From car ownership to transportation subscriptions

October 24th, 2016 | by Mark Thomas, EVP of Marketing and Alliances | Posted in: Insight on Things

And why I left Cisco to join RideCell

From car ownership to transportation subscriptions

Its been an exciting week. After a tough decision to leave Cisco—where I headed up global marketing for connected cars—I’ve made the move to an amazing new mobility startup in San Francisco: RideCell.

What’s RideCell? It’s one of the most innovative car and ride sharing platform companies you’ve probably never heard of. We’re poised to be the leaders in the Mobility as a Service (or MaaS) space. Why is that important? Because transportation is on the cusp of a massive paradigm shift.

Remember when the primary way we’d get music was to go to a store and buy a CD? After the shift to digital music, the rise of subscription music services has pretty much obliterated the need to own the actual media. If you always have access to whatever music you want to listen to, there’s no reason to drive to the store and pay for an album that costs more than a month’s subscription for unlimited music access. Now that we’re in a world where we subscribe to Spotify or Apple Music, this seems obvious.

Transportation is changing: its going to be on-demand, integrated and autonomous

The same thing is happening with transportation. In fact, we’re on the brink of a revolution that’s far bigger than the transition with music. How we get from one place to another is about to change forever. Uber has already shown us what it means to call a ride with the tap of a button. Why drive your car, hunt (and pay) for parking, walk to your final destination, and then repeat the whole thing on your way back? It’s hands-down a better experience and, in some instances, cheaper too if you factor in the cost of parking in downtown SF.

Now imagine that the price for an Uber ride drops by 80%. Instead of $10 for a ride downtown, you’d pay $2.00 or maybe $2.50. It would be a no-brainer to use a service at that price.

But how could the cost drop so much? Ride sharing drivers are already being squeezed with lower and lower rates. The answer is autonomous driving. It’s estimated that over 90% of the cost of operating a ride sharing service is the cost of the driver. When we move to a world where cars drive themselves—and we’re passengers riding around in self driving cars—the cost of transportation as a service will drop dramatically.

Transportation as a service is going to be key in driving revenue

What are the implications? With far fewer people buying music, subscription services are the businesses that are making the money in today’s new music economy. If customers stop buying cars and switch to transportation as a service as their primary means of getting around, it will be the service providers who capture the revenue, not the car manufacturers. Which is why every car manufacturer has an initiative to become a mobility provider. That’s where the profits will be in this new economy.

It’s also probable that we’ll need fewer car brands in the future. When I call an Uber or a Lyft and a Prius shows up, I don’t give it a second thought as long as it’s clean and on time. While I might never consider owning a Prius, the brand of the car I’m riding in is no longer something that reflects on my identity. Transportation as a service will be measured by cost, reliability, and the condition of the vehicle. Not the color or marquee of the car.

In the future, we’ll pay a monthly subscription for all our transportation needs. With our subscription, we can be driven to work in a sedan, take a truck for that trip to Home Depot, and pack the kids into an SUV for a family weekend in the mountains. Each vehicle type would use up our subscription credits at a different rate. Want your subscription to take you more miles? Sign up to share the ride to work for those days when you don’t need to be on the phone. Do you enjoy driving a convertible on a sunny day? Have one drive itself to your home or work, then switch it to manual driving mode and take it for a spin. Transportation as a service doesn’t always have to be autonomous.

RideCell is transforming the future of transportation

Back to RideCell. RideCell offers a unified platform that lets auto OEMs transform their businesses from selling cars to providing services such as carsharing and ridesharing. BMW is using the RideCell platform to power their on-demand car sharing service, called ReachNow, in Seattle and Portland. As auto OEMs around the globe rush to capture the first mover advantage of launching car and ride sharing services, they need a ready-made unified platform to get to market as fast as possible. RideCell has the platform that’s industry proven, feature rich, and ready to roll for these OEMs. RideCell is also building an operating system that will allow OEMs to manage fleets of autonomous vehicles. It’s not only the reason BMW chose to power their new service offering using RideCell, but also the reason they decided to invest in our company.

RideCell has been developing a platform for Mobility as a Service since 2009—long before the most OEMs recognized the need. Now that autonomous is happening faster than anyone thought it would, the pressure to transition to a service model is full on. As car companies seek to build this new line of business, they have very few mature ride sharing platforms to choose from. (Uber has a great platform for their own service, but they prefer to keep it to themselves.) RideCell’s platform is the industry-leading platform for powering multiple offerings from different companies. In fact, RideCell is already powering new mobility offerings for more than 15 customers and is poised to power leading auto OEMs as they embrace this global transition.

Stay tuned for more news from the forefront as transportation changes from a product to a service!

Author: Mark Thomas, VP of Marketing

Share this