The three phases of new mobility

In my book Transportation Transformation I define next-generation mobility as the intelligent movement of people and goods using automated (or autonomous), connected and electrified vehicles. Next-generation mobility is still in its infancy, but I predict it will unfold in three phases.

During the past ten years we witnessed significant changes and innovations in urban mobility. I characterize this period as the first phase of next-generation mobility. People living in urban areas started to adopt on-demand mobility services that they could summon from their smartphones through feature-rich applications. Ride-hailing and carsharing were followed by micromobility, microtransit, and food delivery. Over the next 20-30 years, we expect to go through two more phases before the vision of next-generation mobility for transportation- and delivery-as-a-service can be fully realized. To get there, transformation will be necessary.

The second phase of next-generation mobility, the Fleet Emergence Phase, will unfold over the current decade. During this phase the adoption of on-demand transportation and goods delivery by urban consumers will continue accelerating resulting in these services crossing the chasm and be used by the early majority. Mobility services companies will start deploying vehicle fleets instead of just coordinating the utilization of vehicles belonging to others. Fleets will enable mobility services companies to have better control of managing the in-vehicle experience, as well as their business model’s economics. We have also been projecting that during this phase we will see the commercial deployments of autonomous vehicle fleets initially for goods delivery and logistics, and later on for passenger transportation.

The COVID-19 pandemic is altering our projections regarding how this phase will unfold. Consumers are dramatically decreasing their use of public and on-demand transportation services. This trend it will significantly delay the broad introduction of robotaxi and autonomous shuttle services. The use of privately-owned vehicles (POVs) is increasing because consumers feel that they provide them with the necessary social distancing and better protection against possible infection. On the other hand, consumers are increasing their use of ecommerce and of goods delivery services. We don’t know for how long these trends will continue, which of the pandemic-related behaviors will become permanent, and how the changes that are being discussed about work, shopping, and even education will impact transportation.

Cities will start playing a more active role on how their transportation infrastructures are used and monetized. Madrid, Oslo, and a few other cities have already banned POVs from their centers. As we rethink urban transportation during and after the pandemic more cities around the world will restrict the use of POVs in certain geofenced areas, and will aggressively deploy intelligent transportation, communication, and electrification infrastructures. They will also start establishing the regulatory foundations that are necessary for achieving their goals as one of the three major constituencies shaping next-generation mobility.

The changes in personal urban transportation, continued trade friction among nations, and emissions regulations that will be introduced globally to combat climate change, will lead to the reshaping of the incumbent automotive ecosystem. The incumbent automotive industry, starting with the automakers, will need to make hard choices during this phase. They will need to decide whether to continue investing in technologies that will enable them to just adhere to the regulations being established, or create entirely new vehicle architectures including autonomous vehicles. Only very few will be able to do both. Traditional sales through dealer channels will decline worldwide as consumers will continue to look for more direct sales, including contactless sales, options.

Consumers are learning to operate without leaving their homes. While we are seeing an increase in new vehicle sales in response to the pandemic, long term vehicle sales will suffer. Used vehicles will start flooding the market because the changing economic environment. The resulting unemployment will cause consumers to default on their automotive loans, and leases. Car rental companies and other corporations operating large vehicle fleets will decrease the size of these fleets offering them in the open market. As a result of the transformation the incumbent automotive industry will need to undergo we will see additional consolidation among the automotive OEMs resulting in a smaller ecosystem, large-scale partnerships between OEMs, similar to those already announced between Ford and Volkswagen, and the development of new ecosystems and value chains supported by novel business models. Some OEMs will transform to offer multimodal transportation services using fleets of their own vehicles, as GM is doing, but also partnering with mobility services pure-plays globally to offer transportation services, as Toyota is doing with Grab.

During the Fleet Emergence Phase, the larger Transportation Network Companies (TNCs) will start transforming into fleet operators and to coordinate with public transportation options giving cities a strong role in the shaping of mobility. In response to regulation and economic considerations, mobility services companies will start incorporating into their fleets vehicles that are equipped with advanced technologies: electrified vehicles, vehicles with next-generation ADAS, and eventually, autonomous vehicles of different form factors. As the technology of these vehicles improves, the geofenced areas where they can operate safely will expand, and autonomous vehicles will be used for a greater variety of tasks. Some of these autonomous vehicles, like passenger or grocery delivery pods, will be purpose-built for a specific type of mobility service. Others, like autonomous shuttles, will be the result of regulation by cities. The cost per mile of mobility services will continue to decrease because of the increasing use of ridesharing and coordinated goods delivery, growth in public/private partnerships, and the introduction of autonomous vehicles.

We will enter The Mobility-as-a-Service Phase by the early ’30s. By then, many smart cities will emerge globally and several of them would have transformed to transportation orchestrators coordinating the transportation options offered through their public transportation systems and those of on-demand mobility services companies. In many urban areas, the only transportation option will be multimodal and shared MaaS using a variety of autonomous vehicle form factors to offer affordable, safe, convenient, and personalized transportation of people and goods. This is the driverless future.

The complexity involved and investments necessary to deliver multimodal MaaS at scale mean that only a very small number of providers will be viable in each area. The different regulatory environments, urban infrastructures, and transportation preferences will lead to the emergence of geography-specific MaaS solution leaders rather than global ones. Each MaaS solution provider will deploy large vehicle fleets. The percentage of autonomous vehicles in these fleets will increase, as will the territories where they will be able to operate safely. In several cities around the world, autonomous vehicles of various types will be able to service the entire territory, and for their citizens, driving will become a specialized activity.

Like every other trend that is expected to develop over a long period, next-generation mobility may take longer to unfold than the 30 years I’m projecting. Like with many other megatrends, consumers are expected to have a big role in the pace and the shape next-generation mobility will ultimately take. Where we live has implications on how we move. Regardless of how long it takes, next-generation mobility will require fundamental transformations across the incumbent automotive industry, the nascent mobility services industry but also cities that will no longer be mere spectators.

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