Why Own A Fancy Car When Getting From A To B Becomes An On-Demand Service?

Harald Wouters and Tijn Kuyper

Mobility will drastically change in the coming years. For one thing, environmental concerns will force the automotive industry to gradually expel combustion engines from vehicles. But the real change will be seen in how we will make use of cars, which are parked 95% of the time. Owning a car may become irrelevant, as will driving one, and this will happen sooner than we might expect. In an era of digital services, we need to remind ourselves that buying a CD or DVD player seemed perfectly normal at the beginning of the last century.

Consumer shifts that strengthen belief in disruption

During a conversation about innovation, there is always that one person at the table who quotes Henry Ford’s famous adage: “If I had asked people what they wanted, they would have said faster horses.” Although there is no clear evidence that the pioneer in mass car production ever pronounced this sentence, the sudden shift from horses to Ford’s T-models in the early 1910s, is absolutely phenomenal. At the turn of the 20th century, all vehicles on Manhattan’s 5th Avenue were horse-drawn. Only about a decade later, the only “horse powers” on the same street were inside the cars.

When considering the potential for electric cars, manufacturers like Tesla see this as exemplary for their own ambitions. Their holy belief in disrupting the car industry is strengthened by more recent consumer shifts, like the smartphone boom. When Pope Francis addressed the crowd at St. Peter’s Square for the first time in 2013, he had a completely different view than his predecessor less than a decade before him. In 2013, Vatican square lit up with all the smartphones and tablets capturing the scene, but the spectacle in 2005 was primarily captured by human eyes.

Shaking up the automotive industry as a whole

The most disruptive change coming to the automotive world is probably not the conversion to batteries as a power source. Although crucial for the well-being of our planet, the real revolution for people (and therefore profit) will be the promised shift from personal ownership of vehicles to complete shared usage.

The crux of shared ownership lies in integrating the different means of getting from A to B into a system of mobility services; a digital platform of combining the real-time needs of potential passengers to location-based offers from mobility providers. Hence the name, Mobility as a Service (MaaS).

Deeply rooted in our ego and expression

Taking Uber, Lyft, or Google Maps routing a bit further down the timeline of this decade, we will see more of what connected and automated driving will offer for the masses. About then things will probably become really shaky for the automotive industry. For decades, car manufacturers have developed and designed cars thoughtfully to accommodate personal tastes; different brands, types, and styles for individual personalities. Just like shoes, shirts, and sunglasses. Just by mentioning a stereotype – of a soccer mom, a rural American, or a dad in midlife – you can immediately imagine the types of cars they would be likely to drive. Cars are still part of a lifestyle, of our personality, deeply rooted in our ego and in our expression. But the time will come to let go.

Plan, book, and pay with minimal hassle

Getting from A to B – anywhere, anytime – will be available under your fingertips, just like on-demand television on your remote control. The paradigm shift from vehicle ownership to vehicle usage is embraced by MaaS – not only to provide better service for specific passenger needs but also to address ongoing challenges in the increasing urban mobility demand.

The central line of thought of MaaS – which may sound alien to Top Gear lovers and the newly established middle class around the globe – is that owning a vehicle will be unnecessary when you can use one whenever you need. CES 2020 in Las Vegas and the Smart City Expo in Barcelona both relied heavily on MaaS concepts and platforms. They showed the world concepts that allow users to plan, book, and pay to use multiple vehicles in one place with minimal hassle. MaaS can also offer the ability to provide mobility to a much broader range of target groups, such as people with limited physical mobility, lower incomes, or living in rural, remote areas.

Experimenting with MaaS around the globe

Cities around the globe are experimenting with combining their public transport with shared electric vehicles, such as cars, bicycles, scooters, and mopeds. Interesting MaaS concepts are being piloted in Europe, for example in Copenhagen (Movia), Barcelona (MaaS Catalonia), Antwerp (Civitas Portis), and Hannover (Mobility Shop). But they’re also happening in South America’s biggest city, São Paulo (Bike Sampa), and the Southeast Asia city-state Singapore (Whim). In the Netherlands, the Ministry of Infrastructure is preparing a full-blown rollout of MaaS by using the country’s high population density to pilot it in seven different regions for different target groups, such as commuters, the elderly, and also disabled. The purpose is not only to provide on-demand service around transport hubs in cities and its major airport (Schiphol) but also to find a more effective alternative than laying more asphalt to accommodate its ever-increasing highway traffic.

Optimizing travel in a daily urban system

Recently, the Finnish startup Maas Global raised a $33 million investment to boost the use of alternative mobility concepts around the globe. The company is most known for Whim, which offers numerous subscription and pay-as-you-go models. The app lets you decide how to get from A to B to C (and so on) by using public transportation, rental cars, and shared bikes. It is a prime example of the upcoming shift from ownership to usage, as well as how different parties in a daily urban system can collaborate effectively by optimizing the travel experience. The MaaS platform connects providers (transport operators), utilizers (city infrastructure), enablers (investors), and users (passengers).

Standardization is key to success

In order to offer MaaS concepts, our entire transport systems as we know it needs to change, according to Gartner, and the challenges are both technical and non-technical. The development and integration of suitable mobility services require collaboration with all parties involved in the process. National and local governments need to provide the appropriate legal framework, as well as adequate physical and digital infrastructure. Mobility providers need to collaborate thoroughly and integrate their methods and procedures. Standardization is the key to success. Investors need to be involved to provide financial means to support these developments. These obstacles may become even more substantial when considering MaaS implementations across national borders.

Advantages for passengers

Since starting from scratch is no option, integrating new mobility services with pre-existing public transportation networks can be an obstacle and a prime reason for the perceived stagnation of MaaS developments. For example, in sharing open and real-time data and integrating payment and ticketing systems, contracts with current transport operators and agreements on the usage of dedicated infrastructure must be reached.

Integrating demand-driven mobility services with the public transportation system, however, can provide huge advantages for passengers. It increases operational and financial efficiency and connects rural areas to the larger system. Hopefully, some emerging technologies can speed up the entire process in the near future and help overcome these challenges sooner. The introduction of 5G provides a much more reliable IoT network, a necessity for connected and automated driving. Blockchain technology can help overcome obstacles in ticketing and securing passenger data.

The future looks bright for shared mobility, and MaaS might be nearer than we think.

Examine “How Automotive Companies Are Turning Disruption into Opportunity in Product Development.”

Harald Wouters

About Harald Wouters

Harald Wouters is a Smart City consultant and the founder of WHY Consulting (www.whyconsulting.nl). His agency is dedicated to helping cities in their digital transformation to become #smart, #datadriven and #futureproof. Harald forges Smart City industry alliances and develops their joint programmes and propositions. Harald is an experienced advisor to mayors and CEOs on technology and innovation. Previously he advised the high-tech industry in the Netherlands and the Dutch government on international Smart City trade and investments. He co-wrote the NL Smart City Strategy and reported to the European Commission’s Digital Agenda on how to improve labour mobility of IT-workers.

About Tijn Kuyper

Tijn Kuyper is an entrepreneur, smart city enthusiast, and founder of Next Generation City. As a knowledge platform and community focused on smart city strategies and smart cities, Next Generation City connects theory and practice, recent research, and projects from all over the world. With his experience in smart city and smart city strategy, Tijn has worked for several organizations to help research and develop digitalization strategies such as mobility as a service.