SHARED MOBILITY Fewer vehicles and more shared autos - This is the feature
Today’s cars are used very inefficiently, causing unnecessary accidents, traffic, delays, and pollution. But slowly, carsharing, ridesharing, and robotaxis will begin to reduce the number of vehicles on our roads. Here are some observations.
Studies have shown that individually owned automobiles may be driven on average just 5 % of any particular day. That means for the remaining 95 % of the day, a vehicle is parked somewhere, just taking up space. In areas with a high population density, such as major cities, this space—in the form of parking spaces on streets, in car garages, and from private parking—adds up to a significant amount of real estate. In effect, we’ve surrendered a significant portion of our cities to these expensive, largely inanimate objects that only benefit us just 5 % of our day or less.
Taxi services predate the automobile, having been started at least 415 years ago with horse-drawn carriages for people that only needed mobility on a limited basis. In the first years of the twentieth century, car rental services were established that allowed people to rent cars by the mileage they were driven and/or by the day, the week, or eventually, even the hour, so personal transportation and moving items became much more efficient. In the 1990s and early 2000s, mass-market carsharing was born, allowing users to leave a car almost anywhere instead of returning it to a car rental company’s lot. Soon, booking could be done with a smartphone app, and a carsharer could access a car on a city street and begin using it almost immediately.
Finally, in 2009, Uber arrived and took taxi services to the next level with ridesharing, allowing multiple persons to share hired vehicles and use computing platforms to guide drivers along the shortest, most efficient routes. The success of Uber soon gave rise to competitors like Lyft and Waymo One in the United States and Grab and DiDi Chuxing in Asia.
All of these phenomena translate to less individual ownership of automobiles. And these services are not going away; in fact, research shows they’re only going to become more prevalent. Already, some real estate companies are incorporating shared cars as a way to add value to their building developments, and there are even municipalities that are beginning to mandate a minimum number of shared vehicles to reduce traffic congestion in dense urban environments.
Once autonomous vehicles (AVs) and electric vehicles (EVs) with high-capacity batteries are added to the mix, the portion of autos used for shared mobility will increase further as costs per ride continue to fall below the expense of equivalent trips in an individually owned car. Climate mandates such as the 1997 Kyoto Protocol and the 2016 Paris Agreement are also incentives to boost carsharing, with companies such as Madrid’s Respiro and Australia’s Car Next Door guaranteeing that their services are net-carbon-neutral.
For automakers, the writing is on the wall; there will simply be fewer cars on the roads in the future. This means that overall vehicle sales will fall, and the automobile industry will likely experience a shakeout whereby some manufacturers will sell fewer vehicles while others will go out of business entirely. Some carmakers are better prepared for this eventuality than others, but almost no one is denying that it’s coming. Already in Germany, for instance, in 2010, the share of people who owned a car dropped from 43 % in 2010 to 36 % in 2018, and there have been projections that up to 500,000 jobs could be lost in the country’s auto industry just due to the transition to EVs (which use far fewer parts) from gas-powered vehicles.
Still, as automotive industry observers have found, there are important caveats for automaker OEMs to understand as far as consumer eagerness for shared mobility. In survey results published in late 2020, Israeli car data firm Otonomo discovered that only 34 % of respondents desired public transport-style shared mobility. Roughly 29 % of respondents said they wouldn’t mind sharing their own vehicle, while 40 % of respondents said they would prefer access to a shared car rather than owning any vehicle themselves. Approximately 38 % of respondents said they would be willing to ride in AVs, and 60 % of respondents felt that AV technology would make cars safer. On the other hand, at least 76 % of respondents don’t completely trust AV platforms as far as safety is concerned, and there are also significant misgivings as far as privacy and data collection.
For automakers, “shared” may be the most difficult of the four-lettered automotive “CASE” (connected, autonomous, shared, electric) acronym to predict the future for. Unlike autonomy, it’s less dependent on technology and more about business models that consumers will or will not buy into. In many ways, the operator of a shared mobility service will make the closest connection to an end-user of a vehicle—eclipsing even the automaker OEM. The closeness of that relationship can be measured financially.
Carsharing is probably the biggest single initiative that at least some automaker OEMs are currently underwriting and/or experimenting with to dip their feet into the shared mobility future. In general, carsharing is attractive to carmaker OEMs because it means more vehicles can be sold than with ridesharing.
As of 2020, Europe represented 50 % of the global carsharing market. European carsharers numbered roughly 14.8 million, while the number of vehicles being shared was approximately 150,000. It’s been estimated that as many as 80 % of all vehicle journeys in Europe could be addressed by shared vehicles, whereas the total number of passenger automobiles in the EU is something around 270 million. It’s projected that in 2020, 26 million people worldwide will have some form of carsharing program participation.
In general, there are three business models for carsharing. Free-floating carsharing is where users can access a vehicle almost anywhere by simply using a smartphone app. Vehicles are used mainly for short trips in urban areas; cars for these services tend to be small or even micro-sized. Pricing is typically based on time, not distance. Examples of free-floating carsharing services include Share Now, Enjoy, and ZipCar.
By contrast, stationary carsharing—where cars are picked up and dropped off at fixed locations—tends to take place in smaller towns and rural areas, where users take longer journeys. Examples of stationary carsharing services include Cambio and EVCARD.
Peer-to-peer (P2P) carsharing allows individual car owners to share their own vehicles through an online service operated by a third party firm. Examples of P2P sharing companies include SnappCar, Turo, and Getaround. As of 2017, the P2P model was particularly big in France, representing 90 % of the carsharing market in that nation.
As opposed to carsharing, ridesharing reduces car ownership much further; multiple vehicle occupants can make each journey vastly more efficient. The ultimate extrapolation of ridesharing is bus- or minibus-style vehicles (including AVs) that can hold up to several dozen passengers. Although these latter types of vehicles begin to approach public transport in terms of access and utility, their private operators and routes mean that premium, individualized services can be offered, and their revenue potential is much greater.
In many ways, ridesharing is a bigger threat to automaker OEMs than carsharing because it means fewer vehicles sold. Companies such as Waymo, Uber, Lyft, Grab, DiDi Chuxing, and Ola, while they are potential fleet customers for automakers, represent a threat to them business-wise by providing shared-mobility solutions for travelers and commuters who might have otherwise have purchased (or at least rented) cars individually. Automakers who are able to see even a few years into the future may be smart to try to either enter this business themselves or buy a stake in some of the rapidly growing enterprises that are succeeding in it.
A number of automaker OEMs have invested in carsharing, ridesharing, or both in recent years. Register for free to learn more about the most important players in Europe (article series part 1) and the most important players in the US, Japan, and China (article series part 2).