In the world of COVID-19, shared and mass mobility are experiencing the perfect storm as commuters embrace e-bikes and private cars. But the future still needs collective mobility—Uber and Lyft are already seeing an increase in ridership in comparison to March 2020. People will keep loving convenient door-to-door travelling—the very strength of the ride hailing model.
The future
‘Work from home’ will reshape cities, visibly reducing the number of commuters and moving people away from large urban centres. This means less reliance on mass transportation. The value of car ownership will drop as people won’t drive to work. The love for e-bikes will carry on, but less on cold and wet periods. This means greater opportunities for shared mobility, especially in its most convenient form, ride-hailing. Service providers will learn from the pandemic and adapt their model—broaden geographic coverage, enter into food or grocery delivery, etc.
In the long run, robotaxis will add great price competitiveness to the major convenience of the ride-hailing model. Even if the technology will remain niche at least until 2025, its mass deployment will be a boost for ride-hailing and will impact the need for car-sharing. The models of taxi and ride-hailing will merge, regulations permitting. Echoing Elon Musk’s vision, the gig economy created by ride-hailing will also change, as drivers can simply sit at home while the car does the driving for them. This means the model will become even more attractive.
The disruption currently unfolding in all of the world’s urban areas will offer an even greater role for ride-hailing. As personal mobility becomes less centred on regular commuting, this means flexibility and convenience will be even more relevant. User experience will be critical to fulfil these changing needs, where artificial intelligence (AI) and gamification will play a strong role.
The ride-hailing model had been previously challenged by some studies, with researchers claiming it led to an increase in road traffic in certain areas. Even if a ‘work from home’ scenario makes this less likely, ride-hailing providers should actively cooperate with governments and city transport authorities to build a mobility ecosystem that is holistically beneficial for society. Several legislative barriers in Europe and the revocation of Uber’s license in London are stark reminders.
Incumbents
Pure-play ride hailing providers
The existing ride-hailing companies like Uber, Didi Chuxing, Lyft and Grab will continue playing a strong role in this space. Not only have they managed to conquer many markets globally but they are also exploring iterations of their original business model with the purpose of remaining competitive. These iterations—ranging from e-scooter sharing to helicopter/flying robotaxi sharing—are essential also to hedge the risk of market saturation. COVID-19 has left a visible financial dent, but ridership is recovering. In the end, the pandemic will be an accelerator for consolidation. Different dynamics will happen at regional level, as is the case at Didi Chuxing, which is gaining expression in Asia. A number of these companies are also experimenting with autonomous drive technology.
Tech companies
These incumbents hinge mostly on the success of robotaxis. They use their technological strengths to develop robotaxis that, when fully operational and cost-optimised, could deliver considerably lower running costs. Waymo is one of the most obvious examples. As one of the firstcomers, it was also the first to offer a completely unmanned robotaxi service. Even if currently limited to the Phoenix East Valley area, it is still a major milestone.
Many other tech companies are in the race. Intel aims to become one of the main mobility companies, promising to offer a robotaxi service by 2022. Its subsidiaries Mobileye and Moovit will be crucial in achieving that goal, as they hold autonomous drive technology and Mobility-as-a-Service equity. Baidu is also working with Nvidia to develop its robotaxis.
Besides the big tech names, several tech start-ups are also developing robotaxis. The economic impact of COVID-19 is having a ripple effect on a number of those, creating opportunities for other tech giants—Drive.ai has been bought by Apple and Zoox acquired by Amazon.
Other tech start-ups, however, continue with the strong support of automakers.
Automakers
A significant number of OEMs are partnering with tech companies to develop their autonomous drive technology. Most of these partnerships target the deployment of a robotaxi service. Ford and Volkswagen have invested US$7bn in Argo.ai and this will enable Ford’s robotaxi service to go live in 2022. GM also owns a majority stake in Cruise Automation, but the company delayed its robotaxi plans last year. Toyota is working with Pony.ai, which also offers a robotaxi service.
As ride-hailing is still not part of the core business at automakers, the reliance on tech companies to develop autonomous and robotaxi technology is a convenient approach. But OEMs are also investing in conventional ride-hailing. For instance, Volkswagen has created Moia—currently operating only in Germany and the UK—and Move in Rwanda. The automaker sees Africa’s limited appetite for new cars as an opportunity for ride-hailing. Toyota has invested in Didi and Uber, while Hyundai partnered with Ola and Uber as well. Tesla, however, takes a different approach. It relies on its own capabilities to develop Level 4 autonomous drive technology to enable a robotaxi service. In the meantime, the company has already made available to its customers a peer-to-peer car-sharing platform as a stepping stone to the robotaxi model.
Overall, OEMs are not leading in ride-hailing but keep a close involvement through partnerships and acquisitions as a way to insure a prime position in case the model comes to represent a significant percentage of new car sales.
Considering the current future scenarios, a great opportunity lies ahead for ride-hailing. However, success will belong to the most active companies, which also best understand market changes and provide the best user experience. Innovation will play a key role as autonomous drive technology has the power to disrupt personal mobility and strengthen ride-hailing even further.
About the author: Pedro Pacheco is Senior Director of Research for Automotive and Smart Mobility at Gartner
