BMW's Car Sharing Service: Planning expansion to 10 cities, starting with 3 U.S. cities in 2016
Looking towards introduction of autonomous vehicles, using RideCell system
Vehicle and member of "ReachNow," a BMW car sharing service started in the U.S. using the RideCell system (Photo: BMW)
Mr. Michael Cottle (Vice President of Sales and Business Development, RideCell, Inc., which is currently offering car sharing software to BMW), introduced the reasons why on-demand mobility is expanding, as well as the RideCell services at TU Automotive Japan 2016 conference held in Tokyo from October 18 - 19, 2016.
Centered on Mr. Cottle's speech, this report explains the reasons why on-demand mobility is expanding, the RideCell services that respond to this trend, and the BMW car sharing service that utilizes the RideCell system.
According to RideCell, in 2050 66% of the world's population is expected to live in urban areas due to an increase in city-dwellers mainly in Asia. On-demand mobility is expanding because the capacity of transportation infrastructure cannot keep up with this increase, and funds are flowing into new mobility service companies like Uber. Car sharing businesses are expected to expand around the world at an annual average of 16.4% from 2015 to 2025. Therefore, many vehicle manufacturers including BMW and Daimler are entering into this business, expecting on-demand mobility to increase their revenue in the future.
While BMW has been expanding its car sharing service in Europe since 2011, in April 2016, it started a car sharing service in Seattle, U.S. using the RideCell system. In September, BMW also started business activities in Portland and in Brooklyn, N.Y. in November. The company plans to expand into 10 North American cities.
The Free-floating system is expanding in car sharing, where members can pick up a vehicle close to their current location, and drop off the vehicle at a parking space close to their destination. BMW and Daimler have adopted this system to promote car sharing in Europe and the U.S.
RideCell is developing its system with autonomous and driverless vehicles in mind. The company has stated that, "We have already established an on-demand system, and are preparing for the appearance of autonomous vehicles." If autonomous driving is realized, the shift towards such on-demand mobility is expected to accelerate further. In July 2016, BMW announced that they will develop fully autonomous driving technology by 2021, and at the same time, establish a totally new business model base for connected mobility using driverless vehicles.
Rapid urbanization induces on-demand mobility (RideCell analysis)
According to RideCell, rapid urbanization around the world is a major factor in the expansion of on-demand mobility. Traffic congestion and air pollution are becoming serious issues, and the conventional way for individuals to own vehicles is reaching its limit.
Meanwhile, new ways of doing business called car sharing and ride sharing started based on factors including the growth of the concept of a sharing economy and propagation of smart phones, and huge amounts of capital are flowing into new mobility-related companies like Uber.
Between 2015 and 2025, the average annual growth rate of ride sharing is expected to be 14.9% in Europe, 18.6% in North America, and the annual average of car sharing is expected to increase 16.4% worldwide.
Ride sharing, car sharing, and other on-demand transportation will be key in transforming mobility in the future, and technological innovation and big data will be essential for developing this new system further and increasing its efficiency.
(Note) Car sharing and ride sharing: The function of car sharing is similar to conventional rental cars, where customers rent a vehicle for a short period and drive themselves. Members register as either a driver or a rider. When riders want to use a vehicle, they select one within a usable range and request its delivery by smart phone, and when the driver arrives for pick up they get into the vehicle. In this system the rider pays a charge and the driver gets paid (similar to how a taxi functions).
Background on expansion of next generation mobility
|Rapid urbanization around the world||In 2050, 66% of the world's population is expected to live in urban areas. The population in cities will increase faster than current transportation infrastructure, which will cause serious issues such as traffic congestion, air pollution, and a shortage of parking lots. The increase in the urban population will mostly occur in newly emerging countries, particularly in Asia.|
|It is not realistic to increase vehicles and roads beyond the current level. The conventional way for individuals to own vehicles will reach its limit.|
|Number of registered vehicles in the U.S.||The vehicle number of registered vehicles per person in the U.S. decreased to 0.74 in 2012 from 0.79 in 2006 (6.3% decrease). The figure registered vehicles per person with a driver's license decreased to 1.10 from 1.16 for the same period (5.2% decrease). The number of registered vehicles per family decreased to 1.93 from 2.05 (5.9% decrease).|
Capital flowing into mobility-related startup companies
|Investment in mobility-related startup companies is increasing. Investments grew rapidly to USD 5.14 billion in 2014 from USD 110 million in 2011, USD 180 million in 2012, and USD 540 million in 2013.|
|Among the total amount of funds procured by companies as of May 2015, Uber attracted the largest amount of investment with USD 5.9 billion. Next was LYFT with USD 900 million, followed by DIDI DACHE at USD 800 million. The total for the top seven companies was USD 9.4 billion (Excluding ventures operated by automakers like DriveNow (BMW) and Car2Go (Daimler)).|
RideCell services: Preparing for autonomous driving with a fully automated system
RideCell has been developing and offering management software for on-demand mobility since its establishment in 2009. The company has integrated its services with ride sharing, car sharing, and fixed route type mobility utilizing its accumulated experience, and developed a multi-dimensional platform. The software is being provided to a number of universities, as well as SouthWest Transit, a public transportation system in Minnesota.
In April 2016, BMW started a car sharing service in Seattle, U.S. that utilizes RideCell software.
The RideCell system consists of the following features, suitable for the current period of change.
- End-to-end automation: The RideCell system utilizes a fully automated system to support operation from member apps to day to day fleet management, demand and supply analytics, marketing, CRM (Customer Relation Management), and payments. Most manual operations, such as shipping vehicles and selecting routes taken for transportation to date are no longer required.
- Multi-dimensional: RideCell regards the future state of mobility as "multi-dimensional." The RideCell system supports customers who select multi-dimensional mobility including public transportation systems.
- Currently, demand for transportation is facing a period of major changes:
- On-demand services: The need for on-demand transportation called ride sharing and car sharing is expanding.
- Autonomous Driving: The era of autonomous driving is approaching. When autonomous driving is realized, shifting to on-demand mobility will accelerate further. More than 90% of the ride sharing cost is for the driver, and these will decline dramatically with driverless vehicles.
Most of the software related to transportation to date is premised on work such as renting vehicles and selecting routes being done by people. If this condition continues, it will induce a situation where human assistance is still required to operate vehicles, even after autonomous driving is realized. RideCell has stated that it is "already working on a response to meet the market for on-demand services, and is preparing for the next phase of autonomous driving with customers."
In July 2016, BMW announced that they will develop a fully autonomous vehicle by 2021 in collaboration with Intel and Mobileye. The automaker also announced that it will establish a foundation for a totally new business model of connected mobility using driverless vehicles.
BMW: Adopting RideCell software for U.S. launch of ReachNow car sharing service
In April 2016, BMW launched a car sharing service called ReachNow in Seattle, Washington, U.S., that uses RideCell software. BMW offered high praise for RideCell technology, and BMW i Ventures has invested in the supplier since 2014.
The company has prepared a fleet of 370 vehicles including the BMW i3, BMW 3 Series, and the MINI Cooper. Members download an application from the Apple App Store or Google Play, and approval is granted a few moments after registration is completed (within 2 minutes if there are no problems). Customers can pick up vehicles close to their current location within a specified area in the city (called the Home Area in ReachNow), and drop off the vehicle at a parking space close to their destination.
Subsequently, the service was launched at the Seattle-Tacoma airport. It offers transportation home for members arriving at the airport, which replaces public transportation systems or the recent Uber and Lyft services. Following Seattle, BMW's plan is to expand its services to 10 cities in North America, starting with Portland, Oregon in September and Brooklyn, N.Y. in November.
According to BMW, "members in large cities want simple solutions that are not time consuming and meet an individual's mobility needs. Therefore, our policy is to respond to the requirements of on-demand mobility for members in large cities, in addition to our conventional business of selling vehicles." According to the mayor of Seattle, "Seattle residents are demanding more transportation options, and car sharing is a convenient way to avoid the expense of owning your own vehicle. BMW's group of vehicles conforms to the policy of Seattle to expand EV usage."
Vehicles of car sharing service "ReachNow" launched in U.S.
Searching for vehicle to use personally by smart phone application
How to use car sharing
- Users request a vehicle from among the many vehicles located nearby (vehicles are arranged in areas with the most demand using a supply and demand balancing system).
- The availability of the vehicle that was selected is checked via the RideCell cloud, and the request is sent to the BMW cloud.
- BMW changes the lock status of the applicable vehicle to "Reserved," and simultaneously sends this information to the RideCell cloud. RideCell notifies the user of the available vehicles.
- The user can then open and close the ReachNow vehicle's door by holding their member key card up to the sticker attached in the corner of the front window.
- The user parks the vehicle in a parking space in the area specified by BMW (Home Area) to complete the transaction.
The service in Seattle was launched with 370 vehicles in April 2016. In June, the Home Area was expanded to cover approximately 75% of Seattle, and 150 vehicles were added to the fleet for a total of 520 (the population of Seattle is just over 600,000). The Home area of Daimler's Car2Go service, which was launched in 2013, covers all of Seattle with 750 vehicles.
Car sharing enters the Age of Free-floating
Car sharing started in the 1990s, and the system involved picking up a vehicle at the sales office of an operating company, and returning it to the same location. However, due to the spreading concept of the "sharing economy" and the propagation of smart phones, a so called "Free-floating" system that allows a user to pick up a vehicle in an area close to their current location within a specified area, and drop it off in an area close to their destination has been spreading (also called the one-way system).
In 2012, BMW launched a car sharing service for the first time in San Francisco, U.S. (the service was provided under DriveNow, the same name used in Europe). However, the automaker withdrew from the city in November 2015 because the local government did not give permission to use city parking spaces for the Free-floating vehicle sharing service. Daimler's Car2Go was launched in the U.S. in 2010, and is currently operating in 9 cities, but the service is not offered in San Francisco.
Seattle is active in spreading Free-floating car sharing, and the policy of city administrations is having a significant effect on the popularization of car sharing.
The spread of Free-floating car sharing is said to have started the change from ownership of cars to on-demand transportation in large cities.
ReachNow: Adding four new services
ReachNow will start trials of new services from December 2016, and the service areas will subsequently be expanded. Beyond the framework of conventional car sharing, the policy of BMW is to offer extensive services that meet all the needs of users for mobility in order to promote differentiation with competitors like Daimler's Car2Go.
For example, regarding the services offered with drivers, BMW will continue to improve its mobility services through means such as offering BMW vehicles of higher class than the privately owned cars used in the Uber and Lyft ride sharing services.
BMW offers new mobility services beyond car sharing
|Plan to implement trials from December 2016 or beginning of 2017 for each service, and subsequently expand service areas|
|Ride||Ride offers cars owned by ReachNow with drivers to members who don't like to drive. BMW vehicles of higher class than the privately owned cars used by Uber and Lyft drivers are provided. From the second usage and beyond, details like the temperature of the air conditioning and choice of music are personalized according to the member's preference.|
|Fleet Solutions||Fleet Solutions offers a system where parking spaces are provided for the BMW 3 Series and i3 in locations where there are many ReachNow members like apartments, condominiums, and the offices and plants of specific companies so that the users have vehicles readily available for use.|
|Share||Owners of 2016 and 2017 Mini vehicles can now rent their automobile to ReachNow when they or their family are not using it so that some of the cost of ownership can be offset.|
|Reserve||Reserve offers a system like conventional rental cars that allows members to easily extend the usage period of vehicles. A service will be started where vehicles are delivered to specified locations at set times for members planning a longer period of use from the outset. The introduction of vehicles that can carry larger loads suitable for longer trips is also being considered.|
|Source: BMW Press Release 11.15.2016|
|(Note) BMW also invested in the ride-sharing software company Scoop Technologies in 2016. Its collaborative business plan with Scoop has not yet been announced.|
BMW car sharing service "DriveNow" in Europe
In June 2011, BMW launched the car sharing service "DriveNow" in Europe. Currently, the service has expanded to 10 cities in 6 European countries. As of September 2015, 20% of the 4,000 vehicles owned are EVs. More than 550,000 members have already used "DriveNow."
BMW concluded a joint venture with Sixt SE, Germany's largest rental car company.
According to BMW, the car sharing services are expanding in Europe for the following reasons.
- 18% of the people aged 18 to 35 who have a driver's license in Germany do not own a vehicle
- 40% of the households in Berlin do not own a vehicle
- The average driving hours of personally owned vehicles is less than one hour per day, and the vehicle only takes up parking space in the remaining hours
|Selecting a car to use from a smart phone screen
|Holding a member key card up to the sticker on the front window to open and close the door
|DriveNow cars parked together
BMW, RideCell, Car sharing, Ride sharing
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