Just as battery and plug-in hybrid electric vehicles have transformed the automotive industry, the age of smart technology has dramatically changed how people traverse urban areas.
Within recent years, ride-sharing services such as Uber and Lyft have gained immense popularity thanks to their low-cost, on-demand services. Technology companies have also earned a spot in the urban mobility sphere, with platforms designed to seamlessly integrate public transport, ride-hailing, and active transport.
With the growing demand for these services and a potential decline in private ownership, especially in urban areas, many consumers’ first experience with truly autonomous driving will not likely be through private ownership, but rather with Mobility as a Service (MaaS). From the evolving digital landscape to increased urbanization, numerous factors are driving MaaS forward as a disruption in the automotive industry.
To keep up with newly emerging consumer trends and technological advances transforming the auto market, automakers will need to revise their strategies to account for the growing demand of MaaS, especially in urban areas where owning a car is no longer an economical option.
The new wave of mobility innovation
With the cost of private vehicle ownership rising, many consumers are looking for alternative transportation options—enter “Mobility as a Service,” or MaaS, a scalable and sustainable business model that allows consumers to access various modes of transportation right from their smartphone. MaaS encompasses two significant categories: robo-taxis and autonomous shuttles.
Robo-taxis are autonomous, self-driving vehicles that operate as a taxi or ride-hailing service, providing a convenient way for consumers to travel from point A to point B. While private owners may find it challenging to choose between different types of cars for different needs, consumers using e-hailing services such as Uber and Lyft benefit from the freedom of choice. However, consumers cannot leave any items inside autonomous vehicles and expect them to be returned.
The second subcategory, autonomous shuttles, currently represents the smallest percentage of the future MaaS market. However, by 2030, our firm expects autonomous shuttles to have a market potential of 2.5 million units. As the market continues to develop, it’s worth keeping an eye on major companies with a stake in this subcategory, such as May Mobility, Local Motors, Easy Mile, and Ride Cell.
In urban areas, autonomous shuttles will provide the lowest-cost rides for consumers. While autonomous shuttles do not provide the same speed or convenience as robo-taxis, the affordability of this model will serve as its primary selling point.
The future of Mobility as a Service
Autonomous MaaS applications will significantly influence the cost of travel itself: by eliminating the need for a driver, some estimates expect e-hailing services to cost less than $1.00/mile, compared to $3.00/mile for a taxi or $1.80/mile with e-hailing services such as Uber and Lyft.
By removing the human component from e-hailing services, early adopters of autonomous MaaS can reap major benefits in terms of revenue and cost. This could be significantly lower for autonomous shuttles and other driverless ride-sharing services.
Although disrupting the automotive industry will take some time, OEMs must start considering how they might take advantage of future MaaS applications—or risk falling behind.
Key trends driving the market forward
Beyond the high cost of vehicle ownership, four key trends are driving the MaaS market: urbanization, congestion, society, and the digital landscape.
Urbanization and congestion are paramount factors for major cities that are packed with people, offer limited parking, and have lower air quality. Over 50 percent of the world’s population lives in cities today, with the UN predicting that this number will increase to 4.9 billion by 2030. With this trend, it is likely that 75 percent of the world’s population will live in cities by 2050.
For urban residents, the costs of parking, maintenance, and insurance add up quickly, making vehicle ownership a less-than-ideal option. Furthermore, congestion pricing, which major cities like New York and Los Angeles are pursuing, could also encourage more consumers to adopt car-free lifestyles.
The social and digital trends support the idea that consumers everywhere are losing interest in personal vehicle ownership, as using an app-based service offers an attractive, low-cost, easy-to-use alternative to buying a car. Since 1980, the number of 20- to 25-year-olds with driver’s licenses has fallen by 20 percent. Moreover, nine percent of millennials simply do not want to or need to drive.
How OEMs can survive amid rapidly changing trends
To cater to the market’s growing needs, OEMs need a comprehensive strategy. In the long run, automakers should focus on developing a more integrated approach. However, due to the uncertain future of MaaS, companies should act with caution when integrating an outside entity into their core business model.
Considering the trends driving the market forward, key players in the industry such as Daimler, Volvo, Toyota, GM, BMW, and VW have started building product portfolios separate from their legacy vehicles. Daimler and BMW have merged their mobility services, while VW has partnered with LG and Amazon to gain an early edge on the competition.
Many start-up businesses and Chinese companies are taking advantage of early MaaS applications, marking an early industry transformation in this developing market. OEMs know that, unless they act now, they risk their future in this critical aspect of the auto industry.
Stay part of the conversation with robust strategic planning
In the near future, MaaS will likely remain a challenging market to navigate, especially for automakers. Because vehicle manufacturers enjoy a significant profit from selling individual cars, they might struggle to develop integrated strategies that allow them to find the same margins in MaaS.
With that said, businesses that adopt a strategic approach toward MaaS will benefit from the changing auto market and achieve greater success. In the midst of rapidly changing mobility trends, expert knowledge is needed to navigate this intricate new sector effectively. Reach out to our firm today to learn how your business can gain a competitive advantage in this evolving industry.