09 Jun Reshaping the Future of Mobility
by Bill Russo, Bevin Jacob, Emily Wang and Amber Shu
Throughout history, convenience and user experience have typically shaped our choices when it comes to transportation. People are inherently mobile creatures and some of history’s greatest inventions – wheels, bicycles, steamships, trains, cars, and airplanes – have allowed us to extend our range over greater and greater distances. Over time, each of these inventions added convenience-oriented features to deliver a more pleasant and “painless” experience of mobility.
To satisfy their mobility need, individuals choose between private versus public transportation, alternative form factors (car, train, bus), and transport modality (land, sea, rail, air). Whichever modality or form factor is selected, users often encounter mobility “pain points”, which create opportunities for innovation. User-centric innovations focus on offering the more comfort, convenience or efficiency.
Transportation innovations have significantly extended the range of human beings and have reshaped the global transportation mix and infrastructure. However, population densities and varying stages of economic development in different parts of the world have resulted in a significant difference in mix of solutions deployed across different regions of the world. The contrast in how mobility demand, measured in passenger kilometers traveled, was served in different markets (before the rise in app-based ride hailing) is illustrated in Figure 1.
Figure 1:Global Demand for Mobility
Source: International Energy Agency, Automobility analysis
The chart makes clear that more developed regions like North America, Europe and Japan have embraced personal mobility (typically in the form of individual car ownership) as the preferred modality. People in these markets are typically able to drive, and cars are the preferred mode of transportation, and the leading automotive companies have influenced the mix of demand by offering a highly aspirational experience of personal mobility. However, emerging markets like China, India, ASEAN, Africa and parts of Latin America have a higher mix of alternative “form factors”, and people in these markets are typically riders.
For people born in the 20th century, it will be difficult to reimagine alternative “form factors” of mobility. People born in this period see transport through a nostalgic lens: cars are often their most prized possession and are an indicator of values and aspirations. However, mobility is being revolutionized by digital technology. The rapid emergence and popularity of ride-hailing services such as Uber, Lyft, Ola, and Didi Chuxing are transforming the car into a transportation service device.
This development has profound implications not only for traditional players within the value chain, but also for non-traditional players – as they enter and compete to deliver such services. This is especially true in markets where rider/user population far exceed driver/owner population. In an increasingly urbanized world of the 21st century, the shared economy is accelerating the next mobility revolution: personalized, autonomous mobility on-demand.
How the automotive value chain is fundamentally transformed by new technology, and how disruptive new entrants are utilizing big data to draw insights about customers in order to address their “pain points” and offer new solutions for their mobility needs was the subject of our recent paper Competing in the Digital Internet of Mobility[i],where we introduced the framework of the Internet of Mobility (IoM) Stack, illustrated in Figure 2.
How these forces will reshape the future of mobility is the focus of this paper.
Figure 2:Internet of Mobility (IoM) Stack
The Evolution of Vehicle Design and Architecture
There is general consensus that the future of mobility will be served with a connected, electric and autonomous vehicle architecture, designed to deliver a satisfying mobility user experience. While the time frames to achieve this are not yet determined, the path to commercializing the technology will evolve through the three stages depicted in Figure 3.
Figure 3:Evolution of Vehicle and System Architecture
The Automobility 1.0 phase has already occurred and we are connecting traditional cars (driven by humans) to riders using mobile technology. More recently, we have entered the Automobility 2.0 phase. During this period, we will see Intelligent Connected Vehicles (ICVs) built specifically for mobility services. The defining characteristics of vehicles used in this manner include high utilization rates and rider-centric features which enable connectivity. We expect such vehicles to be powered by electricity due to their lower operating cost (especially fuel and maintenance) and to include features tailored for riders (more screens, connectivity and content services).
In addition, new business models and upgraded/differentiated on-demand mobility services will emerge to address mobility “pain points” observed in the Automobility 1.0 phase, including increased congestion, service timeliness, surge pricing, service inconsistency, safety and security concerns, lack of personalization, lack of charging infrastructure, inconvenient parking, etc.
In the Automobility 2.0 stage, Advanced Driver Assistance Systems (ADAS) technology will act as “support” systems for drivers which allow more tasks to be “delegated” to the car. For example, adaptive cruise control allows a driver to focus less on maintaining a constant speed and thereby improves the driving experience. Routine, mundane tasks like parking or adjusting speeds while driving on highways are already becoming mainstream. Lane departure warning, parking assistance, and cruise control are features that allow the driver to attend less on routine tasks and focus on the actual experience of driving. Over time, the number of tasks that can be handled by the ICV will increase in order to reduce pain points of driving and making the overall experience more convenient, safer and therefore more enjoyable for the occupant.
In the next decade, we will enter the Automobility 3.0 phase, when autonomous driving technologies will become commercially viable. Mass deployment of autonomous mobility on-demand will occur beyond 2025. The most surprising aspect of this type of vehicle will be that it offers its users the opportunity to turn inward and use their time productively. Future cars used for short commuting will be smaller and occupy less physical space: they simply pick people up and drop them off and do this with minimal “extras”. These will be summoned by an app on a mobile device. Longer commuting will be done in autonomous vehicles which have spaces designed to address the productivity needs of the occupants: with connectivity and consumption of content at the core. Such cars may be booked or offered through a “subscription model” to give the users some flexibility in the service offering. The shift in this paradigm will surprise people the most since these vehicles will be designed from a pure passenger experience perspective which will include how to entertain or delight the user during the journey.
With Autonomous driving, a new paradigm can be established to re-focus the passenger on how to productively use their transportation time. Observing the outside of the car moves from a requirement to a choice – especially for the user of a mobility service. Space that is allocated to providing driving information can be repurposed from a driver-passenger perspective to a “connected user” perspective. Beyond mobility, a fully autonomous vehicle’s key benefit will be the experience it gives to the user, and the primary benefit which comes from delegating the task of driving to the car is PRODUCTIVE TIME. As such, while the purpose of the car as a transportation device has not changed, the very concept of how to treat and offer convenience-oriented features to the occupant is different: the autonomous vehicle is built with a “user-centric” mindset, as opposed to a “driver-centric” mindset.
An autonomous car, especially one used in longer-distance (>10km) commuting distances will need to be able to transform travel time into productive time through convenient services which may include infotainment (watching news/video, gaming), online communication (social networking, e-mail, conference calls), or online-to-offline services (discounts or promotions based on mobility patterns). In the world of personalized, autonomous mobility on-demand, the car essentially becomes a connected rolling space that transports us between the places we live, work, and play.
A Fork in the Road: Two Lanes to the Future of Mobility
The new IoM value chain depicted in Figure 2 is multi-dimensional, involving two business models that co-exist in time, serving very different customers and use cases.
The “Old Game” primarily serves owners of vehicle hardware with technology that is typically commercialized on the basis of the owner’s willingness to pay for added features. This typically relegates upgraded technology to the more premium brands and segments of the market. The “New Game” has a much larger addressable market, owing to a much larger target market of mobility services users, and technology is typically commercialized through the economics of the digital services ecosystem.
The “New Game” primarily serves the user of a mobility platform. Features such as connectivity, electric propulsion and autonomous driving are commercialized based on how much they influence the productivity of the mobility device – such as increased hours in service, lower fuel cost, lower maintenance cost, lower driver cost, data streaming revenue, etc.
Playing the New Game engages more frequent and direct daily interactions with users, to which tailored services beyond mobility can be offered, typically derived from analysis of the big data generated from the users’ digital consumption and mobility patterns. In addition, the New Game unlocks new revenue streams through features which can be embedded in the connected mobility platform, expanding the market from car sales and aftermarket services to pay-per-use and third-party services. Hence the New Game opens the scope for collaborative partnerships, including a variety of non-traditional and cross-industry players, while most traditional companies typically limit their relationships to traditional suppliers and dealers.
Competing in the New Game will likely be very difficult for traditional carmakers who have long focused on the branded relationship with vehicle owners through hardware. They must build a new set of capabilities derived from collaborations with digital ecosystems and mobility services providers.
There are multiple pathways to entering the New Game, and all require the core capability to engineer a mobility platform – which is good news for product engineers and manufacturers. However, capturing the maximum value in the IoM stack will likely not reside in the OEM (grey layer) of the stack. Rather, the ability to add intelligent connected (orange layer) hardware to the mobility platform becomes more critical. Similarly, the mobility services provider (blue layer) is in an important, but not necessarily lucrative position – as the mobility service is mainly an enrollment mechanism for the application (green layer) or digital solutions provider.
We see two lanes forming on the path to future mobility.
Lane 1 – OEM Route
Traditional “gray layer” suppliers, OEMs and dealers will likely strive to transform through technology upgrading, which is relatively slow and capital intensive. Premium carmakers may be able to survive on this path for some time, but others will become commoditized and will face a margin squeeze due to the cost burden of adding ICV, EV and AV technology to the platform. Vehicles will leverage carry-over chassis architecture in order to minimize investment burden, and will be retain a cockpit design paradigm, with a primary target of serving the traditional customer who drives their owned vehicles.
Lane 2 – IoM Route
Disruptive new entrants will develop and build purpose-built mobility form factors to unlock value in digital services (application layer). Internet and Communications Technology (ICT) “green layer” companies including Baidu, Alibaba and Tencent and Amazon are increasingly investing in ICV, EV and AV platforms in order to expand their user base for people and goods delivery, while simultaneously investing to create new technology with startup automakers like NIO, XPENG, Weltmeister and Rivian. This path leverages their high valuations to eventually bring new, purpose-built, hardware into the market. Such companies aim to achieve intimacy with end users through digital platforms and monetize customer value through both mobility services and offerings for digitally connected lifestyles.
Traditional carmakers have generally been slow in embracing the Internet of Mobility. Many even fail to recognize the opportunities and threats coming from the shared economy. This is due to the fact that they lack the digital DNA necessary for monetizing relationships with users of connected mobility services. Innovation linked to the digital economy and deepening relationships with end users will be key to survival in the increasingly technology-enabled New Game, which is being led by China.
Form Factor Innovation Case Examples
In 1984, Chrysler launched the minivan, offering a classic example of form factor innovation. Using a conventional K-car chassis platform, Chrysler reshaped the upper body and interior to suit a family vehicle use case, which remained as one of the highest-selling examples of the MPV segment, with over 12 million produced. A boxy exterior design, low floor and high roof – maximized interior space and optimized people movement for over a generation. In 2005, Chrysler improved the platform utility with Stow’n Go®, a system of second and third row seating that folded completely into under-floor compartments. This is a classic example of the impact of “Form Factor Innovation” and how purpose-built designs can unlock new ways of delivering value. Interestingly, the original concept of the minivan was envisioned as a design suitable for urban taxi services.
In the user-centric world where users are passengers, the focus shifts from traditional driver-centric design to a user-centric productivity space. An expanded understanding of mobility use cases and tailoring of the Form Factor based on particular mobility needs will be a way to create a value proposition that is rooted in the unique riding experience. In fact, with a fully modularized design, people and goods movement devices can share the same chassis platform with different top hats designed for various use cases and functions, with several examples illustrated in Figure 4.
Figure 4: Form Factor Innovation Case Examples
Toyota e-Palette is a concept introduced at the 2018 Consumer Electronics Show is an example of a traditional OEM embracing this new modular architecture designed to serve the new mobility ecosystem, with announced partners including Amazon, DiDi, Mazda, Pizza Hut and Uber. The concept is designed for a range of popular mobility use cases from ride-sharing and carpooling, to other special-purpose use cases such as mobile office, retail space, medical clinics, and even hotel rooms. The platform enables an infinite “palette” of in-vehicle functions and use cases.
AEV Robotics is an Australian autonomous electric vehicle startup, has built a modular vehicle system which enables a multitude of use cases on a similar chassis architecture. Packaging efficiency is ensured by pushing all motorized components to the corners by leveraging in-wheel motors, giving the maximum utility of space in the upper body. Custom-built “top hats” for moving people, delivering goods and performing other services in urban environments are added to the standard robotic base (a lightweight, electric, four-wheel steer and multi-directional chassis system) to meet the needs of businesses, city planners and fleet managers.
Next Future Transportation is a Silicon Valley-based startup that takes the form factor innovation to the public transport sector by adding algorithms to control routing of people and things to a standard platform that is capable of coupling and de-coupling of custom-designed modular top hats. These coupled pods can move together and are connected through sliding doors that allows free movement of people and things when the pods are linked. This form factor, routing algorithm and dynamic coupling innovation provides a powerful solution to improve the productivity of the transportation network when compared with conventional cars and buses.
The Shape of Things to Come
Form Factor innovation utilizing a standard platform architecture will be driven by concurrent requirements for use case flexibilibility and operating efficiency of the mobility device. As shown in Figure 5, these use cases can be segmented by people and goods movement and the size of the platform. Top hats customized for the particular mobility use case can be described as “Small Box”, “Medium Box” and “Large Box”, providing increasing people or cargo carrying space.
Small Boxes used for personal mobility can accommodate 1-2 people, with length less than 3 meters for urban short-distance commuting, similar in size to a smart fortwo vehicle. Small Box for goods movement would address the last-mile package or food delivery services and can be significantly smaller than that for people movement, i.e. like a delivery robot or multi-chamber parcel locker.
Medium Boxes for people movement have enough space for 3-8 seats but may utilize extra space for on-board facilities instead of taking on more passengers. “Business-class” mobility experience can be configured for long-distance travel or premium interior accommodation. Medium Box for goods movement would be for similar use cases as today’s light trucks, moving freight of less than 7 tons within and between cities.
Large Boxes longer than 6 meters will be used for public and long-haul freight transport.
Figure 5: Modular-designed Small, Medium and Large Boxes
The Electric Skateboard
As showed in Figure 6, today’s vehicle platform largely follows a similar chassis architecture as was conceived in the early 20th century, with a large engine compartment at the front consuming significant underbody and cabin space. The complex mechanical structure of internal combustion engine (ICE) propulsion places constraints on the packaging of space for people and cargo capacity.
Hybrid vehicles force additional compromises by adding an electric component to the packaging of ICE powertrain systems within the vehicle. While serving as a bridge to electrification, conventional and plug-in hybrids are inherently compromised designs due to their added cost, complexity, and inefficient use of space.
In the era of electric mobility, the number and size of mechanical parts in the vehicle chassis can be significantly reduced. Electric vehicles for future mobility use cases will be built on “skateboard” chassis architecture using purpose-designed top hats. To free up space and optimize user experience, the overarching design objective will be to maximize the utility of the space above the wheels. A skateboard chassis provides personal mobility users with the benefit of maximum cabin space for comfort and utility. The utility of the upper body space can also increase the flexibility of upper body configurations for special purpose commercial and logistics vehicle applications.
Tesla’s Model X is a good example of the positive impact of a skateboard chassis on the overall vehicle design and upper body space. With power batteries packaged into a panel under the floor of the cabin, a skateboard chassis frees up significant space for people and cargo. However, Tesla has selected a central motor as their preferred drivetrain option for the skateboard chassis. This is also the preference for most Lane 1 OEMs, as it permits the leveraging of most of the carry-over components design and architecture of the ICE vehicle.
Figure 6: Chassis System Evolution
An alternative skateboard architecture is also being pursued, primarily by Lane 2 IoM companies. This alternative applies distributed motors either near or inside the wheel itself, maximizing utility of the space above the wheel. For example, Elaphe Propulsion Technologies, a leading EU-based developer and manufacturer of in-wheel electric propulsion systems, has developed a pioneering propulsion solution for HFM’s Motionboard® platform, making it possible to completely reconfigure the vehicle for purpose-built mobility use cases.
Digital Ecosystems and the Electric Skateboard
As noted in Figure 2, the New Game is highly embedded in the digital ecosystem, which is where IoM companies are typically funded. Such players are designing new platforms for purpose-built mobility use cases.
For example, the global online retail giant Amazon has massive global logistics needs and spent more than $27 billion on worldwide shipping last year. One of the most significant inefficiencies in the e-commerce value chain is in last mile of a delivery. Amazon, Alibaba, JD and other order fulfillment companies therefore view mobility as a core part of their value chain. Relying on intermediaries like the US Postal Service, Federal Express or UPS has not yielded a satisfactory design for the new mobility form factor. Hence, they are all experimenting to reshape the future of mobility.
In February 2019, Amazon led a $700 million investment in Rivian, a Michigan-based electric pickup and SUV maker, regarded as a potential rival to Tesla. With this investment, Amazon seeks to create a “global, end-to-end network covering all transportation modalities”, by owning and operating a self-owned delivery network and fleet. Rivian’s skateboard platform (see Figure 7) is the major attraction of this investment, as it includes the key components that enable efficient order fulfillment.
Figure 7: Amazon’s $700 Million Investment in Rivian
Meituan, China’s largest on-demand food delivery company, announced at CES 2019 a collaboration with three global ecosystem partners to accelerate the development of the Meituan Autonomous Delivery (MAD) platform (see Figure 8). Their ecosystem includes the French automotive supplier Valeo, American computing technology leader NVIDIA, and Italian automotive design company Icona. Valeo will supply key components like engines and sensors for MAD’s autonomous delivery vehicles, and NVIDIA’s technology will be used in vehicle R&D and trial operations, while Icona serves as a design partner for unmanned robots and vehicles. These purpose-built autonomous delivery vehicles will gather multiple orders from different restaurants and complete deliveries in an office park or university. Trial operations have been conducted for a dozen locations in China, covering Shougang Park and Raffles City in Beijing, Xiong’an New Area in Hebei and Shenzhen’s Lenovo Building.
Figure 8: Meituan Autonomous Delivery Platform
Legacy vehicle platform architectures are not optimized for the Internet of Mobility era. Lane 2 IoM skateboard platforms leverage an intelligent chassis hardware architecture that can be fitted with purpose-built (for mobility services) top hats. The intelligent chassis should be equipped with the necessary (connected, electric and autonomous) hardware and software to enable the optimal delivery of the service.
IoM ecosystems, including manufacturers and supply chains are in an experimental stage of their development. An example is Cenntro, a producer of an all-electric logistics vehicle platform based in China. Cenntro is positioned as a Physical IoM (hardware) supplier to serve Digital IoM ecosystem providers. Cenntro’s ecosystem includes some of the key digital ecosystem players including Tencent and Alibaba. Cenntro has unveiled an in-house programmable chassis system (see Figure 9) which can be applied across a variety of form factors including logistics vehicle, delivery vehicle, delivery cabinet, vending truck, cruiser car, etc. This open platform facilitates Form Factor innovation for ecosystem partners who lack their own chassis manufacturing capability, such as Alibaba, JD, Meituan, etc.
Figure 9: Cenntro Programmable Chassis System
The business model of the automotive industry is being rapidly transformed. The increasing popularity of mobility services, led by the world’s largest automotive and mobility market in China, are bringing new players into the industry and forcing companies to expand their focus from the product (the automobile) to the utility derived from the product (“mobility”).
The brand identities and product and manufacturing capabilities of traditional carmakers will no longer guarantee success in an industry facing a disruption of the business model. Connected, electric and autonomous vehicle technology will disrupt the transportation market, creating new economics and expectations associated with the transportation of people and things. Standard driver-centric designs will be replaced by new user-centric vehicle concepts and mobility form factors that prioritize comfort, convenience and productivity.
This is a paradigm-changing development that requires a complete rethinking of the way to deliver value to the market. Success will accrue to those companies that are most able to reshape mobility in the context of a place like China: where mobility needs are uniquely challenging, where innovative mobility experiments are being driven by entrepreneurial activity, and where dreams of exponential business growth become reality.
About the Authors
Bill Russo is the Founder and CEO of Automobility Limited. His over 35 years of experience includes 15 years as an automotive executive with Chrysler, including 15 years of experience in China and Asia. He has also worked nearly 12 years in the electronics and information technology industries with IBM and Harman. He has worked as an advisor and consultant for numerous multinational and local Chinese firms in the formulation and implementation of their global market and product strategies. Bill is also currently serving as the Chair of the Automotive Committee at the American Chamber of Commerce in Shanghai.
Contact Bill by email at firstname.lastname@example.org
Bevin Jacobis a Partner & Co-Founder of Automobility Limited. He has 18 years of experience in Investment Advisory, Business Development, Product Management, Mobility Startup Incubation & Engineering of Autonomous Transportation Systems and On-Demand Mobility Services for Shared Mobility, E-Retail, Automotive Infotainment and Telematics. He has also worked nearly two decades in the electronics and information technology industries with Continental, LG Electronics and Start-ups in Greater China, USA, South Korea & India.
Contact Bevin by email at email@example.com
Emily Wang is an Associate of Automobility Limited. She has 9 years of experience in Management Consulting and Marketing in Greater China and U.S., spanning over multiple consumer and industrial sectors. She is knowledgeable about China’s mobility market, technology innovations and digital ecosystem. She has helped multinational, Chinese POE and SOE and startup clients developing strategy for new market entry, M&A pipeline, due diligence, organization structure and operating model design etc.
Contact Emily by email at firstname.lastname@example.org
Amber Shu is a consultant of Automobility Limited. She graduated from Tongji University with major of Automotive Engineering. She is working in Strategy & Management Consulting and Investment Advisory with a focus on automotive sector and related domains. She has solid project experience in Market Entry & Growth Strategy, Cost Strategy, Business Plan Development and Industry Research for leading automakers and global industrial magnates.
Contact Amber by email at email@example.com