Will the Metaverse Kill off the Car Industry?

By Eliot S. Brown

Since Facebook announced the rollout of its virtual reality (VR) “Metaverse,” leaders of businesses that sell physical stuff – such as carmakers – are fretting about this new reality while trying to parse the tastes of younger “digital native” consumers with cash to burn. 

Will their physical offerings get marginalized by new virtual equivalents? Will time in the real world spent with physical products be given up in favor of time spent in the virtual world? How will we connect the commerce and transactions occurring in virtual worlds to our physical retail and offerings?  

Nowhere are these questions more applicable than in the automotive industry. I have chatted up automotive and mobility executives, all of whom fear that more time spent in virtual worlds means less time moving about in the real world which could translate into less time behind the wheel or shopping for cars. 

Of particular concern are young people. The primary fear within the car industry is that 10-to-25-year-olds weaned on a world of VR will become so engrossed in these virtual worlds that they will leave home less, visit people and places less, and be less drawn to IRL ("in real life") experiences.  

While it’s impossible to predict the exact consequences of the Metaverse, an as-yet undeveloped technology, data my firm has collected on digital behaviors offers a few important clues. Our findings suggest that there are a few reasons for carmakers to be optimistic.  

First, we find that younger consumers are less likely to slip into a virtual-only existence than some may assume. Our research indicates they are more aware of the dangers of spending too much time in the digital world more than other age groups. As “digital natives” who have grown up with smart devices in their pockets, they have all the evidence they need to associate excessive time on tech with problems like depression, sense of isolation, low motivation and self-esteem, and the erosion of deep social ties. We observe them actively trying to control their time on devices more than any other generation, and to focus their time on devices to meaningful activities with positive outcomes.  

Secondly, we looked at the causes and consequences of mental health issues affecting younger generations. There is a broad scholarly consensus that the best way to combat this epidemic is to spend more quality time with real people. Rich in-person interactions with friends and family you like most is recognized as the most powerful antidote to mental health challenges for younger generations. 

Thirdly, we embedded teams of anthropologists with young people to track the details of their social lives. What we found is surprising: a lot of their time spent in the digital world is actually dedicated to setting up IRL interactions. A surprising proportion of their online interactions, conversations, clicks and chats are all about building more meaningful connections for fun, romance and study in their actual lives. 

Which tracks with the final reason for hope, based on our research: living exclusively in a virtual world is incompatible with younger generations’ beliefs and ideals around growth and development. Our research suggests they are more ambitious than they are given credit for. Many seek perpetual personal development as their strategy for thriving in life.

When we examine how exactly they believe they will best develop, it is “enriching in-person experiences” that they say will catalyze them most and best furnish them with relevant skills and perspectives. They think that being there to see it, taste it, feel it is the way. Put otherwise, they want to learn French while flirting in Parisian cafes, find gratitude by building a school in Nepal, perfect skateboarding with a hands-on session with their local skatepark king. Being present physically is core to their philosophy of growth.  

Peering into the future, what are the consequences for businesses built around physical offerings, like automotive and mobility? Will they be valuable or even relevant to users of the Metaverse?  

The short answer is - it depends. The Metaverse, for instance, can be used by these companies to determine if there is desire to do something, see something, experience something in real life. For example, if companies can detect a user’s evident interest in, say, the rare flowers of some local or national park, then present them with easy mobility options to whisk them there in real time to see and smell the flowers in person, they will have used the Metaverse to drive desire for mobility and provided an IRL experiential context for people. 

Automotive companies are currently obsessing over getting the “handover” right between driverless cars and drivers taking control. But the more important “handover” to obsess over is between virtual reality desires and in-real-life solutions. The Metaverse may not kill off the car industry. But it may force carmakers to get more creative as driving becomes more experiential than about getting from point A to B. 

Eliot S. Brown is a partner with ReD Associates, a humanities-focused strategy consultancy, who focuses on the automotive industry.  Photo by Dusan Petkovic.