New mo­bil­ity ser­vices

Fight for the £1180bn sec­tor

Autocar - - THIS WEEK - JU­LIAN RENDELL

Car com­pa­nies and their ri­vals in start-up in­ter­net ser­vices are fight­ing over po­ten­tial new in­come of $1575bn (£1180bn) per year by 2030 in the new world of ‘mo­bil­ity ser­vices’.

The as­tro­nom­i­cal in­crease in spend­ing on shared mo­bil­ity and con­nec­tiv­ity ser­vices is fore­cast by man­age­ment con­sul­tant Mckin­sey.

The con­cepts of car shar­ing and mo­bil­ity ser­vices aren’t new but their im­pact on the main­steam car in­dus­try crys­tallised around 2015/16 in the wake of the Diesel­gate scan­dal and the sub­se­quent grow­ing aware­ness that the sales and use of cars was fac­ing a new dawn.

Mo­bil­ity in the au­to­mo­tive in­dus­try is typ­i­cally de­fined as ways of mov­ing peo­ple, such as with car shar­ing or au­tonomous pods, away from the tra­di­tional model of own­ing and driv­ing a car.

“With dis­rup­tive ser­vices [such as mo­bil­ity] be­com­ing more likely in the future, there could be an in­crease in global rev­enues by 20-25%,” An­dreas Tschies­ner, Mckin­sey se­nior part­ner, told the FT Future of the Car Sum­mit in Lon­don ear­lier this month.

Ac­cord­ing to Mckin­sey’s es­ti­mates, the value of car shar­ing and con­nec­tiv­ity could reach around 40% of the value of all rev­enue from new car sales by 2030. Cur­rently, it is around 10%.

“We see real dis­rup­tion to au­to­mo­tive rev­enues through per­sonal mo­bil­ity ser­vices out to 2030,” he told the con­fer­ence.

Now even Ford, whose founder Henry Ford pi­o­neered per­sonal trans­porta­tion for the masses, is talk­ing about “be­com­ing the most trusted mo­bil­ity brand of the future”.

Just 12 months ago, Ford ousted its CEO, Mark Fields, in favour of Jim Hack­ett, who promised to rev up Ford’s rev­enues from mo­bil­ity ser­vices and elec­tric cars. Ford’s re­cent and dra­matic an­nounce­ment to kill off its sa­loon car range in the US is part of the strate­gic move into new, high-tech ter­ri­tory.

Ford’s mo­bil­ity strat­egy – like those of most other car com­pa­nies – is evolv­ing rapidly with new ser­vices like the ride­hail­ing minibus ser­vice Char­iot and the ac­qui­si­tion in Jan­uary this year of Palo-alto-based Au­to­nomic Tech­nolo­gies.

Au­to­nomic is de­vel­op­ing a cloud-based soft­ware plat­form – a “trans­porta­tion mo­bil­ity cloud” in the words of its co-founder and chief op­er­at­ing of­fi­cer, Amar Varma – that Ford can use as the ba­sis for mul­ti­ple apps with the po­ten­tial to se­cure a share of the £1180bn mar­ket that Mckin­sey has out­lined.

“This is like the switch from flip-phones to smart­phones,” Varma told Au­to­car. “It will take time, but it will hap­pen and Ford wants its share.”

In con­cept, Varma likens Ford’s ‘trans­porta­tion mo­bil­ity cloud’ to Ama­zon’s highly suc­cess­ful Web Ser­vices plat­form, which is the de­liv­ery chan­nel for huge vol­umes of online busi­ness, in­clud­ing Ama­zon Prime and Net­flix, worth ap­prox­i­mately £15bn per year. If Au­to­nomic cre­ates a sim­i­lar plat­form for mo­bil­ity ser­vices, Ford can tap into new rev­enue streams and boost its balance sheet.

Char­iot, for ex­am­ple, uses Au­to­nomic’s soft­ware to feed back op­er­at­ing data from the Ford Tran­sit minibus 14-seaters used on three routes in Lon­don. Much of it is nor­mal fleet­man­age­ment-re­lated data about engine op­er­a­tions, but Varma said anal­y­sis of the data

can im­prove the qual­ity of the driv­ing and the punc­tu­al­ity as well as feed lo­ca­tion data to users to in­form them of an ap­proach­ing shut­tle.

The first routes link devel­op­ments of new apart­ments not served by reg­u­lar pub­lic trans­port and Ford claims a higher qual­ity of travel and keen pric­ing as two sell­ing points.

“It’s closer to Uber Pool in con­cept,” said Sarah-jayne Wil­liams, head of Ford Europe’s smart mo­bil­ity di­vi­sion, “but with more pri­vacy, a phone charg­ing point at ev­ery seat and we have a more de­fined route to avoid the ‘first on, last off’ prob­lem.”

Char­iot, orig­i­nally a San Francisco start-up, was bought by Ford in 2016. In Lon­don, its op­er­a­tion is li­censed by Trans­port for Lon­don (TFL) as a bus ser­vice, but future ex­pan­sion could be in eight-seat ve­hi­cles to op­er­ate as mini­cabs.

“That’s an in­ter­est­ing area for us,” said Ford’s John Linn, whose role is to li­aise with TFL.

TFL opened the taps to mini­cabs in cen­tral Lon­don, but man­ag­ing the re­sult­ing con­ges­tion has be­come a headache, with some es­ti­mates of an ex­tra 40,000 on Lon­don’s roads. “That’s some­thing that has to be watched,” said Linn.

Data from the Au­to­nomic plat­form can be shared with TFL for traf­fic man­age­ment pur­poses, which puts a well-funded car maker op­er­a­tion such as Ford’s in a strong po­si­tion in re­la­tion to its ri­vals.

“We want to be part of the so­lu­tion, not the prob­lem,” said Linn. “We can cre­ate a seam­less move­ment across a city and it is likely to be multi-modal.”

Car com­pa­nies are chang­ing and Ford is no ex­cep­tion. Given the chal­lenges fac­ing most mod­ern cities – namely too many oc­cu­pants and not enough road space – new so­lu­tions need to be found.

Ford and Au­to­nomic run ride-hail­ing ser­vice Char­iot

THE EX­PERT’S VIEW ON HOW THE GLOBAL CAR IN­DUS­TRY WILL CHANGE 5 £1180bn Mo­bil­ity and con­nec­tiv­ity 4 £26bn Mo­bil­ity and con­nec­tiv­ity £950bn Af­ter­mar­ket 3 £692bn Af­ter­mar­ket 2 £2843bn New car sales £1946bn New car sales 1 0 2030 2016

Car-shar­ing schemes are ex­pected to be­come more com­mon

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