Unlock the value of mobility services Turning business models into profits 2 Contents Executive summary 4 How to unlock the value of mobility services 6 Defining mobility services 7 The key barrier to profitability 8 COVID-19 challenges the previous growth path 10 The 2030 market outlook on mobility services 16 About the research 18 Appendix 19 Contributors 20 3 Executive Summary The demand for mobility services has accelerated dramatically over the last decade. Despite significant investments and corresponding growth in urban areas, many of today’s leading transport companies have not cracked the code on how to profit from new mobility services. 4 Despite the sharp increase in demand, mobility We then identified a series of three actionable services have been significantly impacted by steps providers can take to overcome these the global outbreak of COVID-19. The demand obstacles. Our recommendations speak to the for mobility has decreased substantially and unique needs of the mobility services market consumers have been prompted to rethink their and serve as concrete measures both regulators preferred mode of transportation with more and private companies can take to protect and emphasis on protecting their safety while having grow mobility service investments. to consider a more uncertain economic situation. However, the underlying drivers of the mobility 1. New rules for a new game transformation still hold true: a need to improve quality of life in urban areas and reduce traffic 2. Optimize mobility across the fleet gridlocks, a stronger push to decarbonize transport and reduce local pollution, as well as customers’ 3. Pivot from your core products changing expectation of digitally-enabled services with on-demand availability. These steps can help mobility providers overcome In our latest study, we set out to understand the fundamental profitability barrier and transform the burning question among mobility service the mobility services market beyond the short- providers today—how do you unlock value and term effects of COVID-19. By fixing the fundamental build profitable mobility service offerings? issues, mobility players can build a balanced market. Subsequently, service providers can optimize mobility Based on interviews with senior executives across across the fleet and integrate new technologies, such the automotive, mobility service and public sector, as AI and data analytics, to generate additional our research revealed a key barrier to profitability revenue streams. And while service providers need that is common across all business models—the to develop close-to-ownership models, public absence of a balanced marketplace. While mobility transport providers must integrate with innovative services are a hybrid between private and public existing services. transport, regulators tend to treat them like private entities, thereby ignoring the potential value these These joint efforts are essential if the mobility services offer society. Furthermore, there are services market is to succeed. Together, market several profitability challenges that are specific to players can usher in a new age of mobility—one the different business models, such as low asset that is not only profitable, but also benefits citizens, utilization, labor intensiveness and insufficient use cities, and automotive and mobility companies of technology. themselves. 5 How to unlock the value of mobility services There’s no doubt that mobility services have the We interviewed senior experts from across potential to create significant economic value. automotive original equipment manufacturers (OEMs), mobility service providers and the This fast growing industry has proven its ability to public sector to gain their perspectives. We then play a pivotal role in tackling macro challenges combined this input with a proprietary scenario- such as congested cities and high carbon emissions, based quantitative model to better understand benefitting individuals, society and the environment. today’s mobility services’ business environment Across the United States, Germany and China, the as well as its future. mobility services market has grown to more than $140 billion over the last decade (Figure 1) and is The aim of this report is threefold: expected to more than triple by 2030. 1. Discuss the key profitability barriers mobility However, despite their growth potential, many service providers face mobility companies were already struggling to generate profits before the COVID-19 crisis. What’s 2. Reveal actionable steps to drive change toward more, expected timelines for rolling out autonomous a balanced market vehicles have been delayed, making it unlikely for the technology to turn around the business case of 3. Explain how to maximize the end-to-end value mobility service operators anytime soon. of mobility services beyond the COVID-19 crisis Figure 1: Mobility services market growth before COVID-19 Source: Accenture Research USA Germany China 100 5 80 80 4 60 60 3 40 40 2 20 20 1 0 0 0 2011 2013 2015 2017 2019 2011 2013 2015 2017 2019 2011 2013 2015 2017 2019 Ride hailing o Rental business ride hailing ear surpassing large gro rental mark 2018 f ears t largest market shar S v Apar ent Rental gro ver fragmented sieable share alre e avel S Rental St 2 Fr Micr DRT 6 Defining mobility services The term “mobility services” refers to new, digitally enabled offerings. These can be clustered into three groups: 1. New ownership models, consisting of subscription-like services 2. Vehicle on Demand (VoD), including car rental, car sharing and micro mobility services such as bike or scooter sharing 3. Mobility on Demand (MoD), which refers to demand responsive transport (DRT), ride hailing and ride sharing (Figure 2) Figure 2: Redesigning mobility business models While this chart shows the full spectrum of mobility business models, this study focuses on New Ownership Models, Vehicle on Demand and Mobility on Demand. Source: Accenture Research Buybuy Owning Owned Vehicle Mobility Leaselease THE FOCS OF THIS STDY Subscription-based Owning New Ownership Models Cluno Rental Avis Peer 2 Peer Station-based Car Sharing Getaround Greenwheels Vehicle on Demand Free-floating Car Sharing ShareNow Micro Mobility Services Lime Ride Hailing Ride Sharing Mobility on Demand BlaBlaCar Demand Responsive Transport (DRT) MOIA sing Public Transport The key barrier to profitability Mobility services are part of an ecosystem with Mobility services also share common requirements multiple stakeholders, values and vendors, falling for success. For example, they must be highly under the broader category of both personal available, easy to use, and integrated with cities’ service and public utility. They have emerged as a traffic and public transport systems. Existing hybrid between private transport (privately-owned market regulations, however, restrict opportunities vehicles, for example) and public transport (trains to capture mobility services’ full value and represent and buses). Mobility services combine key benefits a key barrier preventing mobility’s profitability. including private transport’s convenience and point-to-point transportation, and public transport’s higher vehicle utilization. Overall, mobility services offer an unusually strong set of advantages across individual, societal, environmental and economic dimensions (Figure 3). Figure 3: Evaluating the value of mobility services across four dimensions Source: Accenture Research Environmental Individual Society Economic Value User Value Value Value Lower greenhouse Comfort and Less congestion More efficient asset gas emissions: entertainment utiliation: vehicle aver Less space consumption infrastructur vehicle educe Flexibility ehicle mor capit s Economic growth: Fewer resources needed: Privacy Access for all, ev incre few ehicle non-driver Safety e underserv eas Time gain Circular economy: Reduced investments entir Cost saving astructure longe repair 8 Regulators tend to treat mobility services and The transportation network has prioritized private transport as similar entities, ignoring the private vehicle use since public transport is potential value these services offer society. At the not very responsive. Each business model same time, providers themselves hinder a profitable has some or other externalities which have market. Their business models are largely designed not been factored in so far. to lock in customers and grow the user base while risking intense price-based competition. Mobility Chief of Strategy and Innovation, companies fail to recognize that their services Seattle Department of Transportation more aptly resemble public utilities. What’s more, mobility apps and data aren’t seamlessly integrated with platforms or data sources, and business models rarely tie into city traffic and public transportation management. But these aren’t the only profitability challenges. Each business model faces its own unique limitations (Figure 4). Figure 4: Assessing the limitations of five mobility services business models Source: Accenture Research RENTAL FREE-FLOATING PEER 2 PEER RIDE HAILING DEMAND CAR SHARING RESPONSIVE TRANSPORT • Asset and • Ongoing • Lack of • Challenging • Driver infrastructure damages awareness of driver acquisition management intensity – not and rapid this business and management and expenses fully optimizing depreciation model and related •