gosouth asked what road the self driving car will use--- any my answer is: probably the eight lane freeway that is immediately adjacent to TCL's American assets.
lordolean pointed out that mass adoption may be 10-20 years away--- but I think even if mass adoption is 10-20 years away, the toll roads' debt repayment and profit profiles are contingent on traffic modelling for the next 75 years, not just the next decade or two. That's a long time for a game changer, such as self driving vehicles, to wipe out the value proposition.
I completely agree that the self driving revolution will increase productivity, but it does not follow that American's will pay to own a car and pay to drive it on a toll road, when they can have the same "24/7 door-to-door" experience without paying to own a car, and without paying a toll.
Once this technology becomes available-- be it in 5, 10 or 20 years -- car pooling will increase dramatically, mainly because (as the Forbes article states), there won't be any effort involved in making the necessary arrangements- you take your tablet, or whatever device is in vogue at the time, and say where you want to go, and voila- within a short period of time a vehicle shows up that's heading in that direction, possibly already with a few other people on board going the same way. That vehicle may pick up one or two more people, and at some stage you may switch to another vehicle to take you to your final destination.
The issue with an increase in car pooling is that vehicles with more than 3 people or more travel absolutely free on TCL's American toll roads. Sure, TCL can try to renegotiate these contracts. But that might not make a difference-- because parallel to TCL's "hot lanes" is an eight-lane freeway (four lanes each way) for the self driving cars to use, and its unlikely that any politician that wants to get re-elected will change that. And its the existence of that eight-lane freeway that's ultimately the "achilles heel" of TCL's American dream. None of TCL's Australian toll roads compete with eight-lane freeways (or any freeway for that matter), and therein lies the difference.
Crucial to my views, and what I failed to mention in my original post, is that the self driving car will be followed by the self driving mini-bus, and then by the self driving bus, double-decker bus etc. Once you have a mix of these vehicles, you can reduce the number of cars on the road dynamically and dramatically, and in theory you could completely avoid the "hot lanes" altogether, in favor of the freeway.
Of course there will always be individualists who insist on their own car, and there is an argument that American individualism won't stand for that type of communist-type behavior; but in reality we are already seeing millions of patriotic American's abandon their big SUV's in favor of more fuel efficient small cars that are made in Japan, instead of Detroit. There is no reason to believe that a country most associated with the automobile than any other country would not go one step further, and ask itself the question: why own a car at all if you can have all the perks of owning one without having to pay for one?
And in any event, I think the existing western trend of single occupancy cars is only in part a reflection of our individualism. There is also a major practical component involved-- owning a car ensures its availability when needed, 24/7, as well as the convenience of "door-to-door" service. But with self driving mass transit, you will have access to what is effectively a 24/7 door-to-door service, without the need of owning a car, and at a fraction of the cost of owning a car. So there will be a significant economic incentive to switching to driverless mass transit.
This will most likely be a world-wide phenomenon. And in cities like Melbourne, you may see a shift from existing public transport, such as railways, onto driverless mass transit on TCL's Citylink. Low income earners, who previously relied on public transportation, may suddenly find themselves empowered by using the driverless mass transit system on TCL's toll roads, getting to where they want to go faster, and just as economically.
That said, whilst there may be more people using TCL's toll roads as a result of driverless mass transit, that doesn't necessarily mean an increase in the number of vehicles or revenue, because the idea of driverless mass transit is to put more people into the same vehicle, and so any traffic growth on Citylink may be subdued. I'm no traffic modelling expert and I can't say what will happen to traffic TCL's Australian assets, and I'm open to the notion that perhaps traffic will increase. But this article isn't about TCL's Australian assets so there is no need for me to stick my neck out and take a position in that regard.
As for the assets in the US however I can confortably say that they are fundamentally different to TCL's Australian "base", because those American tollroads compete directly with freeways, whereas none of the Australian assets do, and so the impact of driverless mass transit is far more likely to be adverse to the traffic volumes and revenue there, than here. And in my personal opinion, the hundreds of millions of dollars TCL is investing in the US won't be recouped. The fact is the American assets are burning a hole into TCL's wallet already, because they are simply not profitable as it is.
I've sold out of TCL until I get a better understanding of this situation. Its had a good run, and I think its overvalued. I want to see management address driverless mass transit, and see what their expert traffic models say before I commit any of my superannuation funds into this stock.
Expand
(20min delay)