Every day in the news we read about advances with autonomous vehicles, electric cars, and on-demand ride hailing services. Individually, these technologies are groundbreaking. But all three together are poised to completely disrupt our daily travel routine.
Today’s on-demand ridesharing services are convenient. Press a button on your smartphone and get a ride to wherever you’re going. Unfortunately, they can also be expensive. In all but the most expensive cities, a ride costs 2-3 times more than using your own car.
When autonomous cars are reliably able to drive without a driver, this new technical capability will create a major disruption for today’s ridesharing companies. Paying drivers is the single biggest cost of offering on-demand rides. Removing the driver will bring the total cost down to below the cost of driving your own car. Converting the vehicle fleet to entirely electronic vehicles (EVs) will further reduce cost of operations. Estimates put EVs at 10 cents per mile less expensive compared to vehicles with an internal combustion engine. These three technology trends coming together—adding EVs and autonomous vehicles to existing ridesharing services—will bring the total cost down from $1.50 per mile today to 25 cents per mile in the future. At this price it’s half the price of driving your own car!
Mobility as a Service
Few people today buy CDs or DVDs anymore. It’s just much simpler to press a button and listen (or watch) what you want. Similarly, when the cost of mobility as a service becomes significantly less than the cost of using your own vehicle, we’ll see a dramatic shift in consumer attitudes towards vehicle ownership. Deloitte predicts that sometime between 2025 and 2030, there will be more vehicles in the US urban areas sold to ridesharing fleets than to private individuals.
Economic value creation
With this triple transformation, the economic value creation will transition from the business of selling cars to the business of offering mobility as a service. In fact, ARK Investments estimates that in 2030, the value of mobility as a service companies will be six times the value of auto manufacturers today. These future mobility service providers will benefit from triple disruption to create new revenue streams and consumer offerings.
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Ridesharing companies have clearly established the viability of on-demand rides worldwide. These companies have mastered the most expensive component of their cost structure: recruiting, on-boarding and managing drivers. With the addition of EV and autonomous technologies to on-demand ride services —the triple disruption—this expertise in driver management will greatly diminish as a competitive advantage. Expertise in managing fleets of vehicles themselves, rather than relying on drivers, will emerge as the great strategic differentiator for mobility as a service vendors.
To position themselves for the mobility as a service future, forward-thinking car manufacturers and other automotive operators are experimenting with carsharing services today. Carsharing services are accelerating the learning curve for these companies as they refine their service offerings, demand pricing, vehicle positioning, and fleet management strategies. This hard-won knowledge will build strong brand and operational differentiation as autonomous EVs become the dominant mode of urban transportation worldwide.
How Ridecell helps
Ridecell offers automotive companies a ready-built, proven software platform to manage ridesharing or carsharing services today. By eliminating the time and cost to build and test their own software platform and user app, Ridecell enables mobility vendors to launch their unique branded carsharing, ridesharing, or combined services within months, speeding the acquisition of critical strategic knowledge in physical fleet operations management, demand pricing, user relationships, alliance building, and vehicle maintenance.
By helping companies build their own brands and operational expertise, Ridecell offers its customers a strategic advantage as they prepare for the coming triple disruption of the transportation industry.
Author: Mark Thomas, VP of Marketing and Alliances, Ridecell
Originally posted in the Jefferies Mobility Technology – Weekly Newsletter March 25, 2018