Transportation technology and social trends are creating a new business ecosystem
Far reaching implications for how we move from point A to point B
The entire way we travel from point A to point B is changing. This transformation is creating a new ecosystem of personal mobility, with implications affecting more than just the automative industry. Deloitte serves the entire ecosystem of companies working in and around smart mobility, while focusing on the end consumer within the shifting landscape.
- The Future of Smart Mobility
- Personal mobility consumption
- Potential effects of shift to future smart mobility ecosystem
- Four futures will coexist
- Course of change
The Future of Smart Mobility
Will technological advances and shifts in social attitudes lead to our no longer owning or driving vehicles? The global auto industry's transformation has farreaching implications for how we move from point A to point B and, in turn, affects carmakers, energy companies, insurers, health care, government funding and more. Value shifts as a new ecosystem of smart mobility emerges. Innovative technologies are changing how companies develop and build business.
Further break-throughs are advancing the introduction of autonomous vehicles; increasingly, daily news reports suggest that driverless cars will soon become a commercial reality. We have already seen advances in the "connected car"-innovations that integrate communications technologies and the Internet of Things to provide valuable services to drivers.
Future of Smart Mobility
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Personal mobility consumption
Simultaneously, young adults, along with urbanities, are graviting toward a model of personal mobility consumption based on pay-per-use rather than upfront purchase of a capital asset, which fundamentally challenges today's consumption model centered on personal ownership of cars. All told, a system that has been well established for a century is on the verge of a major transformation that could result in the emergence of a new ecosystem of personal mobility.
Today's debate centers on whether the extended automotive industry will evolve incrementally toward some future of smart mobility ecosystem or whether change will occur at a more radical pace in a highly disruptive manner. No one knows the full scope and magnitude of the changes that are to come, what they entail, or how they will evolve. Yet these forces have the potential to alter current industry structures, business models, competitive dynamics, value creation, and customer value propositions. We may be on the treshold of change as great as any industry has ever seen.
Potential effects of shift to future smart mobility ecosystem
At Deloitte we've been engaged in a deep and broadly ranging study of the extended auto industry, the economics of alternative future states, and the potential impact of each on related industries. Various industries will experience a value shift with a tremendous impact on revenues accross the ecosystem. In our report our infographic on the value shift summarizes some of the potential effects on the shift to the future smart mobility ecosystem and potential societal benefits expected as a result of autonomous drive and shared smart mobility technological advances. The analysis illustrates the directional impact that autonomous cars and shared smart mobility may have on today's ecosystem.
- Transportation: shared fleet vehicles could substitute demand for traditional taxis, and rental vehicles. Moreover increased automation creates new business models for long-haul trucking and movement of goods
- Retail: increased smart mobility of underserved segments (e.g. seniors) could increase retail sales, expand home delivery services and change the retail landscape in response to city demographics shifts
- Technology: emergence of autonomous drive operating system players. Moreover auatonomous cars and shared smart mobility would likely lead to the rise of smart mobility management systems
- Automotive: Wider range of vehicles designs could emerge; value shifts from asset ownership and driving performance to software and passenger experience. Moreover lighter vehicles could enable OEMs to more easily meet CAFE and ZEV requirements
- Finance: growth in fleet financing and shifts away from personal vehicles could lead to a decrease in auto loans and leasing
- Insurance: potential opportunities for experience-based insurance products; shifts away from personal liability to catastrophic systems-failure insurance could lead to a decrease in insurance sales
- Public sector: reduced number of automobiles could decrease current rebenues (licensing fees, fuel taxes etc.); new consumption-based, dynamic taxation models could offset tax revenue decline; and potential change in mix and usage of pubic transportation
- Telecom: increased demand for connectivity and reliability could result in additional bandwith requirements
- Energy: potential for increase miles driven; improved vehicle efficiency could lead to lower energy consumption; autonomous technology enable a transition in alternative fuels
- Medical & Legal: fewer auto-related accidents and fatalities could reduce costs for emergency medical services and related legal fees
- Media: greater time available through autonomous drive and shared smart mobility increases consumption of multimedia and information; increases ub advertising and subscription revenues and data monetization opportunities
Read more on the potential effects and value shift accross industries in the full report of 'The Future of Smart Mobility'.
Four futures will coexist
Given the disparate forces shaping the landscape, we envision four different personal mobility futures emerging from the intersection of two critical trends.
Future state 1: Incremental change
This most conservative vision of the future puts heavy weight on the massive assets tied up in today’s system, assuming that these assets’ owners will neither willingly abandon them nor eagerly transfer capital into new enterprises with uncertain returns. It sees private ownership remaining the norm, with consumers opting for the particular forms of privacy, flexibility, security, and convenience that come with owning vehicles. Importantly, while incorporating driver-assist technologies, this vision assumes that fully autonomous drive won’t become widely available anytime soon.
Future state 2: A world of carsharing
The second future state anticipates continued growth of shared access to vehicles. In this state, economic scale and increased competition drive the expansion of shared vehicle services into new geographic territories and more specialized customer segments. Here, passengers more heavily value the convenience of point-to-point transportation created through ridesharing and carsharing, saving them the hassle of navigating traffic and finding parking spaces. Plus, the system offers options for non-drivers such as seniors, low-income families, and minors without licenses.
Future state 3: The driverless revolution
The third state is one in which autonomous-drive technology proves to be viable, safe, convenient, and economical, yet private ownership continues to prevail. Collaboration between leading academics, regulatory agencies, and businesses accelerates progress toward this future.
Future state 4: A new age of accessible autonomy
The earliest, most avid adopters seem likely to be urban commuters, given the potential for faster trips thanks to reduced distances between highly automated vehicles, and routes enhanced by real-time awareness of conditions. Over time, as smart infrastructure expands and driver usage nears a tipping point, fleets of autonomous shared vehicles could spread from urban centers to densely populated suburbs and beyond.
Course of change
In our view, moves from the current state of smart mobility will likely occur fastest in the direction of shared access, in turn catalyzing the (upward) adoption of autonomous drive. We see this progression occurring in a number of steps, as illustrated in the figure below.
Step 1: Gradual adoption of shared access
The move from pure personal ownership of vehicles to a system more reliant on shared access (i.e., from quadrant 1 to quadrant 2), is already under way in some parts of the United States. For example, carsharing services, such as Zipcar, have roughly doubled their customer base in the last six years, while ridesharing services, such as Uber, have been adding 50,000 drivers per month and completed 140 million rides worldwide in 2014 alone. The software and hardware systems these services employ to match drivers with riders are evolving rapidly, incorporating information about observed behaviors to improve rider and driver experiences. Furthermore, intense competition offers the prospect of reducing market prices as improved economics related to increased asset utilization take hold.
Step 2: Tipping-point shift to driverless
Currently, wide acceptance of autonomous operation seems much further away than a broad carsharing/ridesharing culture. Sources of delay include the need to address existing technological limitations, such as sensor functioning in all weather and the wide availability of 3D mapping, as well as concerns over cyber security and liability. How quickly these and other issues are addressed will be a key determinant of the pace of adoption for autonomous drive.
Read more on how step 2 evolves and download the 'Future of Smart Mobility' report.
Want to know more on the Future of Mobility?
More information on how developments within the mobility landscape affects your business, please contact Frank de Bont at +31 (0)88 288 1572 and via mail FdeBont@deloitte.nl. Interested in our latest reports on the Future of Mobility, visit our Future of Mobility platform where we will publish new research, reports and interviews with thought leaders.