Smart mobility, defined for the sake of simplicity as a personalized ‘service’ available ‘on demand’, providing individuals instant access to a seamless system of clean, green, efficient, and flexible transport to meet all their needs, is a transition affecting the mobility sector, though we cannot call it a revolution yet.
Even though, day after day, smart mobility services such as ride sharing or MAAS (Mobility as a Service) platforms are growing increasingly widespread (especially in big cities), today, the majority of travel is still carried out in a way not very different from twenty years ago, except for high-speed trains. Meanwhile, in sectors such as hosting or entertainment, digital platforms’ potential, from Booking to Airbnb through Netflix and Amazon Prime have completely revolutionized the business models underlying the industry. The macro trends driving the transition to smart mobility are the same ones that are revolutionizing the entire economy: the transition from a culture of ownership to a usership one, the clean energy transition, and the internet of things (IoT).
All these phenomena have enormous disruptive potential, and I am personally convinced they will be a great opportunity to improve our quality of life by making our travel easier and more pleasant. Nevertheless, they still have some constraints of a mainly economic technological, and legal nature, which prevent the full expression of their potential. Like all disruptive events, companies operating in the sector will produce both great risks and great opportunities and, as is often the case, the most traditional companies face the greatest risks if they are not able to interpret the signs of change.
The usership model and the case for cooperation
First, it is not an easy cultural change to move from the culture of ownership to a usership model against the backdrop of a social environment where people are used to do about 80% of motorised travel with private vehicles. However, it is precisely the observation that all public transport service companies, from trains to scooters, have a share market of only 20% that can lead to a large and useful alliance between companies that traditionally feel in competition against each other.
The only way to succeed over private cars, one of the myths born during the second industrial revolution and exploded after the Second World War, is to create a mobility ecosystem, which entails a close collaboration between all mobility providers, from both public - collective and private ones (local public transport companies and taxis), through long-haul operators (railway companies, airlines, and buses), up to the newcomers of urban micro-mobility (bikes, scooters) which, through digital platforms and aggregator services, will be able to offer any mobility solution at a competitive price.
In essence, today, private cars win the competition because they offer a door-to-door service. For public transport to provide a door-to-door service it must necessarily be multimodal and therefore integrated between different modes of transport. To make it happen, the first driver must be cooperation: as a matter of fact, while remaining in an increasingly competitive area where different players in different segments continue to compete with all the levers available (including price), each player shares their own data and systems to allow the user to manage their own mobility as a single integrated service.
The bet is that reducing the percentages of private mobility, the only essential service would be largely self-produced — instead of being entrusted to professionals — and that, therefore, increasing the share of collective and shared mobility brings benefits to all the companies involved in this healthy and competitive ecosystem. In essence, only competition against private mobility — instead of intramodal competition — can produce market growth for public and shared mobility.
This concept of cooperation among providers of mobility should not be seen as an attack against the automotive sector. We do not confuse the vehicle with the service and the business model. The car is — and will continue to be —the best way for many of our mobility habits because of its flexibility, especially for travels that involve from 3 to 5 people, but it will not imply the use of a vehicle directly owned by people. Car ownership has indeed great inefficiencies: to own a mean of transport that is used at most 10% of the day, people must support high fixed costs, such as devaluation, taxes on possession, or compulsory maintenance. In a smart mobility scheme, the car will still be a leading actor, but through sharing services or rentals.
Energy and mobility: target zero emissions
The real revolution for both cars and heavy vehicles will be the transition from fossil fuels to a zero-emissions scenario. To date, 92% of the sector is still powered by energy from oil and its derivatives.
In this case, the main driver is clearly the environmental one. Without an effort to reduce the emissions coming from the transport sector, which accounts for about 30% of global emissions, we will certainly miss the Paris Agreement targets reaffirmed at COP26 in Glasgow.
Even if we overlook for a moment the underlying environmental motivations, we realize that even from an economic point of view there is no doubt that electric mobility, a ready technology and a real alternative to fossil sources, is far more efficient than the traditional one: an electric vehicle, in fact, with the same primary energy covers about 3-4 times the kilometers of a vehicle with an endothermic engine. This, at the system level, entails significant energy savings for our mobility. Given that, as the clean energy transition progresses, green electricity will be abundant and cheap, but we cannot neglect two bottlenecks in this sector: the price of batteries, also due to the scarcity of raw materials that make them up, and the widespread use of charging infrastructure for electric vehicles.
As for the first issue, the trend is very comforting: between 2010 and 2021, their price fell by 89% from 1,200 to 132$/kWh. Given the increase in volumes and the economies of scale, this trend does not seem to stop2. In addition, about 80-90% of raw materials (lithium, nickel, cobalt) are recyclable, which should reduce the need to extract new ones. It is estimated that — at full capacity — 80% of raw materials for battery production will have been previously recycled.
As regards the second issue, we can be moderately optimistic: both carmakers and large utilities/energy companies are incorporating important investments in their industrial plans to develop a network of capillary across the Italian and larger European territory, working together towards interoperability. However, the risk, in this case, is that business models with high prices for the final consumer (fast charging) will prevail, a feature that does not make electric cars particularly competitive against thermal cars in terms of Total Cost of Ownership; ultimately making them less accessible to large parts of the population without abundant state incentives. The preferred model would therefore be a system where the charging column is a terminal part of the electricity network, such as the home meter, and therefore remunerated with RAB mechanisms, while competition would instead be between mobility service providers selling recharging services. Alternatively, it is essential to find business models that minimize the infrastructure Capex making charging costs more competitive than those of gasoline and diesel.
Coming to terms with the Internet of Things (IoT)
The last point is IoT. In this case, unlike the first two, the economic drivers add up to technological and legal ones: on the one hand, fully autonomous driving is ready in closed systems, such as laboratories or circuits, and it seems to be nearly ready in long routes such as highways, though not yet applicable in fully open systems such as city roads. On the other hand, it is not yet clear to whom legal responsibility falls in the event of an accident of an autonomous vehicle. The transition is crucial: from the reaction (typical of a man driving and finding a sudden event to manage), to the decision (which will take a programmer who simulates all possible events in the reality of road traffic). However, it is clear that IoT and autonomous driving bring significant potential benefits to system efficiency, with important and positive externalities. Just by way of example, some researchers at MIT in Boston have carried out a study in Manhattan, calculating through a route optimizer the minimum number of autonomous vehicles necessary vis-à-vis people’s need to move. With the help of a powerful simulator, they came to an extraordinary conclusion: about half of the 290,000 vehicles on the streets of Manhattan today would be superfluous. As such, autonomous driving will allow us to find ourselves on roads that are less busy, safer, more efficient, and where we will breathe cleaner air.
The possibility of a better service for people (combined with lower total costs and a healthier life), the opportunity of growth for companies in the sector, and the prospect of greater efficiency will surely be the driving forces behind the transition from mobility as we have always known it towards truly intelligent mobility.