A deep-dive analysis on where the mobility market is at and where it's headed.
Following our digital roundtable discussion "Future of Micromobility 2020" with McKinsey & Company, we were eager keep the conversation going, so we sat down with Darius Scurtu and Benedikt Kloss from the McKinsey Center Future for Mobility to delve further into the mobility market, how mobility is disrupting other industries, even encouraging greater equality and inclusivity!
Benedikt Prior to McKinsey, I did a PhD in Physics and then I decided to pursue the consulting path. I'm an associate partner now. When I first joined I was working on different topics like insurance, banking, chemistry, automotive, and then finally I decided to join the McKinsey Center for Future Mobility - which is our think-tank for mobility - where I now spend 100% of my time on the future of mobility topics, mainly on autonomous driving and shared mobility.
Darius I’m a knowledge consultant with a background in economics and have been focusing on mobility topics - particularly shared and autonomous mobility - since I joined McKinsey in 2018. As part of my job, I combine consulting with developing data-driven models in order to help our clients make fact-based decisions.
B It’s also important to mention that our clients do not come exclusively from the automotive world: we work with OEMs and their suppliers, but also other industry players like oil and gas companies, energy players who are interested in the micro-mobility space, financial players, and of course, startups.
According to one of your reports, there will be 250 million shared micro-mobility trips by 2030 (base scenario for Munich). What are your observations about the micro-mobility industry’s investment landscape before versus after the pandemic outbreak?
B Each year, we conduct our so called SILA analysis ("startup and investment landscape analysis"). What we do here is to analyze how much money has been invested into mobility startups over time so that we can then track external investments, M&A activities, and so on.
First of all, we have observed that since 2010 seven to eight billion US dollars have been invested into micro-mobility startups or companies that are somehow related to the micro-mobility space. If you look at investment acceleration, what we are seeing there is that about five to six out of these eight billion have been invested into micro-mobility in the last two years alone. There was an exponential increase in investments into these companies, mainly triggered by the emergence of the e-scooter.
Do you think that the pandemic has been an accelerator for change, specifically with regard to mobility?
B We actually do a yearly survey (so called ACES Survey) where we ask people about their attitudes across the ACES trends (autonomous, connected, electric, and shared mobility). We asked consumers, what actually motivates and hinders them from using micro-mobility nowadays? There were three main answers: availability/coverage, price, and weather.
During the pandemic we ran a global consumer survey about how mobility behaviors of people change. The first insight shouldn’t come as a surprise. When asking consumers, "Which mobility mode do you consider safe now?" most people said, "My private car, because I'm alone. Walking and biking with my own bike, because I'm alone and it's my bicycle. I know who touched it, and who used it."
But if you ask people, "Okay, now let's think the pandemic is over. How would your mobility behavior change afterwards?" Then for established modes such as private car or public transport, the survey shows that they come back to the same level as before the crisis, and what’s changed is new habits like private biking, and indeed, shared micro-mobility. Here respondents said, "Hey, I can imagine these other forms of mobility more often than before the pandemic, especially since now I’ve seen the benefits.” There was a significant difference compared to pre-pandemic levels.
What observations have you made across different industries/business verticals regarding mobility in recent months/years?
B So first, let’s go back to the investment analysis we talked about earlier. In total, approximately $300 billion have been invested in mobility companies since 2010. Of that, 100 billion roughly has been invested into shared mobility...that’s a lot of money! What we are seeing across other industries like for example in oil and gas is that electrification is, of course, now the hot topic. Companies have to become sustainable. Moving away from oil and the gas towards sustainable energy is the first step. Companies have to electrify the way we are moving.
The transition from oil and gas stations to charging stations is the future. These players are trying to get a foothold over the broader context of mobility today, by not only providing energy to the mobility industry but becoming a broader player overall. We are seeing oil and gas companies investing into car sharing, for example. We are seeing oil and gas companies investing into battery production for vehicles. This is all really something new for this industry.
Then if you think about the automotive industry, we see many examples of them trying to disrupt their core business which is selling cars. Instead of trying to get the foothold over the shared mobility movement by providing car sharing, which is really far away from their core business of selling cars. Why are they doing this? It goes back to, “disrupt yourself before getting disrupted”. They are investing in a future where shared mobility becomes big. If you are an automotive manufacturer, you know that eventually car sales will go down, and this is one of their reasons to invest into shared mobility. So again, disrupt yourself before getting disrupted.
Would you consider the subscription models to be a prominent emerging trend in the mobility sector? What are your thoughts on that?
D We just recently organized a roundtable on the future of micro-mobility where we asked the participants which of six business models will have the largest success in the future, including the private sales of e-scooters, bicycles, or mopeds, a subscription-based renting of the vehicles for a couple of weeks/months, operational leasing, and three shared business models.
We asked participants about the “winning” business model in the future (private vehicle sales, vehicle leasing, subscription, shared mobility, etc.). Approximately 50% of the participants said it will be shared mobility and over 20% said subscription.
B Specifically regarding micro-mobility, even with a subscription-based model, micro-mobility might be seasonal because people are more likely to use these categories of vehicles in the spring and summer. Other industries are comparable to the automotive industry. Twenty years ago, most consumers were simply buying a car. Then things moved towards financial leasing and later to operational leasing. Today, we are seeing more and more people shifting from the purchase of a car to financial leasing to operational leasing. Subscription seems like the natural next step. It’s basically operational leasing for a shorter amount of time, and many OEMs are going in this direction.
In addition to environmental benefits, what other benefits does the democratization of mobility bring to society?
D I see two main benefits. First, the social one. Let's take a historic example: in the early 20th century, New York City was said to build certain bridges intentionally low in order to keep lower-income people which were relying on buses away from certain recreational areas. If you project this example to micro-mobility now, this is a mode of transport which in contrast is accessible to all groups of income, both from an availability and cost perspective. That fact that you can either move from A to B without any restrictions or can reach the next public transit station much easier than it would be without micro-mobility, makes mobility much more equal.
Secondly, we're talking about the economic impact. For many people - and this also relates a bit to the social benefit - it's actually hard, or at least, quite an effort to easily get to your working place. In many European and US cities, there is often a regional segregation between residential and working places. Transit between these is, unfortunately, not always easy and provenly also harms economic prosperity. By offering a further mobility option to a much wider group of people and by connecting the outskirts to the next public transit station, it also enables people to actually get to the workplace faster and more efficiently. It all comes down to inclusive mobility.