The Future of Automotive Industry: Shared Mobility (Mobility-as-a-Service)

In 2021, the global shared mobility market was valued at $166.3 billion, with experts estimating the market to grow at a CAGR of 16.9% from 2020 to 2030[1]. The tremendous growth comes as no surprise, given recent shifts in customer preferences and rising car prices, coupled with emerging mobility trends. In this article, we’ll dive into the intricacies of shared mobility, from what it is, its impact on the automotive industry, and the benefits it presents to consumers, vehicle manufacturers, and e-hailing platforms. Read on for more insight.

There are an estimated 1.4 billion vehicles in operation worldwide [2]. In the US alone, 91.3% of households have access to at least one vehicle. It’s hard to imagine a world without that many cars, but if the shared mobility trend continues, we will likely see a significant drop in car ownership. In the same measure, it will also create new opportunities for automakers and other players in the mobility industry.

What is shared mobility?

Shared mobility is a mode of transport whereby an operator owns a vehicle and rents it out to the public over a specific period of time. Users can share the vehicle either concurrently or one after the other. Shared mobility differs from public transport in that users rent the full vehicle for personal use.

Developments in mobile apps and other connectivity services allow quick and easy access to this form of transportation, with services such as mobility-as-a-service apps integrating various forms of transport into a single on-demand transport service platform.

Mobility-as-a-service (MaaS) brings transportation solutions to an on-demand service. Contrary to the traditional form of car ownership, where people own and operate their own vehicles, MaaS provides various transport options when and where a user requires them.

It also offers an added degree of convenience by providing a single application with access to numerous mobility options, all linked to a single payment channel. Using a single payment channel eliminates the need for multiple ticketing and payment operations while preserving the convenience of switching between different mobility options in a user’s journey.

The operator aggregates various modes of transportation onto the platform and presents them to users on a single interface. Successful deployment of MaaS services can also birth new business models as well as provide new, convenient ways to organize and operate various transport options. The result is improved user experience, access to on-demand information, and shedding light on new unmet transportation demands.

Forms of shared mobility

MaaS doesn’t just integrate various forms of mobility into a single service. In some instances, it also introduces new forms of transportation, including vehicle sharing, bicycle sharing, and other innovative forms of on-demand transport services.
Some of the most common forms of shared mobility include:

Demand-responsive transport

Demand-responsive transport (DRT) [3]is the most common form of MaaS. It’s divided into two systems; collective and individual demand-responsive systems.

Individual DRT, also called e-hailing, is quite similar to the traditional taxi service. The only difference is that, unlike hailing a taxi on the street, all transactions go through a smartphone app. The trend has caught on so much that the e-hailing market accounts for nearly 90% of the total consumer spending on shared mobility. [4]

On the other hand, collective DRT services involve door-to-door or stop-to-stop transportation, with mini-busses serving as the primary form of transportation. Although it looks much like a regular public transportation service, collective DRT doesn’t actually operate based on a fixed timetable but rather allows users to pick rides based on their location and preferred transportation time.

Car sharing and bicycle sharing

One of the biggest problems facing commuters using public transportation is first and last-mile connectivity, whereby commuters have to walk considerable distances after alighting their preferred form of public transportation.

Bicycle sharing systems eliminate these minor inconveniences by allowing users to borrow a bicycle for a short time at a small fee. There has been a significant influx of bicycle sharing platforms in major cities like New York that allow users to pick up and drop bicycles at standard locations.

The concept of car sharing is quite similar to bicycle sharing. The system allows users to borrow a car for a specific period of time, ranging from a few hours to a few days. And, like bicycle sharing services, vehicle sharing services require users to return the vehicle to a standard location.

Trends driving the shared mobility sector

The Covid-19 pandemic saw a recession in the vehicle manufacturing industry owing to labor and chip shortages. However, private equity and venture capital companies invested a substantial amount of money in new technologies and mobility innovation, which have since given birth to several mobility trends, poised to drive the shared mobility sector even further.
Here are some of the most notable trends in the shared mobility sector.

Autonomous driving

Autonomous driving is poised to revolutionize mobility [5], increase safety and drive changes and innovations in business models in various industries. Currently, vehicle manufacturers are focused on creating vehicle models centered around passenger safety and comfort.

Although we still have a long way to go before fully autonomous vehicles hit the market, recent innovations show that the first autonomous vehicles will be partially autonomous, meaning they’ll still require a human driver to take over whenever possible.

As consumer demand for autonomous vehicles rises, fully autonomous vehicles might hit the market in the near future. These vehicles will bring considerable advantages, including increased personal safety, time-saving for drivers, mobility for non-drivers, and increased vehicle sharing.

Read more about Artificial intelligence in self-driving cars

Peer-to-peer car sharing

Peer-to-peer car sharing was the first mobility service that enabled vehicle sharing. This service allows people to share a car with other users by coordinating via carpool agencies and private networks.

This business model is quite similar to traditional car clubs, but with one key difference-it replaces a typical fleet with a virtual carpool composed of vehicles of participating owners. In simpler terms, private owners rent out their cars when they’re not using them through various platforms.

Ridesharing

Ridesharing is a form of vehicle sharing whereby multiple users share a single vehicle to get to where they’re going. The vehicle can be a car or a van, and it makes multiple stops along the route to pick up or drop off passengers.
Besides providing a cheap transportation service, ridesharing also reduces the need for multiple vehicles on the road, thus reducing traffic jams and carbon emissions.

Ride-hailing

Ride-hailing, also called e-hailing, is a mobility service where a user orders a customized ride online, usually through a website or smartphone app. The hailing platform acts as a third party by coordinating between the driver and the passenger [6].

E-hailing reduces dependence on multiple transport apps and privately owned vehicles by combining numerous services, including taxis, rental cars, and public transport, on a single platform accessible through a smartphone app. Some of the best-known ride-hailing providers are Uber and Lyft.

Rising shared micro-mobility services

Shared micro-mobility services encompass various micro-mobility services such as shared bikes, e-scooters, and shared e-bikes. The service is rapidly gaining popularity in major cities around the world due to the level of convenience and environmental benefits it provides.

With urbanization on the rise, most users only travel short distances, thus falling within the micro-mobility category. This makes them prime candidates for scooter and bike usage. Shared micro-mobility presents numerous advantages, including a small environmental footprint, fewer vehicles on the road, cost-effectiveness, as well as offering a convenient mode of transport for short trips.

Benefits of shared mobility

Shifting transportation infrastructures towards mobility as a service presents multiple benefits. Some of the most notable benefits of shared include:

Higher vehicle utilization

Shared mobility provides the opportunity to reduce the number of vehicles on the road. Unless you use your vehicle as an asset, meaning you spend most of the time on the road, your vehicle is going to be underutilized. Therefore, instead of letting it sit in the garage all day, why not rent it out so other people can use it?

In addition to serving as an extra source of income, it also reduces the amount of valuable space allocated to parking and associated parking costs.

Increased focus on public transport infrastucture

A reduction in the number of cars on the road means the government doesn’t have to continuously build bigger road networks. This provides an opportunity to invest in public transport infrastructure, which in turn, has the potential to provide timely services for a large population. It can also present a more reliable end-user experience.

Presents oppurtunities to recover asset costs

Although not everyone can fully get into shared mobility as they’ll still need to use their vehicles at times, it still presents an opportunity to recover some of the costs associated with keeping the vehicle on the road.

Think of it this way; just as you may rent out your holiday home when you’re not there, you can also use peer-to-peer services to rent out your vehicle when you’re not using it.

Decresed cost per user

Owning a vehicle comes with a lot of associated costs, including car loans, registration, servicing, insurance, and fuel. Although most of these expenses are generally spread out over the vehicle’s lifetime, they can quickly add up.

When you factor in all relevant costs of owning a vehicle, you may be surprised that your simple asset may cost you upwards of $984 a month [7]. When you consider the costs of ridesharing, renting a vehicle once in a while doesn’t seem quite prohibitive.

Reduced risk for fleets

Fleet managers have to manage and maintain multiple vehicles, often on a tight budget. However, shifting to more flexible mobility as a service model can provide opportunities for fleet managers to reduce the risks associated with purchasing and maintaining multiple vehicles.

Fleet managers can gain added convenience and cost-saving benefits by reducing the number of acquired vehicles in the fleet. Fewer vehicles in an organization’s fleet mean a lower risk from an insurance perspective and reduced risks associated with traffic accidents and other infringements.

Final thoughts on shared mobility and the future of the automotive sector

Shared mobility has come a long way from public transport to current trends in peer-to-peer car sharing and e-hailing. As urbanization and advancements in autonomous vehicles continue to surge, we’re bound to see an increase in shared mobility trends, as well as the inception of new, innovative business models geared toward providing more convenient and cheaper shared transportation services.

References

[1] Grandviewresearch.com. Shared Mobility Market. URL: https://bit.ly/3y3WLyr.  Accessed September 29, 2022
[2] Carsguide.com. How Many Cars Are There in The World? URL: https://www.carsguide.com.au/car-advice/how-many-cars-are-there-in-the-world-70629, Accessed September 29, 2022
[3] Capgemini-engineering.com, Integrated Solution: Demand Responsive Transport, https://capgemini-engineering.com/es/en/integrated_solution/demand-responsive-transport-drt/, Accessed September 29, 2022
[5] Towardsdatascience.com. How Autonomous Vehicles Will Redefine the Concept of Mobility. URL:  https://bit.ly/3fAFhn6. , Accessed September 29, 2022
[6]Carrentalgateway.com. Ride-Hailing. URL: https://bit.ly/3RuZrvH. Accessed September 29, 2022
[7] Nerdwallet.com. Total Cost of Owning a Car. URL: https://www.nerdwallet.com/article/loans/auto-loans/total-cost-owning-car. Accessed September 29, 2022