Lisa Jerram, Principal Research Analyst at Navigant Research, looks at the opportunities for OEMs, service providers and other stakeholders as the sharing economy shapes future mobility business models
The advent of connectivity has been a boon to new mobility services. Car-sharing programmes, like Zipcar, and ride-hailing platforms such as Uber, are the highest profile of the new mobility services that have proliferated in the past decade, thanks to increased connectivity.
But we are really only at the beginning of the era of connected mobility. As shared mobility and connectivity trends converge with the move toward zero-emission vehicles – battery electric and potentially also fuels cells – and autonomous driving, a range of new mobility options become possible. These have the potential to create richer, more diverse, and more individually tailored transportation services. They also have the potential to encourage more travel via passenger cars, which could increase congestion or emissions, and consequently encourage greater suburban sprawl. But, while much of the automotive sector seems pointed in the direction of developing autonomous shared mobility services, the pathway there will not be simple or without potential roadblocks.
If we look at the evolution of new mobility services to date, they have mostly been a phenomenon of developed countries. Car-sharing, which in fact predates the advent of connectivity, is the most mature of the shared mobility offerings and is most widespread in markets where private vehicle ownership is already widespread, like North America and Europe. Traffic and limited parking availability, combined with the cost of owning and maintaining a car, have made shared mobility an attractive alternative to owning a car in these regions. As of 2016, Navigant Research estimates that there were around 2 million car-sharing members in North America, and 3 million in Europe – most of them in Western Europe.
As of 2016, Navigant Research estimates that there were around 2 million car-sharing members in North America, and 3 million in Europe – most of them in Western Europe
However, the market for conventional round-trip style car-sharing services is giving way to a new service that has opened up new growth potential in these markets. One-way car-sharing is a service type that leverages last minute, or impulse, mobility needs, rather than planned needs and is enabled by the ubiquity of connectivity. One-way services are more likely to be used in a similar fashion as ride-hailing apps – in response to an immediate need and as a way to travel in and around a city. Because of this convenience of use, thanks to the ability to access the service at the click of an app, car-sharing membership has seen significant new growth.
Much of this innovation has been driven by vehicle manufacturers who are embracing connectivity to open up new market opportunities and service models. Daimler and BMW have been at the forefront of one-way car-share services and have secured millions of members in their car-share programmes. One reason that OEMs have been able to spur such dramatic growth is their ability to make the significant upfront investment needed to launch a car-share service in such a way that it has an immediate impact.
This trend has the potential to shift car-sharing away from the start-up or non-profit model that launched the industry toward a smaller number of multinational players with deep pockets. OEMs are the most obvious example, but in Europe and Japan, other companies such as rental car agencies and parking management companies are major players in car-sharing. For rental car companies, over time, conventional daily rental services could give way to car-sharing services, with traditional car rental programmes focused on providing longer-term and longer-range trips.
Car-sharing, which in fact predates the advent of connectivity, is the most mature of the shared mobility offerings and is most widespread in markets where private vehicle ownership is already widespread, like North America and Europe
For vehicle manufacturers, car-sharing will increasingly be used as a way to funnel certain types of cars – primarily fuel efficient, electric-powered and autonomous – and many OEMs will operate these transportation services themselves as a way to offset reductions in revenue due to falling sales in urban areas. Use of these more efficient but higher cost vehicles in shared transportation services is likely to see higher penetration than the general population and can be justified by operators based on lower total cost of ownership (TCO). Individual customers tend to overlook TCO in favour of lower acquisition cost, especially in markets like the US where fuel prices are low.
Autonomous cars, intriguing opportunities
But the major innovation in shared mobility services would come with integrating autonomous vehicles. Autonomous vehicles will be able to position themselves where needed, largely eliminating the distinction between one-way and round-trip services in urban areas. Analysis of passenger movement data will also help these fleets to preemptively position vehicles where they will be needed, enhancing digital assistant systems that project what time a person should leave based on their location and calendar. Expanding this concept on a broad scale will virtually ensure that a vehicle will be in place when needed. And mobility services for both goods as well as people may increasingly be provided by autonomous vehicles in urban areas.
The advent of autonomous shared mobility fleets opens up some intriguing new business model possibilities. For example, a flat-price autonomous mobility service could be attractive to consumers rather than maintaining relationships with a vehicle dealer, fuelling network, mechanic, and insurance provider. If the consumer has additional travel modes available – including public transit or bike-sharing – that would further speed adoption of this new paradigm.
For rental car companies, over time, conventional daily rental services could give way to car-sharing services, with traditional car rental programmes focused on providing longer-term and longer-range trips
In order for this service model to be viable, small-footprint autonomous vehicles that can be summoned as needed will have to be connected. The same logistics improvements that make vehicles available to riders when needed will keep idle time to a minimum and significantly increase the utilisation rate. The same technology can also be used to request larger vehicles when needed to carry groups of people or cargo. Mobility services for both goods and people within urban areas may increasingly be provided by autonomous vehicles.
In addition, battery EVs have a clear advantage in this type of service model, if they can be equipped for wireless recharging. A vehicle with a wireless charging capability could auto-drive to a wireless charging parking space, self-park in the space, and automatically begin recharging – all without the need for a driver. When the consumer does need the vehicle, a vehicle summon feature could call the vehicle to leave the charging space and drive itself to meet and pick up the consumer. This potential for a seamless transition between occupied and unoccupied states is a critical enabler for a fully automated future.
The types of new mobility solutions will not be universal across markets. There are so many potential avenues to take the combination of autonomous electric shared mobility that there is likely to a be a diverse, and individualised, set of solutions created based on regional needs and infrastructure capability. The types of solutions will not even be universal within companies. For example, in Germany, Daimler launched Moovel, a fully self-contained smartphone app that provides the best travel options for a particular travel destination and time, and in some cases allows payment for the chosen trip mode right within the app.
Car-sharing will increasingly be used to funnel certain types of cars – primarily fuel efficient, electric-powered and autonomous – and many OEMs will operate transportation services themselves to offset reductions in revenue due to falling sales
In the US, the Moovel team is offering up a solution that allows any app developer to add trip planning to their own app. Peugeot is offering electric commercial vehicles through a car-share service in Europe, while in the US, the company is testing out an airport-based car-share service.
This strategy of trialling two different approaches to a market solution is increasingly being adopted by large companies. Essentially, such organisations establish internal competitors to keep testing new solutions or product options and to ensure continued relevance in a rapidly changing marketplace.
This advanced mobility landscape may have some unintended negative consequences, however. Firstly, as is indicated by the level of engagement by OEMs, these types of services are complex and costly. They likely require the resources of a large corporation, like a vehicle manufacturer, to handle the investment costs as well as the ability to insure these complicated systems and withstand any regulatory challenges. It may become more challenging for small start-ups to compete in this environment.
There is also the potential for fuel consumption and congestion to increase with the advent of these services as mobility becomes available to a larger segment of the population. Navigant Research’s analysis has suggested that in a high-penetration scenario for automated mobility services, both vehicle miles travelled and fuel consumption will rise slightly. These changes could be offset by the shift to electric vehicles in these automated shared mobility services. This is a challenge that policymakers and regulators will face when making long-term transportation plans and in working with companies looking to establish these services in cities across North America and Europe.
This article appeared in the Q2 2017 issue of Automotive Megatrends Magazine. Follow this link to download the full issue