Navigating a new mobility landscape

Mobility, by definition, refuses to stand still.

Just as the horse and cart gave way to the motor car, current concepts of transportation will similarly – and soon – be regarded as antiquated, superseded by whole new ways of thinking and moving.

Identifying this future will help businesses, governments and individuals prepare for the journey ahead.  Opportunities are plentiful to turn a profit while helping save the environment, so anticipating these trends is a useful thought exercise.

What do we know for sure?

We know the future of mobility will be:

• interconnected
• on-demand
• shared
• subscription based
• and sustainable

The automotive industry is undergoing a profound, once-in-a-century transformation.  In a global mobility market worth some US$ 7 trillion, more than half of that revenue will by 2030 derive from new business models.  As envisaged by American technologist Ray Kurzweil, the next two decades of technological development will be the equivalent of the last 100 years.

Things are changing – at a fundamental level – and they’re changing fast.

What’s wrong with my car?

Quite a lot, as it turns out.

Firstly, consider its environmental impact. The US Environmental Protection Agency notes that the transport sector accounts for more than half of all nitrogen oxide pollutants in the US, and has calculated that achieving cleaner air by 2030 will result in 40,000 fewer deaths and 4.8 million work days saved.^[1]

 Secondly, private cars have traditionally made dubious financial sense.

New cars lose 10%-15% of their value the moment they leave the showroom, and after just five years they are worth around half their original price – this, despite the fact they spend 95% of their time parked at the roadside.

Electric vehicles (EVs) are stealing the inside lane from internal combustion engine (ICE) counterparts and are predicted to surpass them in sales by 2030.  For consumers, the figures are increasingly compelling.

Long-standing Abdul Latif Jameel partner Toyota, which pioneered the hybrid electric vehicle market with the best-selling Prius and has made ground-breaking advances in hydrogen-fueled vehicles, plans to launch 10 electric vehicles in the early 2020s, starting in China before rolling them out to Japan, India, the United States and Europe.  It aims to sell 5.5 million EVs by 2025^[2]. 

Battery cost and lifespan have until now constrained the mass adoption of EVs, but the next generation of batteries are set to change everything.

They promise far greater distances per charge, of several hundred kilometers each time.  The General Motors model Vauxhall Corsa E, for example, a small passenger car released in the UK in April 2019, has a range of 209 miles^[3], long enough to drive between London and Manchester on one charge.  Some higher-end electric cars can go even further on one charge.  US EV start-up RIVIAN, in which Abdul Latif Jameel was an early-stage investor, will launch its RT1 with a 180 kilowatt-hour capacity battery pack that can travel 410 miles on a single charge – far enough to get you from Manhattan to Montreal, or Abu Dhabi to Muscat.  RIVIAN’s on-board battery management system allows AI to monitor how individual motorists buy and charge their vehicles, potentially extending the life of each battery by up to three times.

This, at a time when 99.3% of journeys in the UK already fall within current EV ranges, suggests so-called ‘range anxiety’ is just a temporary hurdle which word of mouth and personal experience will quickly overcome.^[4]

And if that’s not enough, batteries of the near future will hit the market at a far more competitive cost.

Batteries comprised 57% of an EV’s total cost in 2015, but this is set to fall to 20% by 2025.^[5]

Electric motors are also vastly more efficient than their predecessors, achieving 99.99% energy efficiency compared to 21% for ICEs.  And they need fixing less frequently too, requiring 90% less maintenance work.

Manufacturers are acutely aware of the momentum behind EVs, which explains why they’re investing US$ 300 billion in them over the next decade.

 Policy, the final part of the puzzle, is also falling into place.  In the UK, for instance, the government has announced a ban on all new petrol and diesel cars by 2030 – a decade earlier than previously planned.

With 44% of the world’s EVs currently concentrated in just 25 markets globally, there is clearly room for further exponential growth once word spreads.`

Who, or what, will be moving – and why?

We might think we’re safe drivers, but statistics suggest otherwise.  Some 1,350,000 deaths worldwide are caused by road accidents annually, and of those, 94% are blamed on human error.  Autonomous vehicles (AVs) are primed to take charge, taking people and products where they need to go, faster and more safely than ever before.

The logistics world is primed to respond quickest to this new technology, with autonomous long-haul trucking and cargo transportation destined to become the norm rather than the exception.  Even the world’s largest online retailer, Amazon, is getting in on the game, via its recent purchase of self-drive tech company, Zoox, and order for 100,000 electric vans from Rivian as part of the Climate Pledge in September 2019.

While so-called Level 5 AVs (fully autonomous vehicles requiring zero human interaction) remain a decade or more away, technology is fast catching up with visions of a driverless future.

• Advanced driver-assistance systems (ADAS) use cameras and sensors to assist motorists in driving and parking.
• LIDAR (light detection and ranging) technology enables vehicles to map and avoid obstacles in their path and safely navigate any environment.
• Autonomous vehicles, lacking the human variable, can behave predictably in the event of collision avoidance.

The ‘brains’ within such systems are rapidly getting smarter.

Driverless ride pioneers Waymo and Cruise are busy testing their autonomous vehicles on California’s roads.  Cruise clocked 831,040 miles last year and averaged just one ‘disengagement’ (an instance requiring human intervention) per 12,221 miles; Waymo achieved 1.45 million miles and recorded just one disengagement per 13,219 miles^[6].  Illustrating the speed of progress, as recently as 2017 neither company achieved 500 miles without disengagement.

Testing and approval standards for AVs are still in development and will take several more years to finalize.  Naturally, AVs will also require sensors, intelligent street signs and navigation interfaces to exploit their full potential.  However, ambitious investment will ensure these assets transpire, and the AV market is predicted to increase eight-fold between now and 2030 to US$ 40+ billion annually.

The drive toward diversification

Who will prosper most in this new transport paradigm?  Businesses visionary enough to look beyond their existing scope and ask themselves not just ‘What are we?’ but ‘What could we become?’

Ride-hailing players, for example, in a trend accelerated by the pandemic, are increasingly drifting away from personal transportation to other segments of the conveyance market.  In-person Uber rides plunged 75% between Q2 2019 and Q2 2020, whereas food delivery jumped 106%, prompting Uber CEO Dara Khosrowshahi to say the company’s income will eventually be split 50/50 between ride-hailing and other divisions such as consumables.

Carmakers are braced for an even more fundamental transformation, widening their remit to become not just manufacturers but service providers also.

In the private vehicle market, potential openings emerge right across the business-to-consumer spectrum.

Subscription fees could unlock a host of innovative services for motorists: auto-diagnostics, remote control operation, enhanced navigation, insurance schemes and rental partnerships.

Motorists won’t just be buying a vehicle, more of a portal to a holistic lifestyle.

Real-world examples abound.  Mercedes-Benz Vision AVTR will be able to measure biometrics in the car such as pulse rates and breathing.  General Motors customers can book hotel rooms or reserve restaurants from the comfort of their car.  And Volkswagen’s DriveView technology provides feedback on driving behavior (such as speeding or breaking) to deliver an optimized driving experience.

Such technologies present unparalleled opportunities for brand loyalty.  Manufacturers can extend their customer relationships well beyond the historic forecourt transaction.  And in doing so, they can begin to establish that elusive, all-important brand loyalty.

By getting to know the customer better than ever before, carmakers will accumulate data – and data itself can be monetized.  Yet here, a note of caution.  With access to so much customer-specific information, companies will need to prioritize their security protocols.

Pseudonymization and Format-Preserving Encryption (FPE) are techniques for protecting personal information and enabling legislative compliance, while preserving data useful for business processes.  The best systems will favor local data processing (minimizing the need for transferring personal data out of the vehicle) and offer users the flexibility to control how their data is used.

Only with a rigorous cybersecurity regime will customers overcome privacy concerns and fully embrace the possibilities of AVs.

A glimpse at the future of mobility

Private travel is experiencing a modest resurgence among virus-weary travelers, with ride-sharing down around 80% during the pandemic.  However, few doubt that once normality and confidence in ‘proximity to strangers’ returns, we will resume our trajectory toward a more sophisticated mobility landscape.

MaaS (Mobility as a Service) might still be an exotic term to many, but that unfamiliarity will not last long, with MaaS predicted to account for 31% of all journeys by 2030.

Think of MaaS as one – more practical – manifestation of the ‘internet of things’: a mobility super-app on your mobile phone, communicating with and coordinating all your transport options to efficiently travel from A to B.

Increasingly, these choices will encompass concepts which are only just beginning to make a mark on our streets.

Imagine being picked up from your door by a shared taxi, then deposited by a rank of e-bikes or e-scooters to complete your journey.

Companies such as USA-based Lime and Bird are demonstrating the potential of this on-demand, micro-mobility mindset.  Scooter-sharing firm Bird hit 10 million rides in Southern California in its first year (2017-2018) while Lime recorded 34 million trips via its fleet of scooters, electric/pedal-assist bikes and car-shares.^[7] 

Again, policy support is pumping wind into the sails.  November 2020, saw Transport for London give the go-ahead for e-scooters on the capital’s streets as part of the nation’s green mobility plan.  Three hire firms will operate in tandem from Spring 2021, providing scooters with a maximum permitted speed of 8mph.

There is an even more radical, futuristic-sounding vehicle coming our way, this one set to dominate not our roads, but our skies.

The electric-powered air taxi.

If urban air mobility is to offset our congestion and pollution problems, air taxis cannot purely be the preserve of millionaires – they must eventually be no more expensive than ground transportation.

That’s the ultimate aim of companies like Joby Aviation, in which Abdul Latif Jameel is also an early investor.  This US-based startup’s five-seater electric vertical-takeoff-and-landing (eVOTL) air taxis will be able to travel 150 miles per change at 175 knots – all while making far less noise than a conventional aircraft.

The vehicles, currently at demonstration stage, are designed to be profitable on journeys as short as 25 miles, and capable of landing on areas as small as the top of multi-story car parks.

Each eVOTL taxi holds six electrical power units (EPUs) and can transition from vertical takeoff to more efficient winged flight in as little as ten seconds.

Joby, which could be certificated for air travel as soon as 2023, has already raised some US$ 750 million in funding.

Investment can supercharge competitiveness

As key investors in both Joby Aviation and RIVIAN, we are proud to contribute to the exciting changes that are transforming our relationship with mobility.

Our proactive ethos springs from our successful partnership with Toyota Motor Corporation, a firm renowned for its commitment to the latest mobility technology and trends.  Toyota has launched a US$ 100 million fund for new AV technologies; it has also made strategic investments in robotic taxi startup Pony.ai and the Uber Advanced Technologies Group.  Some 35% of Toyota’s R&D budget is allocated to self-driving technology, and Toyota has committed to selling 5.5 million EVs by 2025.

Abdul Latif Jameel now touches all corners of the mobility ecosystem: from batteries, to AV sensors and security software; MaaS data management, to fleet servicing and EV charge points; even to clean energy distribution and storage.

We’re one of a wave of private investors enabling businesses and governments to do the right thing and get on board a greener mobility future.

Operational in 30 countries across six continents, we are now a key global player in the journey toward a new mobility world: a world of interconnected, on-demand, shared, subscriptional and sustainable transport. As a trusted investment partner to innovative enterprises everywhere, we are helping to redefine the very meaning of mobility within this exciting new digital economy.

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[1] https://www.epa.gov/transportation-air-pollution-and-climate-change/smog-soot-and-local-air-pollution

[2] https://www.toyota-europe.com/world-of-toyota/feel/environment/better-air/electric-vehicle

[3] https://www.vauxhall.co.uk/cars/new-corsa/electric.html

[4] https://home.kpmg/xx/en/home/insights/2019/02/mobility-2030.html

[5] https://www.bloomberg.com/opinion/newsletters/2019-04-12/electric-vehicle-battery-shrinks-and-so-does-the-total-cost-juebizw9

[6] https://www.forbes.com/sites/alanohnsman/2020/02/26/waymo-and-cruise-vie-for-supremacy-in-murky-california-self-driving-data/?sh=4d2744a51760

[7] https://fortune.com/2019/02/07/lime-funding-sarah-smith-bain-capital-ventures/