Mobility-as-a-Service: The Convergence of Automotive and Mobility Industries

By Malte Ackermann

The advent of mobility-as-a-service and the disruption of the automotive industry are both overlapping and fuelled by the same developments and thus raise a very fundamental question: are we at peak car? Based on the author’s extensive field research, academic study, and professional experience, this book explores this very question as well as the underlying social, economic, generational, and regulatory changes that lead to a new mobility regime. Through rich descriptions of established OEMs and mobility start-ups, it discusses the current forms of mobility and the promise of autonomous technology. It further explores the strategic dimension of these developments so as to navigate and succeed within the disruptive and ever-changing environment of mobility services.

• Language: English
• Publisher: Springer
• Release date: Jul 5, 2021
• ISBN: 9783030755904

Book preview

Management for Professionals

The Springer series Management for Professionals comprises high-level business and management books for executives. The authors are experienced business professionals and renowned professors who combine scientific background, best practice, and entrepreneurial vision to provide powerful insights into how to achieve business excellence.

More information about this series at http://​www.​springer.​com/​series/​10101

Malte Ackermann

Mobility-as-a-Service

The Convergence of Automotive and Mobility Industries

1st ed. 2021

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Logo of the publisher

Malte Ackermann

Nuertingen-Geislingen University, Geislingen, Germany

ISSN 2192-8096e-ISSN 2192-810X

Management for Professionals

ISBN 978-3-030-75589-8e-ISBN 978-3-030-75590-4

https://doi.org/10.1007/978-3-030-75590-4

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021

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For Ela und Linus

Preface

This book is the outcome of my personal journey. Many of the ideas and insights stem from extensive discussions over the last years, as well as my personal tenure with Daimler and car2go. Capturing and refining these ideas has been a journey in itself. With this book, I want to explore the general societal and economic trends that lead to a new understanding and perception of mobility as well as the factors that will shape its future. The spread of digital technologies and the emergence of numerous other disruptive forces have changed the rules of the industry. The business playbook that governed the automotive industry for decades does not apply any longer. Within this book, I explore all new forms of mobility and dissect its implications on businesses. Originally, I aimed to describe the rise of mobility-as-a-service through the lens of the automotive industry. While doing so, I realized that the automotive industry and the mobility industries are increasingly converging, even indistinguishable in the eyes of the customer. This entails tremendous implications for both industries. The underlying developments that spark the convergence are here to stay and will likely only accelerate in the future. One central insight emerged from my research and shaped the outcome of this book: I truly believe that we are at the very peak of cars and new mobility services are poised to take over.

A book is always a collaborative learning process and I am especially grateful to Sebastian Ulm, Lars Engelbrecht, Enrico Howe, Stefan Rostek, and Fabrice Tronche. Numerous other people gave me valuable feedback and industry insights. I would like to thank Eric Hsu for encouraging me to write a book in the first place and my editor Prashanth Mahagaonkar for believing in my idea. Special thanks goes to my mother, Irene, who tirelessly and meticulously helped me with any spelling errors or grammatical mistakes. Finally, I would like to thank my wife, Marlies, for all her contributions throughout this project.

Malte Ackermann

Stuttgart, Germany

March 2021

Contents

1 Introduction 1

References 5

2 Why Mobility-as-a-Service?​ 7

2.​1 The Digital Era 7

2.​2 A Game of Cities 14

2.​3 Generational Change 21

2.​4 Synthesis of Chap.​ 2 26

References 30

3 Shaping the Future of Mobility 35

3.​1 The Rise of Ecosystems 35

3.​2 Sustainability:​ A Wicked Problem 39

3.​3 A Flood of Money 48

3.​4 Synthesis of Chap.​ 3 52

References 58

4 Forms of MaaS 65

4.​1 Drive 65

4.​2 Be-Driven 73

4.​3 Ecosystem 77

4.​4 Autonomous Future 81

References 86

5 A Business Perspective 91

5.​1 A Framework for MaaS 91

5.​2 Assessing MaaS 97

References 110

6 The Way Forward 113

6.​1 Strategic Imperatives 113

6.​2 Conclusions 124

References 128

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021

M. AckermannMobility-as-a-ServiceManagement for Professionalshttps://doi.org/10.1007/978-3-030-75590-4_1

1. Introduction

Malte Ackermann¹  

(1)

Nuertingen-Geislingen University, Geislingen, Germany

Keywords

Mobility-as-a-serviceAutomotivePeak car

Mobility is the lifeline of our modern civilization. The twentieth century has been called the century of the automobile, as cars have affected greatly the way we work, communicate, and live (Sumantran et al., 2017). Modern cities and urban developments are built in a fashion that cars are the central means of personal transportation. After WWII, urban sprawl increased in many western countries, the infamous suburb became the focal point of living and led to a culture of cars. It has enabled economic development and a great quality of life in many parts of the world. As economies grew, so did the number of cars. For example, the number of vehicles in the United States increased from 68 million in 1958 to more than 270 million in 2018 (Strategy&, 2019). In recent years, this car-centered policy has come under scrutiny as societies and consumers have increasingly become aware and alerted by the negative externalities that this policy is causing. Traffic congestion and emissions are growing in developing countries and remain high in developed countries. Already, younger generations tend to drive less, for instance, in Great Britain, the peak for 17–20 year olds holding a driver’s license occurred in 1994 at 44%. Afterward this figure started to trend downward, plateauing at around 30% in 2017 (SMMT, 2019). Owning a car has never been more expensive. Cars have become increasingly complex, as advanced driver-assistance systems (ADAS), stricter emissions standards, and entertainment functionalities inflated the bill of materials. In the United States, the average car in 1950 was sold at roughly 45 percent of the average annual family income; this number rose to around 61 in 2014 (Sumantran et al., 2017). In addition, governments made operating and owning a car more costly. Still car ownership remains high, in the EU-28 the average motorization rate in 2016 was 506 cars per 1000 inhabitants, approximately one car for every two persons. However, fundamental changes are in the air.

The megatrends that transform the automotive industry are often abbreviated with ACES, which is short for autonomous, connected, electrification, and shared. Autonomous stands for self-driving autonomous vehicles, whereas connected refers to the connectivity of cars. Sending out and receiving information is a prerequisite for connecting the car to its surroundings, to pedestrians and infrastructure, but also enabling entertainment functionalities. Via over-the-air (OTA) updates, cars can consistently be enhanced, similar to a smartphone. Electrification indicates the electrification of the powertrain, the transition from combustion-engine powered cars toward alternatives such as battery or fuel-cell electric vehicles. Shared refers to the sharing of vehicles, the evolution from ownership to car access. Further developments change the outlook of the industry. Urbanization is still going strong and digitalization has deeply infiltrated our modern life. It has changed the way people socialize and communicate as well as the consumption of products and services. A soaring public awareness for sustainability issues affects every aspect of the industry. The accumulation of all these social and technological changes substantiates the notion that the automotive industry is ripe for disruption.

Interwoven with all the aforementioned developments is the simultaneous rise of mobility-as-a-service (MaaS). MaaS is the idea that transportation does not need to be either public, like trains, or personally owned, like cars. People have the choice to consume multiple forms of mobility. They can decide on what they want and how they want it, and as far away as their nearest smartphone. Today, cars can be shared, rented, or subscribed. New vehicle types such as e-scooters or e-bikes are added to the mix. MaaS is about combining several modes of transportation in a single digital venue. MaaS is a one-stop solution that includes services like renting out a car or an e-bike, but also additional services like purchasing a ticket and routing functionality. Ultimately, MaaS denotes the transition from ownership toward flexible access and opens up an entirely new industry. Mobility has become an individualized service. Figure 1.1 displays the global MaaS market in 2018 and the outlook for 2026. Although these numbers might be disputable, other studies reaffirm the notion that MaaS is destined for tremendous growth and this is the main reason why MaaS has caught the attention of media, academia, and industry insiders.

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Fig. 1.1

Global mobility-as-a-service market in billion USD (Source: based on Statista Mobility Services, 2020)

The tremendous market potential is a magnet to investors; billions of dollars have been poured into mobility ventures within the last years. Yet, most of the funding went to the new kids on the block and not to the automotive establishment. Mobility providers like Uber, DiDi, Bolt, Tier, or Voi have soaked up remarkably large sums. Incumbents like GM, BMW, or Toyota with a decades-old but proven and profitable business model seem somewhat disproportionally discounted by investors. In order to ride with the wind of change, traditional players have started to venture out into these new mobility segments. Today, players from very diverse backgrounds, like original equipment manufacturers (hereafter: OEMs), suppliers, start-ups, tech, software, and regulators, populate the entire MaaS landscape.

In the eyes of the consumers, these new services are highly welcome. In several markets around the globe, consumers are already shifting away from ownership toward mobility access (Simoudis, 2020). Younger generations are embracing modes like ride-hailing, carsharing, or micromobility and are willing to give up their personally owned car. Digitalization has torn apart traditional industry boundaries and the entry point to most services is the smartphone. This is the principal reason why consumers are detached from any distinction between automotive and mobility industry. For them, the question is who offers the best mobility solution for their personal situation. In consequence, automotive and mobility firms are increasingly fighting over the same set of customers. As these two industries are colluding, it comes to a clash of cultures, hierarchies, organizational practices, and ultimately mind-sets. The discrepancy is best exemplified by the different speeds the automotive and mobility industry operate in. Strategically, OEMs are used to think in years, whereas mobility firms think in months. Developing a car takes quite some time, although the average automotive product cycle time has decreased significantly. In 2000, the average was 8 years and has dropped to 6 years in 2010 (Deloitte, 2019). In 2020, the average automotive product life cycle is down to around 4 years. However, developing an electric-scooter takes only a couple of months. Due to large investment rounds, mobility providers are on the fast lane. It used to take companies an average of 20 years to reach a billion-dollar valuation, the major start-ups of today are getting there in four (World Economic Forum, 2016). Start-ups that are valued at $1 billion or more are called unicorn. The e-scooter provider Bird was the fastest ever start-up to reach unicorn status in just 15 months (INC Magazine, 2020). This is simply mind-boggling and a stark contrast to the automotive industry with its strong hardware legacy and organizational structures and processes that are streamlined for the development of time-consuming physical products (Everlin Piccinini et al., 2015).

Advisory firms like BCG, Bain, or the like consistently try to paint the rosy picture of how automotive firms need to branch out into the mobility segments, as the market is poised to grow and apparently incredibly attractive. Figure 1.2, taken from a study by McKinsey does exactly this, they predict that OEMs could earn up to 30% of their revenue from mobility services by 2030. Until now, that seems to be inspired by wishful thinking (McKinsey&Co, 2017).

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Fig. 1.2

Automotive revenue share in % (Source: based on McKinsey, 2017)

Established players from the automotive industry have a very tough time in these new mobility segments. In February of 2019, Daimler and BMW created five joint ventures in carsharing, parking, electric vehicle charging, ride-hailing, and city-mapping services, pledging to invest over $1 billion into these verticals (The Verge, 2019). The initial goal was to operate with their services in nearly 90 cities until the end of 2019 and expand consistently in the years after. Just by the end of 2019, Daimler and BMW reversed out of the expansion plans and even withdrew their carsharing operations out of North America entirely. Oliver Zipse, CEO of BMW, even went as far to announce that his company is an aircraft manufacturer and not an airline and that the company would focus instead on its core competency: manufacturing premium cars (Financial Times, 2019). Many automotive incumbents experienced similar tales. Ford acquired Chariot, an app-based shuttle service for $65 million in 2016, just to shut the service down two and half years later (Wired, 2020). General Motors announced Maven in January 2016 as a personal mobility brand, the company’s first major mobility initiative (CNBC, 2020). Maven was shut down in the beginning of 2020, naming financial troubles. Bosch, the German supplier giant, shut down Coup – a scooter sharing operation serving Berlin, Paris, and Madrid – by the end of 2019. Bosch announced it was getting out of the mobility services entirely, citing the lack of profitability as the main issue (Electrive.com, 2019). As of 2021, it seems that traditional players from the automotive industry have lost their appetite in the new mobility playing field. Services such as ride hailing or shuttling are mainly propelled by young companies. Recent innovations, such as the burgeoning micromobility, are entirely dominated by start-ups.

The advent of MaaS and the disruption of the automotive industry are both overlapping and part of the same developments and thus raise a very fundamental question: are we at peak car? Exhibit 1.3 shows the horse population in millions in the United States. The 1920s were peak horse just before cars became a mass product (Barclays Research, 2015). The global market for new car sales reached a new all-time high of almost 75 million in 2019, and just a century later, we might just have seen the peak of cars. This book delves into the idea of how new mobility services might usher the end of the automotive era as we know it. It explores the economic, demographic, and social changes that lie beneath the shift toward mobility-as-a-service. This book examines MaaS from a business perspective, through the lens of automotive and mobility firms (Fig. 1.3).

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Fig. 1.3

US horse population in million (Source: based on Barclays Research, 2015)

A number of insights that result from this profound transformation will be presented in this book. Chap. 2 examines the developments that gave rise to mobility-as-a-service in the first place. The main ingredients are digitalization, urbanization, and changing generations. Chap. 3 explores the forces that will shape the future of mobility, namely the impact of digital ecosystems, the complexities and multiple layers of sustainability, and how markets flooded with capital have a lasting impact in both industries on various levels. After laying the groundwork, Chap. 4 articulates how MaaS looks today and illustrates all current forms of mobility, the ones we see in the markets today as well its autonomous future. In Chap. 5, I conceptualize MaaS as a framework, portray the implications for firms, and describe the changing value chains. Further, I characterize the major challenges for establishing and sustaining new mobility services. Based on these insights, I advance strategic imperatives in Chap. 6, on what it takes to win in such disruptive times.

References

Barclays Research. (2015). Disruptive mobility: AV deployment risks and possibilities.

CNBC. (2020). General motors shutting down Maven car-sharing operations. https://​www.​cnbc.​com/​2020/​04/​21/​general-motors-shutting-down-maven-car-sharing-operations.​html

Deloitte. (2019). Autonomous driving–moonshot project with quantum leap from hardware to software & AI Focus.

Electrive.com. (2019). Bosch discontinues Coup scooter sharing–electrive.com. https://​www.​electrive.​com/​2019/​11/​25/​bosch-discontinues-coup-scooter-sharing/​

Everlin Piccinini et al. (2015). Transforming industrial business: The impact of digital transformation on automotive organizations. Thirty Sixth International Conference on Information Systems.

Financial Times. (2019). German automakers do