Back in Business is a casual column that puts modernity in perspective by looking at the history of business and the people who shaped it.
In the animated series The Jetsons (1962-1963), the inhabitants of the year 2062 travel in planes that fly straight, reach over 3,000 mph and can be folded into a briefcase at the tips of their fingers.
2062 is just 41 years away, and Silicon Valley is obsessed with the latest incarnation of the airplane-car: electric planes that can take off and land vertically. These helicopters could be used to reduce congestion at airports and in high traffic areas.
Companies are raising billions of dollars to develop these air taxis. Will they ever take off?
The history of transportation over the past two centuries is a chronicle of amazing progress. (Prior to the 1860s, it could take more than six months to travel from the east coast to the west coast of the United States.) However, this progression has been full of false starts, mazes and surprises. Proponents of radical new transportation technologies are often destroyed. Since history is written by the winners, it is important not to forget the lessons of the losers either.
Today’s transport innovators are already winners. In recent weeks, air taxi companies Archer Aviation Inc. and Joby Aviation announced that they would go public by merging with special asset acquisition companies (SAACs). These are companies whose shares are already traded on the stock exchange, while they are looking for companies to buy. Others will surely follow.
These merger plans are valued at $3.8 billion and Joby at $6.6 billion, although neither company has revenue and it takes years to develop and deliver their devices. Nevertheless, they have great protectors, who are from
United Airlines Holdings Inc.
at
Toyota Motor Corp.
and the U.S. Air Force.
Taxi companies have emerged that use radically new technologies and promise to change transportation.
In 1897, what would later become the Electric Vehicle Co. began operating battery-powered taxis in New York City. In Britain, the London Electrical Cab began operations in the same year. In 1899 the French Electric Vehicle Association began its activities in Paris.
Electric taxis have major advantages over the horse-drawn taxis they are trying to replace. They were clean and quiet and, because of their innovative nature, attractive to the rich and fashionable.
Electric passenger car advertisement Your Rauch & Lang or Baker Electric is a 1915 entertainment car.
Photo:
Henry Ford.
The electric taxi industry is booming in New York. In June 1898 alone, about 1,600 customers traveled a total of 4,400 miles, according to David Kirsch, a business historian and management professor at the University of Maryland. They paid 30 cents a mile, which is more than $9.75 in today’s money. (A horse taxi costs 50 cents a mile).
In 1899. Electric Vehicle Co. had about 45 taxis that averaged 27 miles a day, and there was a financial rush. Competitor General Carriage Co. was trying to raise $20 million in capital (about $650 million today). The New York Central Railroad has announced the launch of a 100-seat electric taxi service in Grand Central Terminal.
Estimated demand for electric taxis has risen rapidly this year, from 1,600 to 2,000-12,000. It would take 1,500 battery-powered taxis to bring passengers to New York’s burgeoning streetcar system, which stretches 232 miles in Manhattan. Parent company Electric Vehicle Co. has ordered 850 electric vehicles from its manufacturing subsidiary in Hartford, Connecticut.
In seven weeks, the New York-based electric taxi company’s share price nearly tripled.
Then the boom began to wane as overexpansion took its toll. The short battery life condemns companies in London and Paris to a year or two. In 1902, the General Carriage Co. collapsed after its shares rose from 87.5 cents to $20.50, then fell again. Most electric taxi services in small American cities have never been successful.
First Henry Ford replaced the electric car, changing the idea of the car.
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Electric taxis were a natural extension of the 19th century transportation model. This was the 19th-century model, exemplified by steamboats and railroads: centralized services that charged a fixed price to serve fixed routes at fixed times. Consumers who have accepted this status quo are more willing to pay others to manage them than to manage them themselves.
Instead, Ford has ensured that consumers no longer see transportation as a service provided by someone else, but as a product they can own and operate themselves. It allowed people to go anywhere, at any time. Transport no longer needs to be rigid, it can offer freedom. Travel is still usually a necessity, but it can also be a desire.
Huge power improvements and a range of petrol engines helped, but Ford’s biggest weapon was its low price: He introduced his Model T in 1908 for $850, about a third of the cost of electric cars at the time. Suddenly millions of people were able to own a product that gave them a sense of control over time and space.
Decades later, Sir Freddie Laker took a similar approach. For a long time, air travel was mainly reserved for the rich and business travellers. When Skytrain, an airline connecting the UK to the US, was launched in 1977, queues formed for hours, sometimes days, in the Queue Gardens to get tickets for half or a third of the competition’s prices.
Freddie Laker founded Skytrain, an airline connecting the UK to the US, in 1977.
Photo:
Philip Townsend/Halton Archive/Getty Images Archive
Lakers innovations forced governments to deregulate the airline industry and lower airfares around the world just when the global economy was about to explode. In 1976, 137 million middle-class people worldwide traveled by air. In 1981 it was 212 million and ten years later 583 million.
Technology and industry often take leaps forward allowing products and services to be used for surprising new purposes, allowing customers to meet needs – or desires – they didn’t even know they had.
The radio, developed as an aid to navigation, has become an indispensable musical companion in people’s lives. In the first decades of its existence, the aircraft was used much more for transporting mail and goods than for transporting passengers. The mobile phone, originally designed to communicate with people, has become the universal wristwatch, camera, stereo, cinema, road map and encyclopedia that we all carry in our pockets and handbags.
Endless travel in agonizing traffic jams has made travel unpleasant for millions of people. If all the technologies work and the bureaucracy cooperates, maybe one day taxis will drive again with the sense of novelty and freedom they once had.
Success may depend on what technology can offer in the near future. It may depend even more on the ability of technology to provide what people later don’t know they need.
Corrections and Amendments
Plan to place Archer Aviation Inc. into a $3.8 billion special purpose entity. An earlier version of this article erroneously stated that Archer valued the deal at $2.5 billion. (corrected March 12)
Email Jason Zweig at [email protected].
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