THE FUTURE OF MOBILITY 2 CONTENTS Introduction 3 Executive Summary 4 What This Means for Fleets 10 and the Leasing Industry Major Themes Environmental Regulation 11 Cost Pressure 18 The Developing Markets 22 Technology and Connectivity 29 Rapid Manufacturing and New Materials 38 Wildcard Scenarios 43 Conclusions 47 3 INTRODUCTION LeasePlan commissioned this report on the directions that personal mobility is likely to take from now up to 2023. The report consulted a wide range of sources in order to identif y the key trends most likely to shape this future. The report is the first piece of primary research that supports the activities of the LeasePlan Fleet Strategy Board. EXECUTIVE SUMMARY – FIVE KEY TRENDS 4 FIVE KEY TRENDS Five major trends seem likely to dominate the developments in the mobility landscape over the coming decade. While each individual trend may not represent a significant shift, their overall effect could revolutionise attitudes to motor vehicles. This executive summary presents a brief overview of the five key trends and their implications, these are explored in greater depth in the main body of the report. EXECUTIVE SUMMARY – FIVE KEY TRENDS 5 1. ENVIRONMENTAL REGULATION When the EU signed the Kyoto It is clear that electric vehicles treaty in 1997, this signaled their are set to form a larger proportion intent to reduce long-term of the vehicle stock, but questions environmental harm from carbon about where the energy to charge emissions. Although the US them will come from, and when they and China were not signatories, will become truly competitive with manufacturers face collective combustion cars, still linger on. pressure to produce cleaner, more energy-efficient vehicles. It is the belief of the EU transport commission, that, for mid to long There are obvious synergies with distance travel, the first and last technological developments around ten miles of most journeys will new propulsion options, new energy become a feeder solution for sources, and new ways of using mass-transit systems. existing infrastructure. EXECUTIVE SUMMARY – FIVE KEY TRENDS 6 2. COST PRESSURES The need to recoup increased Technology will alleviate some environmental costs, at the national of the pain with better real-time level, combined with peak oil “polluter journey planning. The road network pays” pricing, means that both the will need to be organised centrally base price of fuel and fuel taxation, so that it can be more efficiently will rise. utilised. And, as the speed of the internet and available bandwidth There will be indirect costs from increases, the advantages of video increased congestion, as more road chat may begin to outweigh the space is allocated to High Occupancy disadvantages of physical movement, Vehicles (HOVs) and Electronic taking some of the pressure off Vehicles (EVs) and cycle routes. And the road network, as homeworking fewer new roads are likely to be built, becomes more widely accepted as planning wisdom sees that they and more practical too. only encourage more driving until congestion reverts to the mean. EXECUTIVE SUMMARY – FIVE KEY TRENDS 7 3. EMERGING MARKETS Vehicle manufacturers, keen to large and 4x4, we’ve seen new, service the most lucrative markets luxury 4x4s produced by Bentley, that offer most potential growth, will Rolls Royce, Jaguar and Lamborghini. continue their shift in focus towards the BRIC countries – Brazil, Russia, And, as many Asian cities expand India and China. beyond populations of 10 million, we’ll see the needs of these We’ve already seen manufacturers ‘Megacity’ dwellers shaping such as Mercedes and BMW make the output of car manufacturers. special versions of their vehicles for these markets and the tastes of the China is an exciting market for BRIC countries, particularly China automotive brands because it has and Russia, will gradually begin to no embedded brand perceptions. influence the cars produced for the It’s a blank canvas where European market. For example, manufacturers can try out new in response to Chinese and Russian technologies and brand positions. perception that premium means EXECUTIVE SUMMARY – FIVE KEY TRENDS 8 4. TECHNOLOGY, CONNECTIVITY AND THE CAR The ways in which consumers, The driving process will be made and their devices, connect to their safer and more efficient, by further vehicles will open up some intriguing automation: techniques such possibilities. Cars will become as motorway “platooning” will “appified” as their specialist hardware see vehicles travel together, in is co-opted into software running on convoy, by communication with the user’s own phone or tablet. The infrastructure and each other. car’s systems will become a conduit controlled by these personal devices. A logical progression of this is the This begs the question; if the unique self-driving cars Google, Nissan, differentiators of “your car” are Audi and others are working to defined by your personal device, bring to market. But you may how much sense does it make to not own one – with Google’s X, own a car, rather than have access as a service model, you may whenever you need it? Consequently, lease access to a cloud of cars we could see a shift away from that comes to you on demand. personal ownership. EXECUTIVE SUMMARY – FIVE KEY TRENDS 9 5. THE IMPACT ON MANUFACTURING New manufacturing techniques As personal devices become more like 3D printing will allow faster integrated into the sphere occupied turnaround of design concepts, by the car, “personalisation” will increased choice of personalisation, begin to apply, as much to behaviour and more niche models to be spun as aesthetics. Manufacturers and off the same basic platform. The other mobility providers will begin lower break-even costs through to offer lifestyle mobility packages, scale means more diversity, allowing drivers to swap out for personalisation, and product a different car with specialist risks being taken. capabilities, greater utility, or more driving pleasure. New materials will emerge in the quest for lighter and more efficient vehicles – we spotlight the BMW i3’s carbon fibre reinforced plastic construction to demonstrate what this means for ownership and repair costs. EXECUTIVE SUMMARY 10 WHAT THIS MEANS FOR FLEETS AND THE LEASING INDUSTRY Arriving at the optimal composition Existing perceptions of manufacturer As the potential for vehicle of a fleet will become more complex, brands will be challenged as vehicles personalisation increases, fleet and choices will need to be made originating from emerging markets operators will need to deal with in the context of extra support will begin to play more of a part increasing operational complexity requirements like specialised on fleet lists, particularly where and driver expectations. Creative recovery solutions, better route low cost is paramount. packaging of services that simplify planning and charging services. the experience will be essential. The increasing convergence of The cost structure of running a fleet vehicles, technology and the data will have many new components generated by their usage will provide and their relative weight will change much greater visibility of and control significantly. Fleet professionals and over fleets. This combined with the suppliers that support them will new models of usage gives the need to simplify the operational and opportunity for genuine service administrative challenges and add enhancement by fleet providers. value to and enrich the experience of drivers. MAJOR THEMES – ENVIRONMENTAL REGULATION 11 ENVIRONMENTAL REGULATION Whenever the future of mobility is discussed, the environment must be a prime consideration. Between now and 2050, major climate change mitigation initiatives will start to bite. At the same time, a “second billion” people in emerging nations will demand western standards of living and freedom. MAJOR THEMES – ENVIRONMENTAL REGULATION 12 REGULATORY RESPONSE IN THE NEXT DECADE Given the US and China’s reluctance However, this is not to say that the In the shorter term, the EU sees Costs across fuel options will be to sign up to Kyoto, the EU is the EU Transport Plan is anything but transport emissions being cut by normalised by the implementation only significant governmental body highly ambitious: conventional cars a variety of means. By 2020, 10% of of “polluter pays” taxation policies. to have produced an on-the-ground would be banned from cities. The all mobility fuel consumption should Which means that consumers will transport plan to the timescales focus of personal transport would come from renewable sources. bear the environmental cost of their involved. The key observation to be around the first and last 10km Initially, the majority of this will come travel directly, through taxes, or note from the report is this principle: of any journey, with cars acting as from biofuels, but in the longer term indirectly through increased costs feeders to and from high-speed rail population growth across the EU will of goods or services. “Curbing mobility is not an option.” lines. Oil dependency would be put pressure on crop growing space, reduced by 60% and relatively few with both biofuel and food production The EU does not envisage solving time-dependent goods would move competing for the same land. the climate crisis by any means by road, with the rest shifted instead which would prevent the free flow to rail and sea channels. Limitations on car use will prevent of goods and people across the some of the more inefficient uses continent. Mobility currently makes of fuel. For example, the London a direct contribution of 5% of the Congestion Charge could be continent’s GDP, and immeasurable replicated across European cities indirect contribution. to discourage uneconomical short, stop-start journeys. MAJOR THEMES – ENVIRONMENTAL REGULATION 13 CASE STUDY LONDON As one of the EU’s most populous Crossrail 2, running from Wimbledon The Congestion Charge is considered [1] https://consultations.tfl.gov.uk/crossrail/2/ urban centres, London is at the to Alexandra Palace, could open to be a success, which could lead supporting_documents/Summary%20of%20Option %20Development.pdf forefront of developing integrated by 2030 [1].