. Refining oil is a dirty business, even if you get “free” hydrogen as a byproduct, and driving trucks of hydrogen around to a non-existent network of hydrogen “Gas” stations just isn’t going to happen any time soon, if ever. On top of that, both companies seem to be taking their styling cues from Michael Bay, and I’m not sure most people, at least in North America, want to be driving in a car that looks like a Transformer. As such, the Honda Clarity and the Toyota Mirai aren’t going to sell particularly well.
Uber and Lyft will continue to put a lot of pressure on the Taxi Industry, but will be more expensive.
Both Uber and Lyft need to start making money. Pretty much no one wants to ride in a taxi at this point, and it feels like the only way taxi cab companies are going to survive is through legislation to preserve their monopolies and keep Uber and Lyft out of their markets. The strategy for 2017 will be to continue to bunker down and hope that neither Uber or Lyft starts to make a profit. This is not a winning strategy.
There are some other head winds that ride hailing services are going to face in 2017. Cities are starting to realize that their traditional transit services like busses are being eroded, and traffic caused by all of the additional cars is going to continue to fill downtown cores. Expect cities like NY and SF to start imposing ride hailing surcharges which go towards paying for more mass transit.