By Karina Schultz, Head of Marketing, dynamics – powered by MHP
It’s no secret that companies like Uber, Lyft, and Didi have been aggressively snatching up market share wherever and however they can. They’re all vying to become the single go-to app that gets you from point A to point B using whatever mode of transport is most convenient and efficient at the time. Over the past few years, these companies have been adding more and more options to their services, like premium ridehailing or carpooling, in addition to acquisitions or strategic partnerships with bike and scooter companies. The Goliath in the transport planning space, Google Maps, has begun including various ridehailing and taxi alternatives in their app, even recently finalizing a partnership with Lime to offer the use of their bikes and scooters in some cities. They’re all in fierce competition to own the relationship to the user.
While these companies were notably absent at this year’s 4YFN in Barcelona (4 Years From Now, the future-forward startup-focused offshoot of MWC), I was present and attending as many sessions on mobility as I could. Here’s what I found:
Multimodal platforms or “meta-apps” are coming
What will come first, carless drivers or driverless cars? Self-driving vehicles will need to be integrated into a combined experience as one of several transport options in order for them not to cannibalize other modes that relieve congestion like scooters, bikes, trains, buses, etc. This is the only way to prevent autonomous cars from creating even more traffic in urban areas.
Jaume Suñol, Country Manager of Drivy Spain said that he foresees the end of ‘single-use’ transport apps, including his own: “Drivy will need to be integrated into a platform with multiple mobility services”
Meta-apps – the ones that aggregate multiple modes of transport and let users choose between them – are becoming more and more common. We’re seeing this in part with Jelby in Berlin, Citymapper, and of course, the above mentioned Google Maps. But what is preventing people from using these apps to their full potential is unified ticketing. “This is the game-changer,” said Dirk Evenson of New Mobility World.
WhimApp in Helsinki is one of the first to attempt such a feat, though it has admittedly slowed their expansion. Unified ticketing would involve securing partnerships and integrations with each individual mobility provider on the same terms, which is a gargantuan task for any mobility company. Instead, the Ubers, Lyfts, and Googles of the world are doing the “I’ll take one of each” approach and circumventing local partnerships by buying up different types of mobility services to expand their portfolio. The idea being that users will prefer their service over others, and cities will have no option other than to hand over the reins of transportation.
Tech giants vs. cities
The majority of new mobility services have come to existence as something completely separate from the cities they operate in. This has allowed companies to deploy at a larger scale and faster pace directly to their customers, but it’s also backfired.
The ‘don’t ask for permission, ask for forgiveness’ strategy of tech giants is not necessarily favorable. In Barcelona, as in many other cities around the world, Uber and Cabify learned a hard lesson. They suffered the consequence of not aligning themselves with the city and ultimately got kicked out.
Electric scooters took cities by storm and there was no infrastructure or regulation to prepare them for the chaos that came from their arrival. The lack of collaboration with transport authorities led to a lot of injuries and uproar from citizens. Madrid, like many cities in California and so many other places, ordered the removal of scooters. A personal injury lawyer sued the city of Santa Monica due to an uptick in accidents related to scooters. Not to mention the enormous piles of garbage that arise from abandoned dockless bike sharing companies, like the one of titanic proportions that went viral in China. Not involving local authorities from the start is costing both the tech companies and the city governments an exorbitant amount of money.
The call for the participation of cities in mobility services was echoed in almost all of the sessions I attended.
What will be the role of cities in terms of future mobility?
Many have suggested that it will be the cities, and not tech companies, that will own and operate the transport aggregator apps. A lot would need to change for that to happen.
For one, new mobility services need to be integrated into existing infrastructure because we cannot hope to rebuild cities from scratch. It’s not only naive to wait for updated infrastructure, it’s fantastical. “We have to get city planners and transport providers on board. Not in the next 50 years, but within the next 5,” said Dirk Evenson at the Connected Mobility Panel. This will also mean the need for a big public investment: “Cities and public transport have been underfunded for the past 40 years, if not more. This is where the money has to flow.”
We (collectively) need to build up the capabilities and create incentives for this on the cities’ side. “Right now we have a two-speed process. The technology is advancing incredibly fast, but the infrastructure lags behind. We need to build the capacity for the city to be able to catch up,” added Olivier Lenz, Programs Director at the Fédération International de l’Automobile (FIA).
One alarming example that illustrates just how far behind we are on legislation mentioned by Francisco Carranza, Managing Director of Nissan Energy: in Germany, electric vehicles actually have to go through the same certification as a mobile power plant. If we’re going to start ghosting diesel, we need to make the process of certifying EVs faster and cheaper than that of ICEs (in addition to tax incentives, etc).
Edouard Rozan, Managing Director at FICOSA Group’s Onboard Ventures noted that “some cities are more active than others” in this respect, citing the pilot project between the Colorado Department of Transportation and Panasonic that enabled V2X communication – the internet of roads – along a 100km stretch of highway. While these projects are exactly what authorities everywhere should start doing, the fact that this made the (albeit niche) news means these initiatives are still in their infancy.
Evenson added, “We’re missing the boat on innovation. We need to push for more regulation & collaboration in transportation and infrastructure development.” Wouldn’t it be amazing if industry lobbyists would push for this instead of clinging to fossil fuel?
Corporates have learned that the best way to innovate is by working with startups. Adopting the entrepreneurial spirit and getting some cultural cross-pollination is the only significant way of speeding up development and driving change. Governments need to learn this too.
How can we get cities to work with startups?
Give them permission! Karolina Korth, Chief Digital Officer of Siemens Mobility Spain, said that from the legislators’ side, cities need to create regulatory sandboxes to open the door for new mobility services. But for regulators to act, they first need to have an idea of what they’re doing and what the potential outcome would be.
Cities need to adapt laws to fit the changing needs of citizens, but tread lightly. Imagine if Paris gave Uber carte blanche to offer their services unchecked and unchallenged. The entire taxi industry would be left in free fall, the safety of passengers would be put at risk through unverified drivers and vehicles, and, ultimately, the city would be boxed out of accessing its own mobility data. Paris would ultimately be forced to hand over the reigns of its entire urban mobility to a tech giant.
In order to avoid this apocalyptic scenario, governments need to be a lot closer to innovation. Rikesh Shah, Head of Commercial Innovation at Transport for London argues that it’s not just technologies we need to adopt, but new business models: “We need to engage early with them in order to understand them.”
In the automotive industry, we’re starting to see a changing landscape. User behavior is evolving, and this is what ultimately will determine which innovations are successful, and which ones aren’t. OEMs have understood that Uber & co are here to stay. “They have to move in the same direction to stay relevant,” warned Evenson.
How are OEMs are preparing for a new mobility ecosystem?
“In the past decade, the mobile phone industry has seen amazing progress, but what has been done in the automotive industry?” Tanja Kufner, Partner at MHP – a Porsche Company, challenged the panelists at her session. Avner Goren, Director of IoT and Imaging Architecture at Intel Corporation, echoed this sentiment, albeit slightly more dramatically: “I don’t see how the automotive industry can survive if the pace of development doesn’t catch up to that of consumer electronics.”
These turtle and hare comparisons, while accurate, fail to consider the stakes if a faulty model goes to market. “The biggest difference is that a car is a top quality product. If the safety of a vehicle hasn’t been tested and confirmed 1000 times, it could cause deaths. If a phone malfunctions, it’s annoying, but not deadly. We as manufacturers have to ensure the quality of each car to the highest standards, and phones simply don’t have that pressure,” explained Lenz.
There’s also less motivation to change because it doesn’t affect the bottom line…yet. While we may be thinking about what mobility will look like in the future, people are still buying cars today. Kufner added, “VW, for example, had its most profitable year in history in 2018. There’s no financial incentive right now to move away from what works.”
When asked how SEAT will make money when personal vehicle ownership goes down, Javier Rivera, Corporate Strategy Manager at SEAT, said “there will still be cars sold, but the variety of cars will change; small autonomous cars will be used in urban areas, and SUVs for long distance road trips and IKEA runs.” Whether owned by individuals or fleets, the total amount of cars on the streets will reduce, but their usage will go up. Right now, cars spend about 90% of their lifetime parked somewhere. “When there’s fewer cars being used more efficiently and more often, they will need to be replaced more often than cars today.” Time will tell whether his positive outlook for OEMs is realistic or just wishful thinking.
Nissan, for one, is focusing its energy (pun intended) on listening and responding to consumer needs . Their vision is to move from a push to pull model, wherein customers will drive new innovation in products and services. Carranza: “We need to evolve, car manufacturing needs to adapt. We need to transform the supply chain and develop more batteries and charging infrastructure.” This type of strategic overhaul requires building an innovation ecosystem with three key elements:
- Recognize your own limitations; you cannot do everything alone
- Support open innovation and build internal capabilities
- Attract, recruit, develop, and retain top talent
This requires fighting the ‘not invented here’ syndrome common to most corporates. Daimler realized that this mentality directly hinders innovation. “Our mentality went from ‘not invented here’ to ‘proudly found elsewhere,’ said Philipp Gneiting, Head of Open Innovation at Daimler, on their transition from premium car manufacturer to mobility service provider.
Historically, carmakers never had a direct relationship with their customer – there was always the dealership in between. It was a push model. Auto brands would build a model, ship it to a retail center, and it would sell or it didn’t. They would then improve the models based on performance results and innovate in increments. Right now, there’s a lot of opportunities to open up the market. “We look to startups to break through our closed OEM environment,” said Lenz on the FIA perspective.
Evenson argued that there’s always been innovation in the automotive industry, that companies don’t necessarily have to look to startups for technological developments: “without startups, there would still be innovation, but not disruption. Not the kind of leap that changes the game.”
Collaboration as the key to survival
Just 10 years ago, the idea of two direct competitors combining their efforts in a joint venture would’ve been unimaginable. Today, we have BMW & Daimler’s €1bn Jurbey.
We’re witnessing the transformation of an individualized industry to a collaborative ecosystem. Dr. Nicolai Schättgen, Founder & CEO of Match-Maker Ventures, outlined five different formats of collaboration:
- New business units
- Joint venture or strategic partnerships
- New company setup
- Startup collaboration
While this topic has been examined in depth and ad nauseam, it’s extremely rare to find an example of successful startup/corporate partnerships scaling past the pilot project. On the surface, putting innovator + market leader seems like an easy win/win for everyone involved, the reality is quite complicated.
You can’t just say the magic word, throw together a dedicated team, and hope for the best. There’s a lot of work and a lot of research corporates need to do before even engaging a startup. First, you need to define a clear need and evaluate what type cooperation works best for your organization. According to Luis Fonseca of Match-Maker Ventures, a startup/corporate partnership can take three forms – either buyer-supplier, co-branding, or joint product development.
A partnership between a startup and a corporation is like an iceberg. 90% of the work has to be done internally on the corporate side beforehand. The project itself is just the tip.
You have to set specific KPIs, technological framework, and value-adding outcomes for every startup collaboration or innovation project. These have to be agreed upon and signed off by every stakeholder, including the Board, IT Security, Procurement, Finance, etc. – basically anyone who can later oppose the project because it becomes too much of a hassle (which it will). This requires top management buy-in and a dedicated internal champion who is senior enough to convince stakeholders to be flexible with processes.
Then, you need to clearly define the project requirements and staff it with the right people. In order for the pilot project to scale beyond just that, you need to make sure to involve people from the mothership that will be inspired to bring some of the key learnings back into the organization. At Siemens Mobility, their focus is in having an ongoing cultural exchange, according to Karolina Korth. “We integrate people from the core business into startup projects so there’s cross-pollination of the entrepreneurial mindset.”
For corporates who are just getting started with startup projects, it’s vital to lay out the selection criteria for a potential collaborator. Schättgen advised that corporates should only consider working with startups when they’re past Series A or B. Before then, they don’t have the time or manpower to dedicate to such a time-consuming endeavor. “They should already have paying customers and a yearly revenue of at least €1m.” You’ll need flexibility in processes, and you’re guaranteed to get a lot of resistance from the CFO, CTO, Compliance, IT Security, etc. The best way to get this wiggle room (and circumvent the naysayers) is to only go for projects that don’t affect the core infrastructure of the organization.
On the startup side, be sure to do a lot of research on the corporate. Have they worked with startups before? What’s become of those projects? Have they invested in companies before? Ask around for feedback from people that have worked with them in the past. Would you have an internal champion with enough leverage to be your cheerleader? Have they made the necessary process exceptions for your project to get any and all necessary approvals quickly? What are the legal ramifications of the contracts? Do they have a technological framework or criteria for the outcome? Build rapport with multiple stakeholders in the organization and remember that you’re a speedboat sailing along with a cruise ship.
On both sides, you need open lines of communication for expectation management and alignment. It’s easy to forget that B2B is still a people’s business.
What will we see in mobility four years from now?
The future of auto tech is all about collaboration. It’s important to note that the ecosystem and the players as we know them today, will not exist in the same way. Innovators, market leaders, and regulators need to prepare for this uncertainty.
“There will be a consolidation of the market, but cities will ultimately have a say in who remains and who will be allowed to operate in local markets. Mobility providers will need to prove that they are reliable partners for cities,” said Mar Pallas Poy, VP of Market Development at Scoot Networks.
Of course, we cannot leave everything up to the cities. The technology is there, it’s just not being integrated or deployed at a large scale. “Working at a deeptech systems integrator for OEMs and Tier 1 suppliers, we’re able to understand that collaboration is necessary. That without collaboration, we won’t get anywhere,” noted Kufner. Gneiting echoed this sentiment: “Established players and startups both have great strengths. The winner will be whoever figures out how to combine the two.”
The biggest investment area for mobility needs to be cybersecurity to protect connected cars and critical infrastructure. “Cybersecurity is never the first concern. We need to make it our top priority,” warned Ana Fuster, Partner at Deloitte.
While this is certainly true, regardless of how much state-of-the-art protection you put into a car, the fact that it’s connected makes it vulnerable. “There’s no silver bullet in security. The only 100% fool proof protection is to have a completely disconnected car,” said Goren. For OEMs, entering into a Spy vs. Spy relationship with hackers is inevitable.
Now, whether it’s electric and automated vehicles, security, meta-apps, connectivity, or even mobility-as-marketing, it’s a question of scaling and user behavior to define which technologies will be adopted at a large-scale. “We’ll be observing how user behavior will change, but it’s critical to shorten the time to deployment,” said Lenz.
In the next four years, we hope to see the widespread adoption of the technologies that already exist today.
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