The Importance of the MaaS Market

Just as the impact of electrification in the automotive market has already begun sinking in for OEMs, another significant shift rears its head. Urban mobility will likely be the first area of the market to be truly impacted by advances in autonomous driving. As it influences both public transportation as well as ridesharing and taxis, this growing segment of the market is too critical for OEMs and suppliers to ignore.

Aside from private ownership, consumers first experience with true autonomous driving will not be associated with very expensive private vehicles but instead MaaS—mobility as a service. This encompassed two significant sub-categories: robo-taxis and autonomous shuttles.

Robo-taxis are driverless vehicles that can be hailed to a customer’s location in order to take them to their destination. This category is characterized by its convenience: where private owners may be unable to choose between different car types for different needs, customers using e-hailing services can, and through notable existing e-hailing brands like Uber and Lyft, they already do. The freedom of choice is likely the most significant benefit to the consumer, however, as they cannot leave any items inside driverless taxis and expect them to be returned. Indeed, what customers can expect is that their driverless car may arrive with the clutter of other passengers inside.

The second sub-category of autonomous vehicles, as it relates to urban mobility, is autonomous shuttles. Presently, autonomous shuttles represent the smallest percentage of the future market, but certainly has room to grow — by 2030, I expect it to have a market potential of 2.5 million global units. Significant companies with a stake in this sub-category include May Mobility, Local Motors, Easy Mile, and Ride Cell — all worth keeping an eye on as the market develops.

Autonomous shuttles are currently headed toward providing lowest-cost rides for urban residents, with the affordability of this method of transport being its primary draw. Neither the comfort and ease of owning one’s own autonomous vehicle nor the speed and convenience of hailing a robo-taxi are present within this transit model, as transit vans and buses, by nature, move at a lower speed and generally have fixed routes.

It is critical for OEMs to begin strategizing around this MaaS market. One of the most significant impacts autonomous MaaS applications will have is on the cost of travel itself: by eliminating the driver, some estimates suggest e-Hailing services could cost less than $1.00/mile, compared to $3.00/mile for a taxi or $1.80/mile with e-hailing services like Uber/Lyft.  Elimination of the human component offers earlier adopters a huge competitive advantage in terms of revenue and cost.  This could be much lower for autonomous shuttles and other ride sharing services.

Beyond cost, there are four key trends driving this market forward: urbanization, congestion, society, and the digital landscape. Urbanization and congestion both point toward cities that are jam-packed with people, have limited parking, and less-than ideal air quality. Individual vehicle ownership tends to be quite costly in these situations. Over 50% of the world’s population lives in cities today; the UN forecasts this number to increase to 4.9 billion by 2030, leading to an eventual 75% of the world’s population living in cities by 2050.

The social and digital trends point toward consumers everywhere losing interest in personal vehicle ownership as using app-based products is more appealing, affordable, and easy than buying a privately-owned car. Since 1980, the number of 20 to 25-year-olds with driver’s licenses has dropped by 20%. What’s more, 9% of millennials simply do not want to or do not need to drive.

All these trends considered, key OEMs such as Daimler, Volvo, Toyota, GM, BMW, Ford, and VW have begun to building product portfolios apart from their legacy vehicles, converging electric, autonomous, shared and connected driving in order to gain an early edge on the competition in this developing market. They know that unless they act now, they won’t be able to take part in the future of this critical aspect of the industry.

Autonomous MaaS applications are a category of the future automotive market that still very much resides in the future, but with consumer trends and advances in technology driving this market rapidly forward, it is critical that all OEMs consider how they might take advantage — or risk being left out of the conversation completely.