New mobility and the shift from ownership to sharing (1): What does the future hold?

Scenario analysis; the trends of Uber, Didi Chuxing, Google

2017/02/02

Summary

Uber app's screenshot
Uber app's screenshot
Source: Uber Technologies

  New automobile services like ridesharing (carpooling/pick-up services driven by non-professional drivers) provided by Uber Technologies and Didi Chuxing, taxi dispatching, and car sharing are growing rapidly. According to Uber, the company's services were used 15 million times globally on New Year's Eve 2016 (taxi services across Japan averaged 4.4 million a day in 2014).

  There are two potential reasons for this state of affairs. First, consumers, particularly younger generations, do not have the desire to own automobiles, and merely want to use mobility services for transportation. Another is that thanks to the popularization of the smartphone, everyone is now in possession of an advanced, networked information device that enables access to location information, which when combined with the improvements in big data processing technology, makes one-on-one (P2P) supply and demand manageable.

  At the same time, autonomous driving technology continues to advance, and in the future, the combination of fully autonomous vehicles with ridesharing services, or robot taxis, is to be expected. If such transportation methods become a reality, this will have a massive effect not only on the automobile industry's business model of selling vehicles to consumers, but also on various operations related to mobility, such as public transportation, urban planning, and road administration.

  For example, Ford has anticipated that the size of markets it has yet to enter like mobility services amounts to USD 5.4 trillion. In anticipation of turning these markets into major sources of income, the OEM has announced its vision of becoming “an auto and a mobility company” in its mid-term business plan in September 2016. Daimler has also noted that new mobility services such as car sharing projects have emerged as a response to socio-economic changes seen in the continued growth of urban problems in areas including congestion, air pollution, and parking spaces; as well as the popularization of digital media and a decrease in the desire for material possessions; and it projects a high probability for these new mobility services to expand in the future.

  The first part of this report will provide an overview of the newly emerging mobility society, as well as what sort of services are provided by ridesharing companies such as Uber and Didi Chuxing.


Related Reports:
BMW's Car Sharing Service: Planning expansion to 10 cities, starting with 3 U.S. cities in 2016 (Dec. 2016)
Ford: Aiming to achieve volume production of driverless vehicles in 2021 for ride-sharing (Jan. 2017)
TU-Automotive Detroit 2016: Advancement of Mobility Drives Automotive Changes (Jun. 2016)



What does the future hold? Scenarios for a new mobility society

BCG and WEF
(Scenario 4)
* 60% decrease in vehicles in urban areas.
* Private ownership of automobiles will disappear almost entirely.
Roland Berger (Trial calculation of the U.S. market) * Vehicle ownership will decrease by roughly 20%.
* Although total vehicle sales will not decrease, roughly 30% will be shared mobility vehicles.
Deloitte Tohmatsu Consulting * One out of two vehicles in major countries will be car sharing vehicles.
* Global vehicle sales in 2030 will decrease by 9% to 120 million in comparison to a scenario where car sharing does not become popular.
American journalist Edward Humes * Users will be able to use smartphones to call for an unmanned autonomous vehicle for transportation.
* Driving will become a form of recreation, similar to horseback riding.

  This section will introduce 4 scenarios for how society will transition from automobile ownership to sharing and the state of the world when totally autonomous automobiles become the norm.

  A report published by the Boston Consulting Group (BCG) in collaboration with the World Economic Forum (WEF) predicts four scenarios. The most extravagant of the 4 predicts that the number of vehicles in urban areas will decrease by roughly 60%, and private automobile ownership will disappear almost entirely. In his publications, the American journalist Edward Humes also anticipates that people will use smartphones to call for autonomous vehicles for door-to-door transportation, and driving will become purely recreational, similar to horseback riding.

  Roland Berger states that if society transitions to one where unmanned vehicle transport becomes a reality, although vehicle sales won't decrease, 30% of those will eventually be shared mobility automobiles. At the same time, private ownership will decrease by roughly 20%. Additionally, Deloitte Tohmatsu Consulting has published a scenario where if car sharing becomes popularized, one of every two vehicles in major countries will be car sharing vehicles, and global vehicle sales in 2030 will decrease by 9% to 120 million in comparison to a scenario where car sharing does not become popular.

"Self-Driving Vehicles, Robo-Taxis, and the Urban Mobility Revolution": BCG and WEF

  A report co-written by the Boston Consulting Group (BCG) and the World Economic Forum (WEF), "Self-Driving Vehicles, Robo-Taxis, and the Urban Mobility Revolution," was released in July 2016. It analyzes how autonomous vehicles, ridesharing, and robo-taxis will have an effect on urban mobility through four scenarios (predictions for mostly after 2030).

  In scenario 4, where electric autonomous taxis (robo-taxis) used for ridesharing become popular, and private automobile ownership becomes almost totally obsolete, the number of vehicles in urban areas will decrease by roughly 60%, traffic accidents by nearly 90%, emissions by 80%, and the amount of parking spaces by 50% or more.

Four scenarios for the future of urban mobility (BCG and WEF)
Major form of automobile ownership Urban policy Overview
Scenario
1
Premium cars that drive themselves Personal automobile ownership None in particular * Autonomous driving will be a complementary feature.
* Consumers will own and use autonomous vehicles in the same manner as conventional vehicles.
* 1/4 of new vehicle sales in urban areas will be autonomous vehicles.
* 1/10 of autonomous vehicles will be shared (to replace second automobile demand).
* The percentage of EVs will increase to 1/3 of sales.
Scenario
2
Autonomous Vehicles rule the streets Personal automobile ownership Promotion of autonomous vehicles * Autonomously driving vehicles will almost entirely replace conventional vehicles.
* The percentage of EVs will increase.
Scenario
3
Robo-taxis take over Ownership by mobility companies * Policies to suppress private automobile ownership will be enacted.
* Promotion of EVs and autonomously driving vehicles.
* Electric autonomous taxis (robo-taxis) will be the first choice for transportation.
* Private automobile ownership will become rare in urban areas.
* Autonomous vehicles will partially replace buses.
Scenario
4
The ridesharing revolution Ownership by mobility companies * Policies to suppress private automobile ownership will be enacted.
* Promotion of ridesharing, EVs, and autonomously driving vehicles.
* Electric autonomous taxis (robo-taxis) for ridesharing will be the first choice for transportation.
* On average, taxis will carry 2 passengers (scenarios 1 to 3 would have 1.2 passengers; the same as the present average).
* Private automobile ownership will become rare in urban areas.
* Autonomous vehicles will almost entirely replace buses.

Source: The Boston Consulting Group (2016) "Self-Driving Vehicles, Robo-Taxis and the Urban Mobility Revolution"

Changes to cities
Scenario 1
Premium cars that
drive themselves
Scenario 2
Autonomous Vehicles
rule the streets
Scenario 3
Robo-taxis take over
Scenario 4
The ridesharing revolution
Number of vehicles -1% -8% -46% -59%
Accidents -19% -55% -86% -87%
Parking space ±0% -5% -39% -54%
Emissions -9% -23% -81% -85%
Share of travel distance by mode of transportation
Scenario 1
Premium cars that
drive themselves
Scenario 2
Autonomous Vehicles
rule the streets
Scenario 3
Robo-taxis take over
Scenario 4
The ridesharing revolution
Private traditional car 35% 14% 5% 5%
Private SDV 11% 31% 1% 1%
Traditional taxi 6% 4% 0% 0%
Robo-taxi 4% 6% 49% 53%
Public transportation 39% 38% 36% 32%
Walking and biking 5% 7% 9% 9%

Automotive 4.0 - a society where unmanned pickup has been implemented: Roland Berger

  Roland Berger, a consulting company, projects a long-term trend starting from 2030 in its "Automotive 4.0" report. The report depicts society transforming into one where shared mobility, connectivity, and autonomous driving merge, and unmanned pickup by vehicles become a reality. In trial calculations based on the U.S. market, the company forecast that 1/3 of the mass-market vehicles sold annually will be shared mobility vehicles.

The world of Automotive 4.0

* Automobiles will change into three categories: small pods, convenient for traveling small distances; commuters, comfortable for traveling mid-range distances; and owners' cars, for the hobbyist.
* Shared mobility will become popular in urban areas where autonomous vehicles operate regularly, thereby realizing a world where people can travel without having to wait.
* The interior of automobiles will become an area that increases convenience for the riders' private lives by acting as both an office and a living room.
* As users and vehicle sales will increase through shared mobility, the occupancy rate per vehicle will increase, leading to a decrease in owned vehicles.

Effects on automobiles (in the U.S. market)

(Million units)

Auto3.0 (current) Auto4.0 (post-2030)
Annual vehicle sales Luxury cars 2.0 2.8
Mass-market vehicles 14.8 9.8
Shared mobility - 5.0
Total 16.8 17.6
Vehicle ownership Luxury cars 30.1 42.5
Mass-market vehicles 224.3 147.8
Shared mobility - 15.4
Total 254.4 205.8

Source: Roland Berger (2015) "Automotive 4.0"

"Mobility Revolution 2030" - one out of every two vehicles to become car sharing vehicles: Deloitte Tohmatsu Consulting

  Deloitte Tohmatsu Consulting published the book Mobility Revolution 2030: The Destruction and Creation of the Automobile Industry in October 2016. The book depicts a scenario where diversity in powertrains, intelligent automobiles, and sharing services will become the norm; largely changing the positioning of cars and leading to a mobility revolution in 2030.

  According to Deloitte Tohmatsu, if the annual mileage of a car is less than 120,000 km, car sharing provides the least expensive total travel costs. Based on that assumption, vehicle ownership in major eight countries and regions is estimated to decline by nearly 50%, with one in every two vehicles being car-sharing vehicles. If car sharing becomes popular, global vehicle sales in 2030 will decrease by 9% to 120 million units in comparison to a scenario where car sharing does not become popular.

Impact of changes in passenger car ownership due to the popularization of car sharing services (target nations/regions: Japan, U.S, U.K., France, Germany, China, India, ASEAN)

(Million vehicles)

Current state Effects of car sharing popularization
(decrease in vehicle ownership)
Effects of ridesharing popularization
(decrease in taxis)
Future
(limit value)
Future
(progress)
Automobile ownership society Transition to car sharing (A) Car sharing vehicle supply (B) Transition to ridesharing (C) Ridesharing vehicle supply (D) Sharing transfer society Automobile ownership society (extension of current state) (E)
710 -380 +10 -5 +3 340 665

Source: Created based on Mobility Revolution 2030, Deloitte Tohmatsu Consulting (2016).

(Note) Estimate assumptions
A: Total travel costs are based on the annual mileage of automobiles. If users fully transition to car sharing, which currently has the least number of users, vehicle ownership will decrease.
B: Vehicle supply assumes that 40 members will be covered by 1 car share vehicle.
C: Taxi vehicle ownership in the eight regions that were analyzed (assuming ride sharing will replace taxis)
D: Vehicle ownership based on the assumption of average passengers estimated at 1.5 for taxis, and 2 for ride sharing.
E: Vehicle ownership based on the assumption car sharing reaches the same levels as Switzerland, where car sharing is the most popular (1.3% of the total population).

 

2030 Global automobile sales forecasts

(Million vehicles)

2015 (results) Potential through income population growth Decrease of automobile purchase rate 2030
(before the effects of car sharing are taken into account)
Decrease in vehicle sales through the transition to car sharing Car sharing vehicle sales 2030
predicted vehicle numbers
90 88 -46 131 -13 1 119

Door to Door - the future of traveling: American journalist Edward Humes

  In his 2016 book Door to Door, American journalist Edward Humes suggests that logistics and the massive distance people travel has put excessive stress on transportation systems and infrastructure in the U.S., which could collapse at any minute. Humes also states that mass murder is being perpetuated by automobiles (350,000 people die annually in traffic accidents).The author proposes smart phone applications for transportation and car sharing services, as well as fully autonomous vehicles, as methods for human mobility that can replace private vehicle ownership, and thereby change this state of affairs.

  According to Humes, the positions that entities are taking regarding fully autonomous vehicles are as follows:

* OEMs: Fully autonomous driving will be a premium option, allowing riders to enjoy freedom when in the vehicle. Autonomous vehicles are also a means to protect the business model of selling as many automobiles as possible.

* Google: Google aims for the wide release of fully autonomous automobiles that lack both a steering wheel and accelerator pedal. In this vehicle, autonomous driving is not optional.


  According to Humes, these fully autonomous vehicles will become a reality between 2030 and 2040. For people, driving an automobile themselves will not be for transportation, but for recreation, similar to horseback riding.

The world Humes depicts

* People will use smartphones to call for unmanned taxis to travel door-to-door. While in transit, they can spend their time freely.
* Parking spaces will become mostly unnecessary, and will be used for other purposes. No more time and energy will be wasted on finding a parking space.
* It will be possible to reduce the width of traffic lanes, which have been made wider to create a margin of error for humans.
* Current traffic lanes can be used exclusively for logistics. Trucks will become autonomous vehicles, and be able to drive while slipstreaming (convoy driving) in sync, saving both personnel and fuel expenses.
* Costs for automobiles may become monthly plans based on mileage, similar to today's smartphones.
* The emergence of automobile transportation services (dispatching services to take passengers to trains), combined with public transportation such as trains.
* Today, families use large cars that can fit the entire family as a precaution, but dispatching services will provide automobiles that suit the user's needs.
* The average travel distance of most cars will become shorter, promoting the increase of electric vehicles.
* Today, cars spend an average of 22 hours parked. In the future, they will be operated more frequently.
* Vehicle operation rates will increase, leading to an increase in the frequency of replacement.
* The necessary number of vehicles overall may decrease.
* Fatal traffic accidents and traffic congestion will decrease significantly.
* The transition to autonomous driving for trucks and buses may advance faster than that for passenger cars.

Source: Edward Humes (2016) "Door to Door"



Uber: currently testing ridesharing with autonomous vehicles, releasing traffic volume data

Uber's autonomous driving ride sharing model
Uber's autonomous driving ride sharing model, based on Volvo's XC90 PHV (Testing in San Francisco has been halted)
Source: Uber technologies

  Uber Technologies is a company established in 2009 in San Francisco that provides ride sharing (UberX) and taxi services. According to Uber, its services are available in 553 cities (as of January 17 2017). Its Chinese business was sold to its competitor Didi Chuxing (see below) in August 2016. As compensation, Uber acquired roughly 20% of Didi Chuxing's shares, and the founders are board members of one another's companies.

  Uber is collaborating with Volvo Cars to develop autonomous driving technology, and is conducting testing with autonomous vehicles for its rideshare business in Pittsburgh (testing in December 2016 in San Francisco was halted due to the company failing to receive permission from the authorities).

  In addition to Volvo Cars, Uber has collaborated with Toyota, Nissan, Suzuki, Tata, Guangzhou Automobile, and Daimler, in a variety of ways.

  Moreover, in January 2017, the company started a new service called "Movement." Uber's traffic volume data was released on its website, and is targeted at urban planners and researchers. The service is expected to ultimately be released to the general public.

  However, media has reported that Uber's losses hit USD 3 billion in 2016, increasing from 2.2 billion in the previous year. Although sales are increasing (the company is reported to have attained a net income of 5.5 billion in 2016), development costs, driver labor fees/incentives, marketing fees, and legal costs have weighed on the company, delaying its turn to profitability.

Autonomous vehicle testing for ridesharing implemented in the U.S.

City name Start date Vehicles used Notes
Pittsburgh September 2016 Ford Fusion, Volvo XC90 PHV Testing took place at a research center established in February 2015 by Uber and Carnegie Mellon University.
San Francisco (terminated) Testing began on December 14 2016, but was halted on the 21 Volvo XC90 PHV, Ford Fusion San Francisco has a higher traffic density than Pittsburgh, with different weather and road conditions.
(Note) 1. The state of California deemed Uber's autonomous driving testing in San Francisco illegal, and ordered the company to stop testing until it received approval. Although Uber refused to comply as it determined its testing was outside the state's jurisdiction, it halted testing on December 21. The testing vehicles will be used later for test driving in Arizona.
2. Uber's testing can be refused by users if they do not wish to ride in an autonomous vehicle. In a situation like this, the passenger will wait for a human driver. Uber test drivers and technicians ride in the front seats of the autonomous vehicles.

 

Partnerships between Uber and OEMs

Volvo Cars In August 2016 Uber and Volvo Cars announced they will invest a total of USD 300 million in a project to co-develop autonomous driving technology. Both companies will develop a base model for autonomous driving.
Toyota In May 2016, Uber and Toyota Motor Corporation announced they have signed a memorandum on pursuing cooperating in ride sharing. As part of the agreement, Toyota Financial Services (TFS) will lease its automobiles to clients, and Uber driver salaries will pay the lease fees. A similar agreement is in place in India. Additionally, Toyota will strategically invest in Uber through TFS and the Future Creation Fund.
Nissan In August 2016, Nissan announced that it has provided Uber with Leaf EVs for its drive testing project in the U.K.
Suzuki In September 2016, Suzuki's joint venture in India, Maruti Suzuki, announced it had signed an agreement with Uber to train drivers. Uber will send future partner candidate drivers to the driving school operated by the automaker.
Tata In August 2015, Tata Group's investment fund, the Tata Opportunity Fund, announced it would invest in Uber. Additionally, in June 2016, Tata Motors and Uber announced a new partnership. Uber drivers can purchase Tata vehicles, as well as receive special automotive loans and insurance from the Tata Group's financial companies.
Guangzhou Automobile In December 2015, Guangzhou Automobile and Uber announced they have signed a strategic partnership agreement.
Daimler Daimler and Uber sign general agreement on the intended supply and operation of self-driving Mercedes-Benz vehicles on Uber’s network, on 31th January 2017.

Diagram of the alliances of rideshare companies and OEMs
Diagram of the alliances of rideshare companies and OEMs: Uber and its Chinese peer Didi Chuxing (depicted later) are at the center.


Didi Chuxing: Acquisition of Uber's Chinese business, partnerships with Lyft (U.S.), Grab (Southeast Asia), and Ola (India)

Didi Chuxing
Didi Chuxing purchased Uber's Chinese business in August 2016
Source: Didi Chuxing

  Didi Chuxing is a taxi dispatching and ridesharing service provider in China that boasts an overwhelming share of the market. The company provides its services in more than 400 cities in China, is used by 400 million people, and has over 17 million registered drivers. Apple has also invested in the company.

  Originally, Didi Chuxing was two companies: Kuaidi Dache, which the major E-Commerce company Alibaba invested in, and Didi Dache, which received investments from Tencent, the company that operates WeChat and other businesses. The two companies merged in 2015 to become Didi Chuxing. In 2016, the company acquired the Uber's Chinese business, and currently enjoys a near monopoly in the Chinese market. Didi Chuxing has partnerships accompanied by investments with other companies in the industry, such as Lyft (U.S.), Grab (Southeast Asia), and Ola (India), and is in a central position in the ride sharing industry.

  Didi Chuxing began partnerships with public transportation departments, and began providing "last mile" transportation for railway and long-distance bus users.

  In 2018, the company aims to have 30 million daily users (2016: 11 million), 10 million drivers providing service, and user wait time reduced to within three minutes. Didi Chuxing has an advantage in deep learning for matching supply with traffic demand forecasts, as well as demand mapping and route optimization technology, and it has been reported that the company will enter the information service industry by utilizing big data of traffic in the future.

History of Didi Chuxing

Summer 2012 Kuaidi Dache, which the major E-Commerce company Alibaba invested in, and Didi Dache, which received investments from Tencent, the company that operates services like WeChat, begin providing taxi services.
February 2015 Kuaidi Dache and Didi Dache merge.
September 2015 Didi Chuxing invests USD 100 million in the U.S. ride sharing service Lyft. Didi Chuxing users have been able to use Lyft services since February 2016.
February 2015 The company signs a strategic partnership agreement with the dispatching services Lyft (U.S.), Grab (Southeast Asia), and Ola (India) to construct a comprehensive transportation service platform.
June 2016 Apple invests USD 1 billion in Didi Chuxing.
August 2016 Didi acquires Uber's Chinese business. In exchange, Uber acquired a 5.89% share of the merged company, as well as a preferred equity interest equal to 17.7% of Didi Chuxing. Didi and Uber's founders are members of the board in both companies.
November 2016 Didi Chuxing signs a strategic partnership agreement with VW China in the mobility services field.
January 2017 The company announces it will make strategic investments in 99, the top ride sharing service in Sao Paulo and Rio de Janeiro, Brazil.

 

Strengthening coordination with public transport departments (announced December 2016)

Minibuses Didi Chuxing started a service to transport clients to railway and bus terminals via minibuses in Beijing and Chengdu.
Partnership with state railway The company partnered with China's state railway "China Railway Corporation," and has developed an app for railway users that grants access to Didi services.
Partnership with a bus company in Tianjin Didi partnered with the Tianjin Bus Group, providing it with its traffic data analysis services to assist in route planning.


Waymo: Google's autonomous driving project becomes a new, independent company

  Google has been researching autonomous driving since 2009, but in December 2016, the project was spun off as an independent company called Waymo, a subsidiary of Google's parent company Alphabet. The company name is derived from the phrase "new WAY forward in MObility."

  Since 2009, Waymo has done test driving in urban areas amounting nearly 2 million miles (roughly 3.2 million km), including its time as a project within Google, and its simulated runs in 2016 alone have reached approximately 1 billion miles (roughly 1.6 billion km). Waymo's autonomous driving system can detect pedestrians and cyclists in all directions at a maximum range of approximately 200 meters.

  Additionally, Waymo has independently developed autonomous driving hardware, such as the mid to long-range distance LiDAR, cameras, and radars. These systems can be retrofitted onto existing vehicles.

  Waymo has completed the basic research and development stages for autonomous driving technology, and will begin its business as an independent venture company with powerful backing. In the future, the company will continue to advance its research, and will seek opportunities for joint business with transportation and logistics companies, as well as OEMs.

Autonomous driving test vehicle based on the Chrysler Pacifica Situation when the testing vehicle encountered a school bus
Autonomous driving test vehicle based on the Chrysler Pacifica
Source: Waymo
Situation when the testing vehicle encountered a school bus (Austin, Texas)
Source: Waymo

Cooperative relationships with OEMs

FCA FCA In December 2016, Waymo unveiled an autonomous driving testing vehicle co-developed with FCA and based on the Chrysler Pacifica HV minivan. The vehicle features an autonomous driving system and equipment developed by Waymo, and 100 vehicles will be operated in testing procedures for system improvement. Test runs using the vehicles will begin in 2017.
Honda Honda R&D, a subsidiary of Honda, and Waymo began considering joint research for autonomous driving technology in the U.S. (announced in December 2016). The project will feature Waymo's sensors, software, and computers on Honda vehicles for joint behavioral experiments.

Autonomous drive test sites

Area State Starting period
Mountain View California 2009
Austin Texas 2015
Kirkland Washington 2016
Phoenix Arizona 2016


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Keywords
Mobility, Car sharing, Ride sharing, Uber, Didi, Google, Waymo

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