Many western countries pride themselves on their automotive industry pioneers such as Gottlieb Daimler, Henry Ford, Ferdinand Porsche, and Amédée Bollée. However, despite these nations’ historic love of the automobile, according to an Accenture survey, 48% of drivers would be willing to give up car ownership. While drivers love their cars, they also realise that by entrusting something they already own to a willing customer for few days they can turn an idle asset into hard cash.
It goes without saying that the automotive industry, as well as related sectors, are challenged as never before with these challenges revealing untapped value behind mobility services as a business model. These future opportunities are huge and not only from a business perspective. Though Accenture’s ‘Mobility services: Turning business models into profits‘ report predicts a combined market volume of US$542bn by 2030 in China, the US and Germany, there are also societal benefits; think about traffic flow and environmental sustainability, for example.
The market
The consumers’ mindset in terms of car ownership is undergoing a significant change. More than 80% of the Chinese population think that owning a car is much less relevant than a decade ago with car-sharing seen as a more convenient solution. Similar trends are seen in western countries where people believe that cars will no longer be perceived as the status symbols they used to be. Consumers will be more willing to use car-sharing and even share their own car with others, yet the full change to ‘as-a-service’ business models will take time. It’s going to be an evolution rather than a revolution.
The technology
As tech continues to develop the automobile will too, transitioning from a pure commodity that brings to commuters from A to B into the third living space in addition to homes and workplaces.
The revolution of the connected car is almost finished. By 2025, all new vehicles will be connected vehicles, and 40% will have embedded telematics, putting software at the centre of the driver’s experience. By 2030, 30% of all new vehicles will be electric, while by 2045 the true game-changer will appear when half of newly sold cars will be either partially or fully autonomous. This will have a significant impact on the mobility landscape as the driver will turn into a rider. This progress will be the very foundation of new business models and fuel even greater inventions.
The cities
About two-thirds of the world’s citizens will live in cities by 2050, more than twice as many as in 1970. Without any action from the public sector, this will lead to more vehicles on the road, which means more time spent in traffic jams and also more pollution. Municipalities need to reassess how to tackle mobility to support the transformation to worry-free, affordable, clean, and sustainable transport.
We can already observe cities taking action on that end, such as new regulations to meet sustainability targets, additional tolls or fees for personal vehicles, and restrictions on goods delivery by trucks in the city centre. As such actions become more widespread, they will create greater incentives for people and businesses to find ways other than driving their own vehicles to get around increasingly populous cities.
Looking at the pure customer perspective, there are three important factors that will influence the choice of mobility mode: certain preferences, such as environmental values or desire for predictability, the willingness to pay a price premium, and the expected degree of convenience. The governmental sector will be also critical, especially when it comes to infrastructure, think 5G networks, orchestrating the mobility mix, and the needed regulatory environment. Last but not least are the mobility industry players, which are the driving force behind the technological progress critical to making new mobility services possible. Even though all the single factors have a dedicated influence on future mobility, it is the chemistry between each of them that will build the bigger picture of how the industry can move forward.
Consumers will be more willing to use car-sharing and even share their own car with others, yet the full change to ‘as-a-service’ business models will take time. It’s going to be an evolution rather than a revolution
As stated, the real game-changer will be autonomous technology. When autonomous vehicles reach Level 5—full automation—driverless cars will be able to operate on any road and in any condition a human driver could negotiate. This will make robotaxis technologically and, at some point, economically feasible, which could spell the end for other mobility services based on vehicle-as-a-service and mobility-as-a-service.
The mobility ecosystem of the future will change everything, as new players enter the market and cities, mobility providers and other stakeholders shift the balance of key strategic points and power across the wider ecosystem. Strategic partnerships and alliances, probably even with former competitors, are highly important to create the critical mass that is needed to scale mobility services in a timely fashion. But, this will not be feasible without the necessary infrastructure which enables the operation of connected and autonomous cars at scale and an efficient level. That requires pivots on local orchestration and collaboration, and significant investments from both the industry and the public sector.
Axel Schmidt is a Senior Managing Director and Accenture’s global automotive industry group lead. Juergen Reers is a Managing Director and leads Accenture’s global Mobility X practice.
