From auto manufacturing to mobility services

The 2015 Consumer Electronics Show was once again attended by over one hundred thousand people looking to discover the next great thing. Over the last few years, the show has attracted some of the most innovative prototypes and concepts created by the auto industry.

At this year’s show, Daimler’s CEO, Dieter Zetsche, delivered a keynote, during which the Mercedes F015 electric driverless concept car was introduced.  It can only be described as one thing: luxury in motion.

 

Mark Fields, Ford’s CEO, gave a morning keynote at CES during which he introduced Ford Smart Mobility and the 25 mobility experiments that the company will be undertaking in cities around the world.

According to Fields, four megatrends are shaping the way Ford sees the future:

  • increasing urbanization
  • rapid growth of the middle class
  • issues of air quality and related health risks from congestion
  • changing consumer attitudes and priorities.

Combine these megatrends with three enablers (connectivity [in two years, 80% of world’s population will have a smartphone], software and sensor technology and big, smart data) and Ford sees a major opportunity for innovation and a “higher purpose”, as Fields explains.

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The 25 described experiments fall into three categories:

  • creating a better customer experience
  • developing more flexible user-ship models for customers
  • connecting with every customer in a socially collaborative and rewarding way. 

Many of the experiments to be undertaken relate to vehicle sharing and many involve electric vehicles. Fields also mentioned “user-ship” experience, multimodality and the company’s priority “in making the first Ford autonomous vehicle accessible to the masses” although Fields does expect the first driverless vehicles to be available in five years.

He spoke about shared and electric as well about autonomous and multimodal. Fields also talked about making mobility information accessible to consumers through their smart phones.  Doesn’t this remind you of the SEAMlessTM Mobility model that has been promoted by the Transportation Evolution Institute?

The megatrends identified by Ford are clear to everyone in the mobility space.  The combination of population growth, urbanization, an aging population, millenials’ relative disinterest in vehicle ownership / driving and finally, the congestion and pollution issues faced by most cities would make any auto manufacturer and transportation planner realize that a more sustainable transportation system is required.

Strained government finances in most countries means that limited resources can be invested toward new road infrastructure. As Fields stated, “the existing infrastructure for motor vehicles simply cannot sustain the sheer number of vehicles expected to be on the road in the coming years”.

Given a low vehicle utilization rate (average of 4%) means that vehicles can be shared. The growth of an increasingly urbanized population means they HAVE to be shared.

Despite Fields’ continued emphasis on a “higher purpose”, we are all aware that auto manufacturers are in business to deliver a strong return to shareholders.  It is fantastic to see that at least some of these auto OEMs are recognizing that a strong ROI will not necessarily only come from auto manufacturing but from an expansion into other areas of mobility.

In the future, surviving auto manufacturers will need to adjust to the new mobility ecosystem and become mobility service providers. Such mobility services may include operation of car sharing programs, ride sharing services and mobility insurance.

Will today’s auto manufacturers, seeking to generate revenue from activities other than vehicle manufacturing, look to expand their operations into areas that are currently the domain of transit properties? How will governments react in such situations?

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