Mobility Industry Trends
Auto companies are transforming themselves into “Mobility” companies. Even a casual observer of the automotive industry is aware of the rapid changes taking place both in auto technology and for consumers.
Some examples: Many mega cities are restricting use of vehicles, due to pollution and congestion.
The words “autonomous ” and “connectivity” are being used more than “engine displacement” & “horsepower” at auto events.
“Rideshare” concept is taking a big bite out of the conventional taxi industry
“Partial ownership” concept may spread, as consumers realise that most vehicles sit idle for up to 90 per cent of the time
Congested cities like Beijing, New Delhi and even European cities like Milan and Rome have been forced to deal with the worsening air pollution by putting measures into place that reduce the number of cars plying on roads. Some cities are using the odd-even system whereby cars plying on city roads will be restricted by allowing access to odd number registered vehicles on odd dates and even numbers on even dates.
In many locations, hybrid and electric vehicles will be exempt from the policy. Auto OEMs’ need to take note of this situation and adjust their product mix to match local needs. Ford’s Executive Chairman Bill Ford has long been a proponent of addressing the challenges of future mobility as cities become more congested. The number of megacities (population of 10 million or more) is expected to grow from 28 today to 41 by 2030 and the middle class is expected to double to 4 billion.
Ride Sharing: Uber, Lyft
The growing concept of rideshare and the emerging concept partial ownership will affect the mobility industry in a significant way. In San Francisco, one young executive does not own a car, instead relies on Uber for his commute to office and travels in the city. He pays $7 for one-way ride, conveniently charged to his Uber account, with no-waiting for a door-to-door service. If he were to own a car, he would pay $100 and $300 per month for parking at his apartment and office respectively, in addition to the other car ownership expenses. He is one of the new breed of growing consumers, making auto executives plan for the mobility industry.
As proof that the concept of ridesharing is gaining prominence and the attention of the OEM’s, General Motors recently invested $500 million in the taxi service Lyft, a privately held American transportation network company based in San Francisco. The company’s mobile-phone application facilitates peer-to-peer ridesharing by connecting passengers who need a ride with drivers who have a car. Ford has recently introduced its Smart Mobility plan with 25 projects that incorporate data, ride-sharing, alternative modes of transportation, connectivity and autonomous driving to try to find better ways for people to share the road in the future. Ford also opened a Silicon Valley office in California to broaden its thinking in these areas.
The pioneering rideshare nameplate, Uber, was founded in 2009 and has in six years gotten to a $40+ billion valuation, making it perhaps the fastest-growing company in world history. Both Uber and Lyft are evolving the way the smart phone world moves. By seamlessly connecting riders to drivers through their apps, they make cities more accessible, opening up more possibilities for riders and more business for drivers. From Uber’s founding in 2009 to their launches in thousands of cities around the globe today, consumers are crisscrossing their cities more conveniently and with more value options.
Car Sharing, Partial Ownership
Car-sharing services such as Zipcar Inc. and Cars2Go are eating into demand for new and used cars adding to social changes, such as smaller households and mass-transit improvements that pose long-term challenges for new-car sales, according to two recent studies. One study found that Americans would have purchased about 500,000 new or used cars between 2006 and the end of 2013, if they didn’t have car sharing services as an alternative.
The auto companies are have taken notice of car sharing and are looking at new opportunities in this trend. However, some executives are not so sure. Nissan CEO Carlos Ghosn’s Ghosn told the Automotive News World Congress audience that he’s skeptical about car sharing as a business segment for world automakers, despite enthusiasm for the idea among some companies. “Is it going to be a significant part of this industry?” Ghosn asked, “I have some doubts. There are some things that go against sharing.” For examples, he said, smartphones defy the sharing trend because they contain a wealth of private data. Similarly, he said, “the car is going to be connected, and you’re going to have a lot of personal data. You’re going to have emails, videos, phone calls and images, etc. Some people are not going to want to share.”
In the United States, the National Highway Traffic Safety Administration (NHTSA) has proposed a formal classification system:
Level 0: The driver completely controls the vehicle at all times.
Level 1: Individual vehicle controls are automated, such as electronic stability control or automatic braking.
Level 2: At least two controls can be automated in unison, such as adaptive cruise control in combination with lane keeping.
Level 3: The driver can fully cede control of all safety-critical functions in certain conditions. The car senses when conditions require the driver to retake control and provides a “sufficiently comfortable transition time” for the driver to do so.
Level 4: The vehicle performs all safety-critical functions for the entire trip, with the driver not expected to control the vehicle at any time. As this vehicle would control all functions from start to stop, including all parking functions, it could include unoccupied cars.
While Google’s gumdrop-shaped self-driving cars are logging thousands of miles on the streets of California, don’t expect to jump in the backseat of one anytime soon for a robot-chauffeured ride. According to Toyota, a fully autonomous vehicle is may not arrive till 2025. “Our belief is that a human driver must always be behind the wheel,” Jim Lentz, CEO of Toyota North America, said during the Automotive News World Congress in Detroit. Given that most car accidents involve the driver, automakers are developing systems that intervene to prevent or mitigate a collision, thus dramatically improving safety, even without completely autonomous capability.
So don’t expect a day coming soon where we can just hop in the back seat, pull out our newspaper and scan the headlines while our cars take us to our destination, chauffeur-driven cars excepted!