Timo Möler, Asutosh Padhi, Dickon Pinner and Andreas Tschiesner, all members of the McKinsey Center for Future Mobility published an article in McKinsey & Company in December 2019, named “The future of mobility is at our doorstep”.
The article provides an up to date review on this issue. Here there are some of the key issues.
The past year was a pivotal one, with many important achievements across the disruptive dimensions of mobility: autonomous driving, connectivity, electrification and shared mobility (ACES). In 2019, electric-vehicle (EV) sales set another sales record global. Some players demonstrated truly driverless cars without backup drivers, setting new milestones in autonomous driving. Uber and Lyft – the two big disruptors in the ride-hailing space – went public in spring 2019. Also in 2019, regulators began granting approval to drone deliveries and to electric vertical takeoff and landing crafts, with these types of vehicles flying for the first time.
The article stresses that 2019 was also a year of reality checks, as congestion and public – transportation woes reached new heights for cities around the world, realization timelines for technology like autonomous vehicles (AVs) were postponed, and some new mobility business models failed to win over investors.
Authors point out that key risks for the industry remain elevated and that competition from new mobility attackers is intensifying, the road ahead remains bumpy, as today’s reality delivers a mixed picture for the future of mobility. On the one hand, there are big expectations with regard to future technologies and business models; on the other hand, there is an urgent need for a “double transformation”. In other words, preparing companies for the mobility of tomorrow also means making today’s business crisis resistant.
Investments across the mobility landscape
The authors remark a continued acceleration of investments in the relevant technologies – with e-hailing, semiconductors, and sensors for advanced driving – assistance systems and autonomous driving still being the front-runners.
On a regional level, activity in the United States is strongest, but tech-intense locations, such as Israel, also play important roles in the mobility ecosystem.
2019 was a year in which optimistic forecasts had to be scaled back to a certain degree. And the automotive industry is quickly turning into a true mobility ecosystem.
Yet the underlying logic for autonomous driving, especially in cities, remains intact. The article highlights that electric, shared AVs – also called robo-taxis or -shuttles – could address mobility’s pain points in cities (such as road congestion, crowded parking spaces, and pollution) while revolutionizing urban mobility, making it more affordable, efficient, user friendly, environment friendly, and available to everyone.
Of the global markets for AVs, China catches the eye. It has the potential to become the world’s largest market for AVs.
Connected cars are poised to become potent information platforms that not only provide better experiences for drivers but also open new avenues for businesses to create value. According to the authors, the key success factor for connectivity services is the clear value proposition the offering has, either to an external customer or to an internal stakeholder.
While the signals are somewhat mixed for autonomous technology, the “E” in ACES – electrification – certainly gained momentum in 2019. This development was triggered by two trends: tightening regulation – for example, in Europe – and rising customer demand.
The challenge of making EVs profitable remains, but OEMs and their suppliers are working hard to address it successfully.
Advancements in battery technology, economies of scale in EV production, native EV design, and cooperation among OEMs can help bring down costs – which are currently still higher than for comparable internal – combustion – engine (ICE) vehicles.
In this respect, 2019 certainly has been the year of many cities’ announcements of their future mobility visions, including micro mobility. With micro mobility being a nascent market in Europe, many start-ups introduced shared e-scooters in European cities.
The 2020 outlook
Consumers. As CO2 regulations in Europe kick in next year and more EVs need to be pushed onto the road, 2020 will be an important year to measure the reinforcing power of electrification. Early adopters love their EVs, but will followers as well?
Technology. Might 2020 be the year in which more attention is given to the transport of goods? The commercial-mobility segment could catalyze some noteworthy developments. One example here is autonomous driving in the context of shared mobility. Specifically, the replacement of the driver cost is a significant element of the total cost of ownership.
Market and competition. The authors understand that 2020 will be characterized as the year of the intensifying “double mobility transformation,” with players operating in an economic slowdown but, at the same time, needing to rethink their business models in a time of heightened city regulation, technology disruptions, and changing consumer needs.
The growing role of regulation. For many players and for many technologies, cities will be the most important stakeholders. From “sticks” (such as parking fees, low- or no-emission zones, and city tolls) to “carrots” (such as piloting new robo-taxi or -shuttle service-mobility solutions), it will be cities where the future of mobility will be decided.