Mobility-As-a-Service Is Coming Soon

Ford Motor Co. CEO Mark Fields -- now pushing mobility as a service.

Ford Motor Co. CEO Mark Fields — now pushing mobility as a service.

by James A. Bacon

In the world of surface transportation, self-driving cars are generating a tremendous amount of excitement. While such vehicles undoubtedly will transform the driving experience, I question whether they will alter the underlying economics of transportation. Yes, they will be safer, and they even may allow a passenger to stream Netflix or answer emails instead of keeping his eyes on the road. But there is little in the nature of autonomous cars that will alter an individual’s calculation whether to drive solo, carpool, walk, bike or take mass transit to work.

What could change the underlying calculus of transportation decisions is the concept of Mobility As a Service. I highlighted one of the world’s first experiments a year-and-a-half ago in “Car-Lite Burbs,” describing a project by Daimler AG (owner of Mercedes Benz) that bundled access to scooters, cars, circulator buses, destination shuttles and Car2Share carpooling in a monthly subscription service for residents of the Rancho Mission Viejo development in California.

Now comes news that Ford Motor Co. and General Motors Co. also are thinking beyond the sale of automobiles to individuals and in terms of providing mobility as a service. This trend, if it takes off, could result in people purchasing fewer cars and riding more vans and buses, thus cannibalizing automobile sales. But the big auto companies see growth opportunities in the transportation market outside cars.

At the Consumer Electronics Show Monday, Ford CEO Mark Fields said the company plans to diversity into “transportation services” beginning in 2016. The transportation services sector, which includes buses, cabs and passenger rail, is a $5.4 trillion market, reports the Wall Street Journal. (I presume that is the global market, not the U.S. market.) “Ford and all industry competitors receive virtually no revenue today” from that sector, he said.

Ford has experimented with mobility services, such as ride-sharing and pay-by-mile rental vehicles but has yet to launch a full-scale effort. Apparently, that will change in 2016. When asked if Ford might form a new subsidiary to make a strategic investment in ride-sharing, Fields said “We are open to all possibilities.”

The previous day, General Motors announced a $500 million investment in Lyft, Inc., the ride-sharing competitor to Uber Technologies. “We see the future of personal mobility as connected, seamless and autonomous,” said GM President Dan Ammann in a statement. “With GM and Lyft working together, we believe we can successfully implement this vision more rapidly.”

Much of the buzz focuses on the move of Ford and GM into driverless cars. Just imagine how much less it would cost to provide Uber- or Lyft-style service if there weren’t a driver to compensate. But the looming transportation revolution is much bigger. While the top 20% or 30% income earners might choose to stick with solo cars (whether self-driving or not), a far larger share of the market is looking for affordable transportation services, and that could include riding on vans, jitneys, buses or mass transit as well as access to a car as needed. The really big play is integrating these transportation modes and bundling them into a unified mobility service.

Bacon’s bottom line: Policy makers in Virginia need to understand that the future of transportation demand will not be a straight-line projection of past trends. The shape of the transportation future in 2035, twenty years from now, will look nothing like transportation today. Yes, driverless cars are likely to be part of the mix. But that’s only part of the equation. There is a good chance, in the major metros at least, that hundreds of thousands of Virginians will be subscribing to mobility-as-a-service packages.

How will that affect the demand for new roads and mass transit services? I have no earthly idea. But I think it would be prudent to begin thinking about these things before plowing billions of dollars more into transportation infrastructure that very well could become obsolete in a couple of decades.

And how will private-sector mobility-as-a-service competition affect entities like the Washington metro, plagued as it is by poor governance, poor finances, poor management, union featherbedding, huge maintenance backlogs, declining ridership and other ills too numerous to describe? Or smaller bus-and-rail services in smaller metros, for that matter? It could well put them out of their misery.

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15 responses to “Mobility-As-a-Service Is Coming Soon

  1. Fascinating to think about. I’m particularly interested in the land use implications. The cost of traveling by car will be more directly tied to the trip under a service model versus the large upfront cost and smaller per trip cost of car ownership. How this impacts behavior …? I’m excited about not having to pay to have a car parked for 90% of its useful life, and the ability to help the elderly stay independent for longer.

  2. Jim: Thanks for pointing out what’s coming from Big Auto and Internet ride hailing. Bern Grush and I are lately thinking that for public transit to survive in an age of robotic shared mobility, that a “Transit Leap” is needed which we describe on our blog at http://endofdriving.org/2015/11/12/transit-leap-autonomous-vehicles-and-transit/. This means transit agencies relatively quickly starting up their own automated shuttle services with existing automated vehicles on limited routes, ahead of the more difficult job of mapping entire urban areas for pod cars going everywhere. This gets such agencies started on a more positive evolutionary path than just waiting to see what happens from GM and Uber. We laid out the concept of Transit Leap in a poster available at the endofdriving site.

    • I personally think planning too much too soon is not going to be optimal in a rapidly changing and innovating environment. I don’t think trying to force people into centralized modes that they may not want is going to be a savings. I think more “go with the flow” and less “command and control” will optimize the outcomes.

      Also, I don’t see the problem with parking you allude to in the linked article. Once the passenger gets out, the car can drive itself to a parking area to wait – it can pack itself in tighter, and parking garages are no longer places you have to fear being mugged, because only the car, and not the person, is ever in it. You will have fewer issues with parking not more.

      • Virginia Gal 2, Good points, thank you.

        I agree completely that “planning too much too soon is not going to be optimal in a rapidly changing and innovating environment. …[and] … trying to force people into centralized modes that they may not want is [not] going to be a savings.”

        “Transit Leap” describes the idea [for discussion] of public transit agencies franchising new, higher-technology mobility services in high demand service territories (initially, then spreading to lower density areas). We who came up with this idea envision the services — driverless shuttle routes initially — being set up by public agencies with private capital investment (to be more tolerant of risk) and a managed, reasonable public subsidy level, if any. Hopefully, labor costs per rider would be lower as the capability of driver automation grows.

        A reason for even involving public transit agencies is to support their historical mission of delivering equitable, life-critical mobility for lower-income and dependent populations. There is some evidence I’ve heard in professional conferences that Lyft and Uber are already showing they are willing and able to provide services in cooperation with public agencies that are part of a city’s transit services for all people rich or poor.

  3. certainly such a model would be a boon to those who cannot operate a car themselves – no question about it – and much more convenient and probably less expensive that the social assistance vans now used.

    so more like folks using cabs in NYC except driverless?

    call me a skeptic for the non-disabled folks…

    for instance, if you had a contest between a human cab and a driverless cab to go from point a to point b – say from an airport to a hotel – who would win?

    😉

    from what I read – driverless cars are severely abused by real humans who consider them too timid and tentative… and I read one report that said a driverless car could not get from the 3rd lane over to the exit on a congested freeway… the car would not proactively make the moves necessary to get there so I’m quite sure folks who can drive will that kind kind of behavior pretty useless and frustrating.

    but I also do not believe that automobiles are all about functional mobility.

    the ability, for instance, to decide to pull into a 7-11 for some chewing come then check out the new store a half mile later is not going to be something easily replicated by mobility “service”.

    the Dad who is on his way home and gets a call from Mom asking him to pick up the kid or get a loaf of bread, etc… is going to have a hell of a time in a driverless car… a feeling of hopelessly trapped will enter into the equation.

    I’m starting to see driverless cars like the way the Jetsons used to get around in that cartoon series.. which is amusing because it demonstrates as humans – we pretty much suck at predicting the future sometimes even though we are the ones engineering it!!!!

    however – a properly designed driverless car – could learn to deal with the scofflaw drivers , divert Ad Hoc in real time, and – using computers and the internet – detect and avoid congestion and trouble spots much more effectively than humans listing to traffic radio or trying to follow a GPS in real time and if that will stop the idiots from texting while they drive – I’m 100% in favor!

    • I’m not sure I understand your point. I’d personally prefer, and would feel safer in, a driverless car than a cab.

      Why would you not be able to pull over a half mile later to check out a new store, or to pick up a kid or get a loaf of bread? The car is driverless – it still goes where you tell it.

  4. We no longer manufacture things, we live in a “service economy.” Now, we are chipping away at the need for people to provide those services. Where is the value-added-by-people going to come from to create the wealth to pay the salaries to buy those services?

  5. re: ” Now, we are chipping away at the need for people to provide those services”

    not totally clear what the nexus is to transit.. can you further explain?

    • Just pondering Jim’s comment, “Just imagine how much less it would cost to provide Uber- or Lyft-style service if there weren’t a driver to compensate.”

      Another way to put it is, if automation saves cost, somebody isn’t getting paid a salary.

    • On reflection, what I just said sounds like a simple argument for featherbedding. No, my concern simply is, manufacturing has been automated or moved overseas and our labor force has been encouraged to take jobs in the service industries; now our service industry labor force, like that Uber driver, is going to be ‘encouraged’ to take a job elsewhere as automation moves into services as well. Where is ‘elsewhere’ for young people today? Communications technology for sure and other cerebral value-added endeavors; but what about those kids who quit school or never had the temperament for it? Increasing the productivity and complexity of society comes with a big price tag: you have to learn how to use it, how to be employed by it! All this “progress” is a good, even wonderful thing for the employed folks well-enough educated to take advantage, but builds the barriers to employment and escape from poverty ever higher to those left behind. I fear that’s a hidden cost of technology, of automation, we tend to sweep under the rug. THAT’s what I was thinking.

  6. Does anyone know why GM partnered with Lyft rather then Uber?

    As a casual reader of the business news one might conclude Uber is the larger and more well known.

  7. For over a decade I’ve — unsuccessfully — promoted a German-Australian “transportation demand management” project called “TravelSmart” which “pulls” cars off the road through education and encouragement.

    Annually, in the Aussie metros which use TravelSmart, they see a 12-15 percent drop in Vehicle Kilometers Traveled and in places where it’s been piloted in the U.S., they’ve seen an 8 percent to 15 percent drop in VMT. This decline is huge BUT…

    In America, we think we’re “exceptional” and learning something from overseas — even from a culture which has as high a per-capita car ownership as we do — can’t be presented in our political culture.

    Today, as Americans purchased over 17 million cars last year (and an increase in SUVs accompanying a decrease in electrics), both our gasoline consumption and annual miles traveled by car has increased.

    Until we begin education and encouragement, like TravelSmart, any concepts making driving easier ALWAYS beget more driving. Autonomous cars will do so too, creating more congestion and more pollution and more greenhouse emissions. Greatly increased taxi projects, like Uber and Lyft, will do the same as the data is already there. When people buy a new vehicle (and many do to become Lyft or Uber drivers), they drive the vehicle more. It’s called the “rebound effect” and is more prevalent when the vehicle is more energy efficient. On average, a new vehicle which gets better gas mileage than the one it replaces will use two percent MORE fuel in it’s first year, research shows.

    So it goes in the Car (caught) Culture.

  8. While I acknowledge there is an important role for transit, IMO, we need to understand the value Americans place on freedom and independence. From horses, buggies to automobiles, individual/small group transport modes provide(d) this freedom and independence. Future transportation technology needs to remember this.

    And many non-Americans have similar beliefs. I have a good client that operates a high-tech, radio-based company near the French Alps because it isn’t Paris and there is more freedom in lifestyle for the owners and employees in less urban parts of France.

  9. Larry, your imagination is not robust enough. The dad would have the loaf of bread/kid delivered.

  10. One of the things I’ve always wondered about is why/how car ownership ever equates to freedom. Free to pay a monthly car payment? Free to deal with local and state government over licensing? Free to worry a ton when forced to park in iffy neighborhoods? Free to deal with insurance issues? Free to pay taxes on every gallon? Free to pay an annual registration? Free to be stuck in traffic? Free to create emissions in other people’s front yards? Free to a six-thousand pound boat anchor when it breaks down miles from home? Free to create the need for more regulation (speed, intersections, police, tax collectors, state insurance regulators)? Free to have one’s personality described by something made of steel, plastic and rubber?

    Maybe addressing our very odd manner of looking at “freedom” — which I believe Orwell called “doublespeak” — is a good beginning. After all, it seems highly unlikely any of our founding fathers (or their wives who probably told them what to do!) thought of independence or freedom in any connection to any automobile. In my copy of the Bill of Rights, I can’t find a single reference to owning even a carriage or a wagon or a horse.

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