New mobility services
Fight for the £1180bn sector
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