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Illustration: Eniola Odetunde/Axios

The transportation industry is teetering between tried-and-true business models of the past and an alluring, but uncertain, future.

The big picture: The modernization of cars, trucks, planes and public transit could be one of the greatest reorderings of civilization since the dawn of the horseless carriage. But progress in the $1.5 trillion transportation industry is getting snagged on technological, regulatory and social issues.

What's happening: A historic shift to cleaner, more economical, automated transportation is underway.

All of this change is roiling an industry that provides jobs to 13.3 million people in the U.S. and represents a 9% slice of the U.S. economy.

  • The future, industry leaders predict, is a clean, highly-tuned, multimodal transportation system that includes shared, connected vehicles running on electrons rather than gasoline and in which driving is optional.

But that vision is being challenged by unforeseen technical hurdles, crumbling infrastructure and a stalled-out federal government that has yet to create standards and regulations for the coming changes, leaving strapped states struggling to step in.

  • Meanwhile, cars, trucks, planes and ships continue to pump carbon dioxide into the atmosphere, accounting for nearly 22% of global carbon emissions in 2018, per the IEA.
  • President Trump has gone to battle with California over auto emissions laws, causing regulatory uncertainty for automakers during what is likely to be a long court battle.
  • All the while, a culture of convenience is fueling a fast delivery system that is putting more vehicles on the road and more CO2 in the air.
  • Companies have to solve the stubborn technical challenges associated with AVs and EVs, but also figure out how to make money from vehicles that consumers aren't interested in or don't trust.
  • The world's largest automakers — once drivers of employment and the economy — are also weathering labor disputes and are caught up in politics as trade wars persist and the global economy is reordered.

What to watch: The specter of disruption is triggering enormous R&D investment by automakers fearful of becoming the next Kodak, Blockbuster or BlackBerry.

  • Spending on AVs, by both traditional automakers and newcomers, is forecast to grow to a cumulative $85 billion through 2025 — on top of the $225 billion spending for EVs, according to Alix Partners.
  • They're all chasing a multitrillion-dollar global market that Boston Consulting Group says is worth $380 billion in profits.
  • But there's no guarantee any of it will pay off.

"It’s a gamble based on what you think will happen, but if you don’t do anything, then for sure you’re out of business," says Mike Ramsey, an analyst at Gartner.

Go deeper

Tina Reed, author of Vitals
46 mins ago - Health

The end of the Omicron wave is in sight

Expand chart
Data: Our World in Data; Chart: Baidi Wang/Axios

The Omicron wave is likely beginning to recede in the U.S., experts say.

Why it matters: Omicron is still wreaking havoc in parts of the country, but infectious disease experts are optimistic that relief is around the corner.

NASA estimates Tonga volcano exploded with force of 5-6 megatons

A satellite image of Hunga Tonga Hunga Ha’apai volcano on Dec. 24, before the eruption. Photo: Satellite image ©2022 Maxar Technologies

NASA scientists estimate the power of Tonga's volcanic eruption over the weekend to have been 5-6 Megatons of TNT equivalent.

Threat level: Saturday's eruption of the Hunga Tonga Hunga Haʻapai volcano and subsequent tsunami killed at least three people. Scientists warn an "ash-seawater cocktail" poses a potentially toxic health threat, and drinking water could be contaminated.

Updated 5 hours ago - Politics & Policy

New York AG alleges "significant evidence" of Trump Organization fraud

Combination images of former President Trump and New York State Attorney General Letitia James. Photo: Al Drago/Bloomberg via Getty Images; Scott Heins/Getty Images

New York's attorney general filed a motion Tuesday seeking to compel former President Trump and his two elder children to appear for sworn testimony in her office's civil investigation into the Trump Organization's financial dealings.

Why it matters: Attorney General Letitia James revealed new details in the court filing and a statement on her office's investigation into the Trump Organization's business practices, including a preliminary finding alleging the company used "fraudulent and misleading asset valuations to obtain economic benefits."